US EARLY MORNING: Equity futures are rallying amid more constructive Ukraine/Russia talks, hopes of China policy support; FOMC at 18:00GMT/14:00EDT

EQUITIES: NQ +1.6%, RTY +1.2%, ES +1.0%, YM +0.9%. Asian equities were higher on hopes Chinese authorities would provide economic support amid the resurgence of the pandemic; the European day got off to a solid start, after positive leads from Wall Street and Asia session; gains are being underpinned on apparent progress being made in Russia/Ukraine talks (the latest: Ukraine President said talks had become more 'realistic', though still 'difficult', and more progress was needed, while Ukraine must recognise it will not join NATO; Russia President claimed Kyiv was not serious in wanting to find a solution; Russian Foreign Minister said Ukraine's neutral status was seriously being discussed, and some agreements are near). The main event, however, is the FOMC meeting (note the earlier time in Europe: 18:00GMT/14:00EDT, +25bps rate hike expected, updated projections – how many hikes do the dot plots foresee? We’re not expecting balance sheet specifics. Our preview here), but before then, retail sales for February will be released at 12:30GMT/08:30EDT.

TREASURIES: Treasury yields are bear-steepening, but yields aren’t too far off neutral; the shape of the curve is biased towards small steepening. The complex will be paying more attention to the FOMC than anything else today. And while a 25bps rate hike is the base case, there may be more focus on how many hikes the Committee is projecting for the rest of the year. The previous ‘dots’ pencilled in three rate rises in 2022, but money markets are pricing six/seven rate rises of 25bps through the rest of the year; we’ll also be paying attention to where the Fed sees the eventual terminal rate; inflation projections are likely to be raised, while the growth forecasts will be telling: does the FOMC see a slower pace of growth as it is lifting rates?

DOLLAR: The Dollar Index is lower by around 20bps, amid a more constructive risk dynamic, where there seems to be some limited progress in Russia/Ukraine talks, while risk rallied in Asia on hopes of policymaker support amid a COVID resurgence in China. The Fed will ultimately prove to be the main catalyst for the buck today (preview link above). Activity currencies are rallying, with the favoured risk-proxy SEK up almost 1.0% vs the USD. EUR is also gaining, and is hovering around 1.10, where there are some lumpy option expiries rolling off at the NY cut today. EMFX is higher, with Asia FX (like KRW) rallying. CEE3 FX in Europe is mixed, however.

CRUDE: Oil benchmarks are up USD 1.75-2.50, pausing after the declines recently, which has seen oil shed around one-third of its price since from peaks, as geopolitical risk premium unwinds. ING said that leaves the complex vulnerable to sharp upside in the event of unfriendly geopolitical headlines. Meanwhile, the IEA has cut its view of demand given the Ukraine/Russia war, and sees Russian output slumping next month. The demand side continues to focus on China COVID, where there have been some hopes of policy support.

EQUITY NEWS:

COMMUNICATIONS:

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  Amazon (AMZN), Netflix (NFLX), Disney (DIS) - EU antitrust regulators give unconditional approval for the proposed USD 8.5bln takeover of MGM to help it to compete with streaming rivals Netflix and Disney+. (Reuters)


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  Electronic Arts (EA) - EA will not host its traditional 'EA Play' event this year, will instead be revealing more about its projects when the time is right for each of them. (IGN)


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  Live Nation Entertainment (LYV) - US Senators say DOJ should probe Ticketmaster-Live Nation over the state of competition in the live entertainment and ticketing industry. (Bloomberg)


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  Microsoft (MSFT), Sony (SONY) - Elden Ring is Europe's biggest new games IP since 2016, biggest game launch since Call of Duty: Vanguard last year. The game sold best on PC (44% of total sales), then PS5 (27%), Xbox (16%), PS4 (13%). (Games Industry Biz)


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  Publicis (PUBGY) - Ceases operations and investments in Russia effective immediately. (Newsquawk)


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  Roblox (RBLX) - Analysts at Goldman Sachs reportedly said the rate of Q1 bookings was below consensus, but it expects that it will grow in March. (Newswires)


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  Spotify (SPOT) - Announced a long-term partnership with FC Barcelona, starting July 2022. (SPOT)

INDUSTRIALS:

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  BMW (BMWYY) - Cuts 2022 automotive margin forecast due to Ukraine war; says margins will be lower. (Automotive News Europe)


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  Equifax (EFX) - Acquires Data-Credito; no terms. (EFX)


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  Herc Holdings (HRI) - To acquire Cloverdale Equipment Company; terms were not disclosed. (HRI)


