Macro light before US Nonfarm Payrolls

EU mid-market update: Wealth management stock selloff triggered by fears of AI takeover in tax advisory space; Macro light before US nonfarm payrolls.

Notes/observations

- European opened mixed and turned lower, extending a softer tone after Tuesday. With a quiet European macro slate (Italian production the only notable print), price action is being driven more by cross-asset moves and earnings than data.

- The giddy optimism sparked by the ISM Manufacturing’s 52.6 surge has mostly evaporated as the Citi Economic Surprise Index rolls over from its 53.3 peak and the Atlanta Fed’s GDPNow forecast is pruned from 5.4% to 3.7%. With yesterday's flat 0% retail print suggesting a consumer sputter, this morning's nonfarm payrolls - where estimates swing wildly from +135K to outright contraction - to determine whether the recent batch of weak retail and labor data signals a potential economic cooling.

- Tech sentiment remains fragile on renewed “AI disintermediation” concerns, with wealth management and brokerage platforms the latest group hit after new planning tools were announced; the selloff echoes last week’s software wobble following Anthropic product headlines. That said, the pressure looks more contained in Europe and Asia than in the US, with a developing view that markets may be over-discounting near-term disruption risk while earnings expectations and the medium-term European software outlook remain broadly supported. A related pocket of concern was UK price-comparison names, though some analysts argue regulation and market structure limit the scope for “cutting out the middleman.”

- Macro/rates and FX are largely a waiting game into delayed US labor data, after flat US retail sales reinforced easing expectations and kept the dollar on the back foot. In Europe, UK political-risk premia appear to have faded for now, leaving gilts steadier after last week’s spike; sterling remains sensitive to the balance between political noise and expectations for further Bank of England cuts.

- Ukraine President Zelenskiy is reportedly set to announce a high-stakes roadmap on Feb 24th for spring presidential elections and a national referendum on a potential peace deal, a maneuver intended to secure a democratic mandate for a settlement by June. This strategic pivot, expected on the invasion’s fourth anniversary, is heavily influenced by a White House eager to resolve the conflict before the American midterm elections, effectively forcing Kyiv to navigate a risky quest for electoral legitimacy under the shadow of ongoing war.

- European gas is higher, with attention on storage drawdowns and the potential for end-winter inventories to become uncomfortably low, which would raise reliance on LNG and reduce buffer capacity if bottlenecks emerge.

- Earnings were key micro driver. Siemens Energy beat on cash flow, raising questions over conservative guidance, while TotalEnergies delivered in line but slowed near-term buybacks while reiterating its 2026 framework. Heineken posted solid FY results but issued cautious FY26 guidance and a major cost-cut plan, and Ahold Delhaize beat Q4, hiked its dividend and guided mid-to-high-single-digit EPS growth despite a tough grocery backdrop. In software, Dassault Systèmes slumped on a soft quarter and weak guidance. In UK housing, Barratt Redrow dragged peers with weaker earnings and a dividend cut. Separately, Gerresheimer fell after delaying FY accounts, flagging a large non-cash impairment and initiating a US asset sale

- Siemens Energy is capitalizing on the digital age's insatiable thirst for power, navigating a market where extreme demand has pushed turbine delivery timelines out to 2030. Despite these historic bottlenecks, management confirms they have yet to see any data center cancellations. To bridge the gap between silicon demand and aging grids, the firm is expanding its American and European footprints to manage a gas turbine order book that already stretches toward the end of the decade. Though data centers provide the structural momentum, the sheer scale of the broader energy transition - typified by massive 60% surge in American orders.

- The F.A.A. has abruptly paralyzed aviation in West Texas by grounding all commercial, cargo, and private flights at El Paso International Airport for ten days, citing cryptic "special security reasons" in the unprecedented ten-day blackout, effective through February 20th.

- Asia closed higher with Nikkei225 outperforming +2.3%. EU indices -0.9% to +0.4%. US futures -0.3%. Gold +0.9%, DXY -0.3%; Commodity: Brent +1.3%, WTI +1.4%; Crypto: BTC -3.1%, ETH -3.5%.

Asia

- China Jan CPI Y/Y: 0.2% v 0.4%e; PPI Y/Y: -1.4% v -1.5%e.

- South Korea Jan Unemployment Rate: 3.0% v 3.0%e.

- South Korea Feb Exports 10 Days Y/Y: 44.4% v -2.3% prior; Imports 10 Days Y/Y: 21.1% v -4.5% prior.

