EUROPEAN EQUITY OPEN: Indices start the week on the defensive following hot US jobs data on Friday, which spurred hawkish Fed bets; ECB and BoE speak ahead

EUROPEAN OPEN:

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  OVERNIGHT: On Wall Street, stocks ended Friday lower in a choppy session, as investors balanced a hot jobs report against the backdrop of disappointing big tech reports (see here for Friday's wrap). Asian stocks started the week mostly lower after Friday’s downside on Wall Street; Japan outperformed on reports that BoJ's Amamiya (considered dovish) was sounded out for the next Governor, though an official later denied this (see here for more).


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  EUROPEAN OPEN: European equity indices start the week on a downbeat note, following similar leads from Wall Street and the overnight APAC session. Elsewhere, German industrial orders for December topped expectations (3.2% M/M vs an expected 2.0%). Geopolitical tensions between US/China over the downed balloon are also being cited, but do not seem to have concerned markets too much just yet. ECB officials will be eyed after last week’s ‘dovish’ policy announcements, while the corporate earnings docket is quite busy in Europe this week, and includes the likes of BP (BP LN), BNP Paribas SA (BNP FP) on Tuesday, TotalEnergies SE (TTE FP) on Wednesday, Unilever PLC (ULVR LN), AstraZeneca PLC (AZN LN), L'Oréal  (OR FP), and Siemens Aktiengesellschaft (SIE GY) on Thursday.

DAY AHEAD:

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


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  EUROPEAN DATA: ECB’s Lagarde will give further remarks following last week’s rate decision, which was judged as dovish by markets. Retail sales for December are expected to fall again, though the annual decline is seen steady vs November levels. The February Sentix index (improvement expected) and construction PMI data are also due. From the UK, the BoE’s Chief Economist Pill will give further commentary in wake of the Old Lady’s rate decision last week, but given he has already spoken a few times since, comments from the hawkish policymaker Mann may provide fresher insight.


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  US DATA: There is not much on the North American data slate, which should keep participants digesting the solid data from the tail end of last week, which has sent some shorts for cover, and brought market expectations of the Fed terminal rate in line with what the central bank has been forecasting; with little major on the economic slate this week, Fedspeak will be eyed for further colour; Chair Powell will be delivering remarks on Tuesday, but is expected to stick to the talking points from his post-meeting press conference last week (you can recap on these in our central bank weekly note here). For Monday, US January Employment Trends data, and Canadian Ivey PMI are due. Geopolitical developments between US/China will gain a lot of headline attention, but has not been rocking financial markets yet.


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  CORPORATE EARNINGS: ATVI is the standout on today’s docket; expectations can be accessed here. This week also will feature earnings reports from FISV, VRTX on Tuesday; CVS, ETN, EMR, CME, D, DIS, ORLY on Wednesday; AZN, PEP, TRI, PM, DUK, SPGI, ABBV, PYPL on Thursday. The weekly earnings expectations note can be accessed here.


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  WEEK AHEAD: MON: US Secretary of State Blinken to visit China (TBC), Australian Retail Sales (Q4), EZ Sentix Index (Feb), EZ Retail Sales (Dec), New Zealand National Day. TUE: RBA Announcement, US Trade Balance (Dec), Canadian Trade Balance (Dec), EIA STEO. WED: RBI Announcement, NBP Announcement, Banxico Announcement, BoC Minutes. THU: Riksbank Announcement, EU Leaders' Summit on US Inflation Reduction Act. FRI: EU Leaders' Summit on US Inflation Reduction Act, ECB TLTRO Publication of Repayment Amount, Chinese Inflation (Jan), Canadian Jobs Report (Jan), UK GDP (Dec), Norwegian CPI (Jan), US University of Michigan Survey (Feb), CBR Announcement. Our full week ahead briefing can be accessed here.

STOCK SPECIFIC NEWS:

• Our full European equity specific briefings for February 6th can be accessed here and here.


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  TECH: To bolster the chances of an Arm joint-IPO in London/NY, UK reportedly offers to ease the rules on “related party transactions” that Arm was concerned about. Foxconn and Vedanta said to be close to choosing STMicroelectronics (STM FP) as its technology partner in proposed semiconductor chip manufacturing unit.


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  COMMUNICATIONS: Thousands of Telecom Italia (TIT IM) customers in Italy reported internet outages on Sunday; no indications of cyberattack. CMA-CGM is reportedly interested in purchasing Bollore's (BOL FP) logistics arm. Telenor (TEL NO) upgraded at Nordea.


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  FINANCIALS: Banco BPM (BAMI IM) CEO rules out a potential acquisition of Banca Monte dei Paschi (BMPS IM). Global Emerging Markets have upped its stake in GAM (GAM SW). Barclays upgraded Lloyds (LLOY LN), downgraded Natwest Group (NWG LN) and Virgin Money (VMUK). Hargreaves Lansdown (HL/ LN) downgraded at Credit Suisse. Jefferies initiates Banca Generali (G IM), Banca Mediolanum (BMED IM) with buys; Finecobank (FBK IM) initiated with Underperform. CaixaBank (CABK SM) upgraded at Keefe Bruyette.


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  UTILITIES: Ofgem gets new powers to investigate energy firms following the British Gas prepayment meter scandal. Enel (ENEL IM) extends exclusivity period with Greece's PPC on negotiation for the sale of Enel's Romanian unit.


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  INDUSTRIALS: Aurubis (NDA GY) quarterly profits slip on high power prices, but it is optimistic for FY. Lufthansa (LHA GY) and Air France (AF FP) said to be in talks to purchase collapsed airline Flybe. UK Treasury signals no new money for defence spending, despite urgent need to rearm.


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  MATERIALS: Newcrest Mining (NCM AT) receives USD 16.9ln offer from Newmont (NEM).


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  CONSUMER DISCRETIONARY: Nissan's (7201 JT) Board reportedly approves the planned restructuring with Renault (RNO FP). BMW (BMW GY) seeks to invest EUR 800mln in Mexico to produce high-voltage batteries; separately, is said to be in talks with the UK over a GBP 75mln funding package for electric-Mini plant.


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  CONSUMER STAPLES: Nestle (NESN SW) CEO said it will further raise prices for food products to offset higher production costs. Diageo (DGE LN) upgraded at Bernstein.


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  HEALTH CARE: FDA has accepted Novartis's (NOVN SW) Biologics' License Application for Sandoz proposed biosimilar denosumab. Carl Zeiss (AFX GY) downgraded at Berenberg.

06 Feb 2023 - 08:10- Data- Source: Newsquawk