Equities, fixed income on FX continue to react following ECB QE

Notes/Observations

- South Korea Q4 Preliminary GDP sees lowest quarterly growth since Q3 of 2012 (Q/Q: 0.4% v 0.4%e)

- China Jan Preliminary HSBC Manufacturing PMI beats expectations but registers its 2nd straight contraction (49.8 v 49.5e); dealers ponder if stimulus measures beginning to work

- Saudi Arabia's King Adbullah dies; New Saudi King Salman to maintain policies of predecessor; Oil gives back its initial overnight gains

- Major Euro Zone PMI data come in mixed; little impact as markets react to ECB QE

- UK Dec retail sales beat expectations, aided by lower fuel prices

- Focus turns to the weekend Greek parliamentary elections to see if opposition, anti-austerity Syriza party can win outright

Economic data

- (SG) Singapore Dec CPI M/M: -0.2% v -0.2%e; Y/Y: -0.2% v -0.1%e; CPI Core Y/Y: 1.5% v 1.6%e

- (FR) France Jan Business Confidence (miss): 94 v 95e; Manufacturing Confidence: 99 v 99e

- (FR) France Jan Preliminary PMI data mixed; Manufacturing PMI (beat): 49.5 v 48.0e; Services PMI (miss): 49.5 v 50.8e

- (TW) Taiwan Dec Industrial Production (beat) Y/Y: 7.3% v 4.7%e

- (DE) Germany Jan Preliminary PMI data mixed; Manufacturing PMI (miss): 51.0 v 51.7e; Services PMI (beat): 52.7 v 52.5e

- (EU) Euro Zone Jan Preliminary Manufacturing PMI (inline): 51.0 v 51.0e; Services PMI (beats): 52.7 v 52.0e

- (UK) Dec Retail Sales Ex Auto (beats); M/M: +0.2% v -0.7%e; Y/Y: 4.2% v 3.4%e

- (UK) Dec Retail Sales (incl. Auto) (beats); M/M: +0.4% v -0.6%e; Y/Y: 4.3% v 3.0%e

Fixed Income:

- (IN) India sold total INR140B in 2020, 2028, 2033 and 2040

- (ZA) South Africa sold total ZAR800M in I/L 2025, 2046 and 2050 bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 +1.6%, FTSE 100 +0.4% at 6,823, DAX +1.4% at 10,589, CAC-40 +1.7% at 4,630, IBEX-35 +1.5% at 10,664, FTSE MIB +0.7% at 20,616, SMI +1.4% at 8,105, Athens Stock Exchange +5%, S&P 500 Futures flat at 2,058]

- Market Focal Points/Key Themes: Equity markets open higher amid ECB's QE announcement; Lower copper prices weigh on basic resource companies; Adidas confirms FY14 outlook; Telefonica confirms talks to sell O2 UK for approx. £9.3B; NY morning earnings (GE, Bank of New York, Honeywell, McDonalds); Greek elections over the weekend, Greek equities rise over 5%

By Sector

- Telecom [Telefonica TEF.ES +3% (talks to sell O2 UK) ]

- Basic Resources [Antofagasta ANTO.UK -3% (broker commentary)]

- Consumer Discretionary [Premier Foods PFD.UK +7% (reaffirmed forecast), Adidas ADS.DE +3% (reaffirmed outlook, to sell Rockport unit)]

- Industrials [Thales HO.FR -4% (profit warning)]

- Stoxx50 Sectors [Consumer Cyclical +2.4%, Consumer Non-Cyclical +2%, Telecom +1.9%, Financials +1.6%, Industrials +0.9%, Basic Materials +0.6% Technology +0.5%, Utilities +0.2%, Energy +0.1%]

**Speakers**

- ECB Survey of Professional Forecasters (SPF) Survey cut its 2015 and 2016 EU Harmonized CPI forecasts to 0.3% and 1.1% respectively

- ECB's Nowotny: Size of QE means it has advantages but risks were 'not insignificant'; risk sharing proposal was controversial but well resolved

- Finland PM Rinne called for investment to stimulate the Euro economy; ECB QE cannot be the only way to boost growth. Reiterated view that structural reforms remain the key in Europe

- Portugal Economy Min Lima: 2015 GDP growth could exceed the official 1.5% forecast