- Australia Q4 Home Loans Value Q/Q: 7.9% v 4.8%e.

- South Korea Jan Total Bank Lending To Household (KRW): 1.173T v 1.174T prior.

- RBA Dep Gov Hauser stated that inflation was too high and could not let it persist.

Global conflict/tensions

- Ukraine said to have begun to plan Spring Presidential elections, alongside a referendum on any peace deal with Russia.

- Pres Trump stated he might send second carrier group to Middle East if Iran talks fail; Trump notes that this time talks were different; Expected second round of US-Iran talks to happen next week; "We could make a great deal with Iran".

Americas

- Treasury Sec Bessent: US-China relationship was stable, but competitive; The goal with China was not decoupling.

- Pres Trump said to direct Pentagon to buy coal in effort to revive the industry.

Trade

- China reportedly might consider probing wine from France and take countermeasures if France adopted its duty.

Energy

- Weekly API Crude Oil Inventories: +13.4M v -11.1M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.34% at 618.86, FTSE +0.18% at 10,372.93, DAX -0.43% at 24,877.66, CAC-40 -0.56% at 8,281.60, IBEX-35 -0.56% at 18,015.88, FTSE MIB -1.08% at 46,297.50, SMI -0.09% at 13,498.20, S&P 500 Futures +0.12%].

Market focal points/key themes: European indices opened generally higher but quickly lost momentum in the early part of the session; AI disruption seen weighing on risk appetite as software companies fall; outperforming sectors include materials and energy; among underperforming sectors are technology and industrials; tech sector weighed down after disappointing results from Dassault Systemes; oil & gas subsectors supported amid rising tensions with Iran and TotalEnergies earnings; focus on US NFP coming out later in the day; earnings expected in the upcoming US session include McDonald’s Kraft Heinz, Michelin and Essilor Luxottica.

Equities

- Consumer discretionary: Ahold Delhaize [AD.NL] +9.5% (earnings; guidance), Heineken [HEIA.NL] +3.5% (earnings; cut jobs).

- Energy: Siemens Energy [ENR.DE] +4.5% (earnings; conf call comments), TotalEnergies [TTE.FR] +2.0% (earnings).

- Financials: London Stock Exchange [LSEG.UK] +2.5% (Elliott said to build a significant stake), Commerzbank [CBK.DE] -5.5% (earnings).

- Industrials: Gerresheimer [GXI.DE] -28.0% (defers its 2025 annual and consolidated financial statements due to ongoing internal investigations into accounting practices).

- Technology: Dassault Systemes [DSY.FR] -19.0% (earnings; guidance; concerns about AI hitting software).

Speakers

- ECB’s Makhlouf (Ireland): Uncertainty reinforces ECB's meeting-by-meeting approach.

- ECB's Schnabel Op Ed: EU needed true single market to compete as one economy.

Currencies/fixed income

- USD remained on soft footing heading into the delayed release of Jan US Nonfarm Payroll data. Greenback continued to be on the defensive in the aftermath of poor retail sales data on Tues.

- USD/JPY around the 153 area as the Yen continued to strengthen following Takaichi’s LDP victory and the markets rethinking the narrative of just a week ago that a LDP victory would lead to fiscal erosion of Japan’s finances.

- EUR/USD at 1.1915 with focus on the key 1.20 resistance area. Dealers noted that some ECB members could signal the risk of
another interest-rate cut if the euro sustained moves above $1.20 on potentially weak upcoming US jobs data.

- 10-year German Bund yield last at 2.79%, France 10-year Oat at 3.39% and 10-year Gilt yield at 4.50% 10-year Treasury yield: 4.14%; 10-year JGB: 2.22%.

Economic data

- (NL) Netherlands Dec Trade Balance: 9.7B v €10.8B prior; Exports Y/Y: 7.1 v 5.0% prior; Imports Y/Y: 5.8% v 6.7% prior.

- (TR) Turkey Dec Retail Sales Y/Y: 16.3% v 14.9% prior.

- (IS) Iceland Jan International Reserves (ISK): 958B v 968B prior.

- (IT) Italy Dec Industrial Production M/M: -0.4% v -0.5%e ; Y/Y:3.2 % v 2.8%e; Industrial Production NSA Y/Y: 3.3% v 1.4% prior.

Fixed income issuance

- (IN) India sold total INR290B vs. INR290B indicated in 3-month, 6-month and 12-month bills.

