EUROPEAN EQUITY OPEN: Stocks open around flat; UK jobs data does little to shift BoE pricing; US CPI data ahead

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  OVERNIGHT: On Wall Street, US stocks rose on Monday (see here); President Biden will name Federal Reserve Vice Chair Lael Brainard as a replacement for outgoing NEC Director Brian Deese, with an announcement coming as soon as Tuesday, Bloomberg reports. Additionally, Council of Economic Advisers member Jared Bernstein is likely to be named its chair, replacing Cecilia Rouse, who is stepping down. Asia-Pac equities were mixed, with only a slight positive bias following the firm handover from Wall Street (see here); Japan GDP data showed the economy returning to growth in Q4, albeit at a slower-than-expected pace, while its government nominated academic Kazuo Ueda as the next BoJ Governor, and Executive Director Uchida and former FSA chief Himino as Deputy Governors, as expected.


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  EUROPEAN OPEN: European equities opened flat/slightly firmer. In M&A, Liberty Global acquires a stake in Vodafone (just under 5%), but will not make a full offer. In cyclicals, Flutter (FLTR LN) will begin consultations on US listing. In materials, activist Engine Capital calls for split of Brenntag (BNR GY), Thyssenkrupp (TKA GY) reported lower operating profits, while Norsk Hydro (NHY NO) revenues and profits missed expectations. In financials, Allianz (ALV GY) is reportedly shifting towards bonds rather than alternative investments, which would be a major shift. Meanwhile, UK jobs data has done little to shift BoE expectations (see below). Elsewhere, traders will be cognizant of US CPI data out today, which could influence the macro narrative (see Day Ahead, below, for our preview link).


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  UK JOBS DATA: December’s unemployment rate was unchanged at 3.7%, as expected, average weekly earnings fell by more than expected, although the ex-bonus measure rose, and was above expectations. The claimant count fell in January, and over 100k payrolls were added in the month. Pantheon Macroeconomics said that “a clear slowdown in private-sector wage growth boosts the chances of no further rate hikes” from the BoE.

DAY AHEAD:

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


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  EUROPEAN DATA/SPEAKERS: Flash GDP data for the Eurozone (which is actually the second reading) is expected to confirm the 1.9% Y/Y and 0.1% Q/Q reported in the advanced metrics; the Q4 employment data, released at the same time, will likely be ignored. On the central bank speakers front, Riksbank's Thedeen will deliver remarks on the current economic situation and monetary policy. The main data point of the day, however, will be the US CPI report, which we talk more about below.


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  NORTH AMERICAN DATA/SPEAKERS: The main event of the day will be the US CPI report for January, where the annual rates of headline inflation are expected to pare back, although the monthly metrics are likely to still allude to rising price pressures. The market reaction may be nuanced, however, given the significant hawkish repricing of the Fed rate rise trajectory priced by financial markets in wake of hot jobs data and hot ISM services data. JPMorgan thinks that a print between 6.0-6.3% (consensus looks for 6.2%), would likely be a positive for risk assets. We have more to say about the CPI data in our preview, which contains trading scenarios from the folks at JPM, and can be accessed here. Elsewhere, there is a heavy amount of Fedspeak that will follow in wake of the CPI release; Fed's Barkin (non-voter), Logan (voter), Harker (voter) and the influential NY Fed President Williams (voter) are all on today’s docket.


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  SUPPLY: On the supply front, Italy will auction between EUR 7.0-8.5bln of 2026, 2029, 2038 BTPs; the UK will sell UK GBP 3bln of 2033 Gilts. Elsewhere, books have opened for the EU's 2029 and 2042 issuance, which will be priced today. Our G7 bonds preview note can be accessed here.
  


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  ENERGY: The API will report its gauge of energy inventories for the week after the market close today; this week, analysts are expecting headline crude stocks to build by 300k, distillates to build by 400k, while gasoline stocks are seen building by 2mln.


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  EARNINGS: Today's corporate earnings include Coca-Cola (KO), Suncor (SU), Devon Energy (DVN), Zoetis (ZTS), GlobalFoundaries (GFS), Restaurant Brands (QSR), AirBnB (ABNB); our note containing expectations for these releases can be accessed here.

EQUITY SPECIFIC NEWS:

• Our full equity specific briefings for February 14th can be accessed here and here.


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  COMMUNICATIONS: Liberty Global (LBTYA) acquires a 4.92% interest in Vodafone (VOD LN) for GBP 225mln, but said it was not considering an offer for Vodafone.


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  CONSUMER CYCLICAL: Flutter Entertainment (FLTR LN) has reached a prelim view on a US listing of its shares to yield strategic and capital market benefits; expects to start consultations on listing immediately. TUI (TUI LN) reported encouraging bookins, sees strong sumer bookings as travel recovers. Delivery Hero (DHER GY) to issue convertible bonds, launch subsequent tender offer for outstanding convertible bonds. Michelin (ML FP) sees lower 2023 profits but a more stable market, and sees no reason for price cuts at this time. Ceconomy (CEC GY) prelim Q1 numbers showed LFL revenue +4.5% Y/Y. easyJet (EZJ LN) upgraded at Deutsche Bank. InterContinental Hotels (IHG LN) downgraded at UBS.


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  CONSUMER STAPLES: Kesko (KESKOB FH) Jan SSS +10.1% Y/Y, sales growth was particularly strong in grocery trade.


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  ENERGY: Neste (NESTE FH) downgraded at UBS. Tullow's (TLW LN) disputed tax claims have been referred to arbitration. Subsea 7 (SUBC NO) was awarded a large offshore wind contract.


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  FINANCIALS: Allianz (ALV GY) is reportedly shifting towards bonds rather than alternative investments, a major portfolio shift. BBVA (BBVA SM) proposes share capital reduction by up to a maximum amount of 10%, maximum nominal amount of EUR 295.5mln. Monte dei Paschi (BMPS IM) will reportedly not be constrained by an Italian government salary cap when Rome decides on a new CEO. Credit Suisse (CSGN SW) former employees reportedly transferred personal data onto a personal device, in breach of Credit Suisse policies, before leaving the bank. SocGen (GLE FP) downgraded at Deutsche Bank.


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  HEALTH CARE: New analyses of reinforce survival benefit of Merck's (MRK GY) BAVENCIO First-Line Maintenance Treatment in patients with Advanced Urothelial Carcinoma.


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  INDUSTRIALS: Randstad (RAND NA) topped Q4 profit expectations despite slower hiring. Bilfinger (GBF GY) Q4 sales and profits rise. MTU Aero Engines (MTX GY) cuts FY23 revenue guidance. Saab (SAABB SS) announced mid-term targets, sees +10% annual organic sales growth over the next four years. Intertek (ITRK LN) initiated with Buy at SocGen.


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  MATERIALS: Activist Investor Engine Capital is said to be calling for a split-up of Brenntag (BNR GY) to prioritise its specialties unit; has taken a 1% stake. Thyssenkrupp (TKA GY) operating profit down on lower steel prices, clients cut orders. Norsk Hydro (NHY NO) Q4 revenues and profits miss expectations amid an unpredictable outlook. Boliden (BOL SS) reported strong Q4 cashflows despiute large investments.


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  TECH: Nokia (NOKIA FH) and Kyndryl expand global network and edge computing alliance.

14 Feb 2023 - 08:10- EquitiesData- Source: Newsquawk