- Russia First Deputy PM Shuvalov: Need to prepare economy for hard landing. People see sanctions as an attack on Russia, not Putin

- Ukraine Rebel Leader Zakharchenko ruled out trying to arrange ceasefire agreement with Kiev, To advamce towards edge of Donersk region in Eastern Ukraine

- IEA Chief Economist Birol: stated that he did not expect Saudi oil policy to change following death of king and oil price change related to the news was 'temporary'

- New Saudi King Salman: To maintain policies of predecessor (as speculated) - national speech

Currencies

- USD maintains its firm tone; EUR/USD at fresh 11-year lows below the 1.1250 area. Following the ECB launch of QE, numerous analyst cut their EUR forecast for both 2015 and 2016. European core and peripheral bonds hit fresh record lows as well

- Focus turns to the weekend Greek parliamentary elections to see if anti-austerity party takes over

- Crude Oil initially spiked up almost 3% to near $47.80 after confirmed death of Saudi Arabia's King Adbullah despite the well-articulated succession plan. WTI gave back all of its gains after new Saudi King Salman stated that he would maintain the policies of predecessor

Political/In the Papers:

- (SA) Saudi Arabia's King Adbullah died; Crown Prince Salman becomes King of Saudi Arabia - State TV

- Yemen's parliament will hold an emergency meeting on Sunday after President Abdrabuh Mansur Hadi offered to resign over a deadly standoff with Shiite militia controlling the capital

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)

- 06:00 (BR) Brazil Jan IBGE Inflation IPCA-15 M/M: 0.9%e v 0.8% prior; Y/Y: 6.7%e v 6.5% prior

- 06:00 (EU) Weekly ECB 3-Year LTRO Repayment vs. €10.0Be

- 06:00 (UK) DMO to sell combined £3.5B in 1-month, 3-month and 6-month Bills

- 06:30 (SE) Sweden PM Loefven at Davos

- 06:30 (IN) India Weekly Forex Reserves

- 06:40 (UK) BOE regulator Gracie in London

- 06:45 (US) Daily Libor Fixing

- 07:00 (DE) German Fin Min Schaeuble at on panel Davos

- 07:30 (BR) Brazil Dec Current Account Balance: -$9.7Be v -$9.3B prior; Foreign Direct Investment (FDI): $6.8Be v $4.6B prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Dec Chicago Fed National Activity Index: 0.60e v 0.73 prior

- 08:30 (US) Weekly USDA Net Export Sales

- 08:30 (CA) Canada Dec CPI M/M: -0.6%e v -0.4% prior; Y/Y: 1.6%e v 2.0% prior; Consumer Price Index: No est v 125.4 prior

- 08:30 (CA) Canada Dec CPI Core M/M: -0.4%e v -0.2% prior; Y/Y: 2.2%e v 2.1% prior

- 08:30 (CA) Canada Dec CPI(Seasonally Adj) M/M: -0.3%e v -0.2% prior; CPICore (Seasonally Adj) M/M: 0.2%e v 0.0% prior

- 08:30 (CA) Canada Nov Retail Sales M/M: -0.2%e v 0.0% prior; Retail Sales Ex Auto M/M: 0.1%e v 0.2% prior

- 09:00 (BE) Belgium Jan Business Confidence: -6.2e v -6.9 prior

- 09:45 (US) Jan Preliminary Markit Manufacturing PMI: 54.0e v 53.9 prior

- 10:00 (US) Dec Existing Home Sales: 5.08Me v 4.93M prior

- 10:00 (US) Dec Leading Index: 0.4%e v 0.6% prior

- 10:00 (UK) BOE's Carney participates in Davos

- 14:00 (AR) Argentina Nov Economic Activity Index (Monthly GDP) M/M: No est v 0.8% prior; Y/Y: 0.1%e v 0.1% prior

- 15:00 (AR) Argentina Dec Industrial Production M/M: No est v -1.1% prior; Y/Y: -1.1%e v -2.1% prior

- (CO) Colombia Dec Industrial Confidence: No est v -4.1 prior; Retail Confidence: No est v 22.0 prior

- (PE) Peru Central Bank Q1 Inflation Report

Weekend:

- (GR) Greece Parliamentary elections