EUROPEAN EQUITY OPEN: Indices slump after the open; Fed Chair Powell and other central bank speakers ahead

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  OVERNIGHT: On Wall Street, stocks were lower on Monday with defensive sectors faring better, while the Nasdaq 100 and Russell 2k led losses, as markets ramped their hawkish Fed expectations further in wake of the hot jobs report on Friday (see here). Asia traded mixed with sentiment subdued after the recent hawkish Fed re-pricing (see here), while the region also digested the RBA rate decision (see below).


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  EUROPEAN OPEN: European stocks opened flat, but selling pressures picked up in th eminutes after the open, without an obvious headline catalyst. Once again, the corporate earnings slate has been in focus, with energy major BP reporting record profits in 2022, though some of the tech names like ams-OSRAM and Nordic Semi disappointed investor expectations. Elsewhere, Ubben is trying to rally other shareholders in making changes at Bayer. Fed Chair Powell is the main highlight of the day, but is expected to largely reiterate remarks he made in wake of last week’s FOMC rate decision.

DAY AHEAD:

• Our live day ahead calendar can be accessed here; a PDF version can be accessed here.


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  RBA RECAP: The Australian central bank raised its cash rate by +25bps to 3.35%, as expected. Westpac said the Governor's statement was slightly more hawkish than in December, and the Aussie bank confirmed its forecast for the cash rate to peak at 3.85% in May.


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  EU DATA RELEASED: German industrial output declined in December by -3.1% M/M, a deeper fall than the expected -0.7%; the previous was revised up to 0.4% from 0.2% initially reported. France’s currency account deficit widened in December to EUR 8.5bln from 6.8bln.


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  UK DATA RELEASED: January card spending data from Barclaycard showed consumer spending +9.7% Y/Y, boosted by New Year sales, film releases and holiday bookings; sales growth also helped by favourable comparison to January 2022. Elsewhere, Halifax reported house prices were steady in January after slides in November and December; annual rate of house price growth slowed to +1.9% (from +2.1% in December)


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  EUROPEAN DATA/SPEAKERS: Inflation commentary will come via the ECB Consumer Expectations Survey. There are also a few key ECB speakers due, by way of hawks Kazimir and Knot, as well as the markets chief Schnabel; so far, officials have been trying to talk down the dovish aspects of last week’s policy announcement, and this is likely to continue in the remarks of these policymakers.


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  NORTH AMERICAN DATA/SPEAKERS: Fedspeak is the key focus, with Chair Powell due to deliver remarks from the Economic Club of Washington (the event begins at 12:00EST, but Powell will speak from 12:40EST); he will likely reiterate the themes he touched on at his post-meeting press conference last week (you can get a recap of this in our central banks weekly note here), and reiterate that ongoing interest rate increases are still appropriate. Fed Governor Barr will also give remarks today. Ahead of the BoC’s meeting minutes on Wednesday, BoC Macklem will also be speaking; expect the Governor to reiterate that he is not even thinking about rate cuts yet.


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  FIXED INCOME SUPPLY: In Europe, the Netherlands will sell EUR 4-6bln of a 2033 DSL; Germany will sell EUR 0.70bln of a 2026 linker and a 2046 linker. The UK will auction GBP 3.5bln in 2027 Gilts. Stateside, the US will kick off this week's 3s, 10s and 30s supply with a USD 40bln 3yr note sale.


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  ENERGY: The API will release weekly energy inventories; this week, the street expects headline crude stocks to build by 2.2mln, distillates to draw y 0.5mln, though gasoline is expected to build 1.4mln. Elsewhere, the EIA will release its short-term energy outlook in the afternoon.


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  CORPORATE EARNINGS: The corporate earnings docket features FISV and VRTX on Tuesday; daily earnings expectations can be accessed here. Traders will be eying CVS, ETN, EMR, CME, D, DIS, ORLY on Wednesday, and AZN, PEP, TRI, PM, DUK, SPGI, ABBV, PYPL on Thursday; our weekly earnings expectations note can be accessed here.

EQUITY SPECIFIC NEWS:

• Our full European equity specific briefings for January 7th can be accessed here and here.


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  COMMUNICATIONS: Ubisoft (UBI FP) US peer Activision Blizzard’s (ATVI) shares rose after hours following earnings, while Japanese peer Nintendo cut its FY23 Switch sales guidance.


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  CONSUMER CYCLICAL: Clas Ohlson (CLASB SS) January sales +5% Y/Y. Dufry (DUFN SW) appoints Xavier Rossinyol as CEO, Yves Gerster as CFO.


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  CONSUMER STAPLES: Carlsberg (CARLB DC) sees lower beer consumption impacting FY23 growth. Carrefour (CA FP) downgraded at Exane BNP.


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  ENERGY: BP (BP/ LN) reported record 2022 profits, boosts dividend, plans a further USD 2.75bln share buyback.


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  FINANCIALS: BNP Paribas (BNP FP) Q4 net income was short of expectations, but raised 2025 targets. Credit Suisse (CSGN SW) is reportedly delaying compensation day for some of its bankers. SCOR (SCR FP) says it improved portfolio profitability. KBC (KBC BB) initiated with Buy at ING.


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  HEALTH CARE: Bayer (BAYN GY) holder Jeff Ubben has reportedly contacted other shareholders to rally support for big changes at the company. Roche (ROG SW) announced positive data from global phase III programme for crovalimab in PNH. AstraZeneca's (AZN LN) Forxiga was approved in the EU for the treatment of symptomatic chronic heart failure. Laetitia Rouxel will succeed Enno Spillner as Ecotec’s (EVT GY) CFO. Zur Rose (ROSE SW) upgraded at Deutsche Bank.


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  INDUSTRIALS: Siemens Energy (ENR GY) Q1 net loss widened after issues at wind unit. A postal workers strike at International Distributions Services' (IDS LN) Royal Mail called off after legal challenge. Rolls-Royce (RR/ LN) appointed a former BP (BP/ LN) exec to lead an overhaul of the company. Bpifrance acquired a 5.1% stake in Alstom (ALO FP) for over EUR 500mln. Airbus (AIR FP) downgraded at Berenberg. Legrand (LR FP) downgraded at Deutsche Bank. Aurubis (NDA GY) downgraded at Exane BNP. Sixt (SIX2 GY) upgraded at Exane BNP


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  MATERIALS: Holcim (HOLN SW) to acquire US roofing company Duro-Last in a USD 1.29bln transaction. Brenntag (BNR GY) initiated with Hold at Jefferies.


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  TECH: S&P raises Nokia (NOKIA FH) rating to the lowest level of investment grade at BBB-. TeamViewer (TMV GY) Q4 revenue rises, but too early to think about dividend, and will buy back EUR 150mln shares. Nordic Semiconductor (NOD NO) said there has been lower demand for its proprietary products and first-generation Bluetooth low energy products in H2. ams-OSRAM (AMS SW) Q4 net profits miss expectations. Bechtle (BC8 GY) prelim FY22 revenue small beat.


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  UTILITIES: Orsted (ORSTED DC) upgraded at Goldman Sachs. RBC upgrades SNAM (SRG IM), Terna (TRN IM) and Italgas (IG IM).

07 Feb 2023 - 08:10- Fixed IncomeResearch Sheet- Source: Newsquawk