- (FR) France Debt Agency (AFT) opened its book to sell EUR-denominated 30-year bonds via syndicate; guidance seen +6bps to May 2056 Oat.

- (SK) Slovakia Debt Agency (Ardal) opened its book to sell EUR-denominated 20-year bonds via syndicate; guidance seen +115bps to mid-swaps.

- (UK) DMO solds £300M in 4.25% Dec 2049 Gilts via Tender; Avg Yield: 5.256%; Bid-to-cover: 4.32x.

- (IT) Italy Debt Agency (Tesoro) sold €8.5B vs. €8.5B indicated in 12-month Bills; Avg Yield: 2.068% v 2.112% prior; Bid-to-cover: 1.43x v 1.45x prior.

- (SE) Sweden sold total SEK8.0B vs. SEK8.0B indicated in 2031 and 2071 Bonds.

- (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 2035 and 2039 bonds.

Looking ahead

- (CO) Colombia Jan Consumer Confidence: No est v 19.9 prior.

- 05:20 (IT) ECB’s Cipollone (Italy).

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell combined €2.5B in 2054 and 2056 Bunds.

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 2029 and 2036 OT bonds.

- 05:30 (PL) Poland to sell Bonds.

- 06:00 (PT) Portugal Jan Final CPI M/M: No est v -0.7% prelim; Y/Y: No est v 1.9% prelim.

- 06:00 (PT) Portugal Jan Final CPI EU Harmonized M/M: No est v -1.1% prelim; Y/Y: No est v 1.9% prelim.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 06:00 (CZ) Czech Republic to sell combined CZK11.0B in 2029, 2034 and 2036 bonds.

- 06:30 (CL) Chile Central Bank (BCCh) Minutes.

- 07:00 (US) MBA Mortgage Applications w/e Feb 6th: No est v -8.9% prior.

- 07:00 (MX) Mexico Dec Industrial Production M/M: -0.2%e v +0.6% prior; Y/Y: +1.8%e v -0.8% prior; Manufacturing Production Y/Y: +1.9%e v -2.2% prior.

- 08:00 (HU) Hungary Central Bank (MBN) Jan Minutes.

- 08:00 (RU) Russia Dec Trade Balance: No est v $6.8B prior; Exports: No est v $32.9B prior; Imports: No est v $26.1B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Jan Change in Nonfarm Payrolls: +65Ke v +50K prior; Private Payrolls: +68Ke v +37K prior; Manufacturing Payrolls: -7Ke v -8K prior.

- 08:30 (US) Jan Unemployment Rate: 4.4%e v 4.4% prior; Underemployment Rate: No est v 8.4% prior; Labor Force Participation Rate: 62.4%e v 62.4% prior.

- 08:30 (US) Jan Average Hourly Earnings M/M: 0.3%e v 0.3% prior; Y/Y: 3.7%e v 3.8% prior; Average Weekly Hours All Employees: 34.2e v 34.2 prior.

- 08:30 (CA) Canada Dec Building Permits M/M: +5.0%e v -13.1% prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:00 (RU) Russia Dec Unemployment Rate: No est v 2.1% prior; Nov Real Wages Y/Y: No est v 6.1% prior.

- 11:00 (RU) Russia Dec Real Retail Sales Y/Y: No est v 3.3% prior.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:00 (DE) ECB’s Schnabel (Germany).

- 12:00 (CA) Canada to sell 2 Year Bonds.

- 13:00 (US) Treasury to sell 10-Year Notes.

- 13:30 (CA) Bank of Canada (BOC) Summary of Deliberations.

- 14:00 (US) Jan Federal Budget Balance: -$94.4Be v -$144.7B prior.

- 16:00 (NZ) New Zealand Government 6-Month Financial Statements.

- 17:00 (AU) RBA members testify in Parliament.

- 18:50 (JP) Japan Jan PPI (domestic CGPI) M/M: 0.2%e v 0.1% prior; Y/Y: 2.3%e v 2.4% prior.

- 19:00 (AU) Australia Feb Consumer Inflation Expectations: No est v 4.6% prior.

- 19:01 (UK) Jan RICS House Price Balance: -11e v -14.0% prior.

- 21:00 (JP) Japan Jan Tokyo Avg Office Vacancies: No est v 2.2% prior.

- 23:00 (SG) Singapore to sell 6-month Bills.

- 23:00 (TH) Thailand Jan Consumer Confidence: No est v 51.9 prior; Economic Confidence: No est v 45.5 prior.

- 23:45 (AU) RBA’s Hunter.