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  Honda (HMC) - Will spend CAD 1.4bln over six years to upgrade an Ontario manufacturing plant to make electric hybrid vehicles. (Globe)


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  IAA (IAA) - Board looks forward to continuing dialogue with activist Ancora, which called for the CEO to be replaced or for the company to sell itself. (IAA)


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  Lockheed Martin (LMT) - Germany to borrow up to EUR 200bln for climate and defense; eyes EUR 15bln for F-35 jets and EuroFighters. Spending on new armaments has reached EUR 44bln to date. Germany is also looking to earmark over EUR 5bln for cargo helicopters. (Newsquawk)


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  Stellantis (STLA) - To slow production at the Melfi plant in Italy amid a worsening in the chip situation following Russia-Ukraine War. (Newsquawk)


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  Tesla (TSLA) - Is suspending production at its Shanghai factory for two days as China tightens COVID restrictions to curb the country's latest outbreak. (Reuters)


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  Traton (TRATF) - To invest EUR 2.6bln in e-mobility R&D by 2026. (Newsquawk)

ENERGY:

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  Equinor (EQNR) - To take new steps to meet gas demand in Europe; increased production permits allow higher gas production from the Troll, Oseberg and Heidrun to be maintained through the summer month. (Newsquawk)


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  ExxonMobil (XOM) - Loses appeal to stop climate change probes. (Upstream Online)


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  Shell (SHEL) - Reportedly one of the final bidders to acquire India's Spring Energy, deal could be valued at around USD 2bln. (Newsquawk)

MATERIALS:

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  Univar (UNVR) - Announced distribution agreement with Particle Dynamics. (UNVR)

CONSUMER CYCLICALS:

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  Inditex (IDEXY) - Omicron weighed on Christmas quarter. Increased markdowns, higher costs erode earnings growth. To raise prices. Q4 revenue EUR 8.39bln (prev. 6.32bln Y/Y). EBITDA 1.75bln (prev. 1.22bln). Net 967mln (prev. 435mln). Online sales +14% in constant currency. Said trading was well above pre-pandemic levels. Russia and Ukraine represented 5ppts of sales growth in the period. (Bloomberg)

CONSUMER STAPLES:

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  Big Lots (BIG) - Mill Road disclosed a 5.1% stake, urges board to pursue a sale to maximise shareholder value. (Reuters)

HEALTH CARE:

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  Abbvie (ABBV), Eli Lilly (LLY), Novartis (NVN) - Drugmakers including Eli Lilly, Novartis, Abbvie are scaling back operations in Russia, still pledge to continue supplying critical medicines. (Reuters)


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  Denali Therapeutics (DNLI) - Appointed Alexander Schuth as CFO, as Steve Krognes transitions to Denali's Board. (DNLI)


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  MorphoSys (MOR) - UN National Comprehensive Cancer Network updated designation of Monjuvi to preferred regiment. (Newsquawk)


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  Pfizer (PFE), BioNTech (BNTX) - Pfizer, BioNTech submit for US EUA of an additional booster dose of its COVID-19 vaccine for older adults. (PFE)


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  Roche (RHHBY) - To continue operations in Russia for now. Separately, New data for Evrysdi demonstrates long-term efficacy and safety in a broad population of people with spinal muscular atrophy. (Newsquawk)

TECH:

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  SentinelOne (S) - Q4 EPS -0.27 (exp. -0.18), Q4 revenue USD 65.6mln (exp. 60.7mln). Sees Q1 revenue at USD 74.5mln (exp. 68.2mln), and sees FY23 revenue between USD 366-370mln (exp. 346.2mln). (S)


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  Softbank (SFTBY), Shift Technologies (SFT) - SoftBank-backed car-leasing start-up Fair Financial sells some assets to Shift Technologies; the outcome is a money-losing one for SoftBank. (Bloomberg)

FINANCIALS:

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  Ryan Specialty Group Holdings (RYAN) - Q4 adj. EPS 0.29c (exp. 0.28), Q4 revenue USD 378.5mln (exp. 378.8mln). Sees FY22 revenue growth between 13-15% (exp. 1.69bln). (RYAN)

UTILITIES:

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  E.ON (EONGY) - Sees profits lower this year, sees risks around Nord Stream 1. (MarketWatch)

REAL ESTATE:

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  Foxtons (FXTGY) - Activist investor Converium Capital urges Foxtons to sell itself. (FT)

16 Mar 2022 - 09:23- EquitiesResearch Sheet- Source: Newsquawk