Bulls given greenlight after NVDA blowout in a backdrop of a Fed ready to ease

Notes/observations

- Nikkei225 hits all-time high (surpassing previous high in 1989) as global risk appetite catapulted higher after Nvidia Q4 earnings beat consensus with Q1 guidance above analysts’ estimates, despite high expectations. Several other equity indices hit all-time highs, including Euro Stoxx 600.

- European flash PMI’s saw a beat across the board in France, with only beats in services for Germany, UK and Eurozone. Major miss in German manufacturing PMI (below all analyst estimates).

- Busy corporate session for EU earnings saw Anglo American, Repsol, Danone, Iberdrola, Lloyds, Hays, Rolls-Royce, WPP, Engie, Nestle, Jupiter and Telefonica report results.

- Upcoming US Premarket Earnings: D, ETR, GCI, HOV, KOF, NEM, NICE, PCG, TECK.

- Asia closed higher with Nikkei225 outperforming at +2.1% (record high). EU indices are 0.0% to +1.1%. US futures are +0.3-2.0%. Gold +0.2%, DXY -0.3%; Commodity: Brent +0.5%, WTI +0.6%, TTF -0.4%; Crypto: BTC +1.6%, ETH +4.1%.

Asia

- Australia Feb Preliminary PMI Manufacturing moved back into contraction (47.7 v 50.1 prior).

- Japan Feb Preliminary PMI Manufacturing registered its 9th month of contraction and lowest since Aug 2020 (47.2 v 48.0 prior).

- Bank of Korea (BoK) left the 7-day Repo Rate unchanged at 3.50% (as expected) for its 9th straight pause in the current tightening cycle. Statement stressed that would maintain restrictive policy stance for sufficiently long period of time.

- Bank of Korea (BoK) Gov Rhee post rate decision press conference noted that decision to keep policy steady was unanimous; to maintain restrictive policy for sufficiently long period. Rate cut not likely during H1, 2024.

- BOJ Gov Ueda testified that country was experiencing inflation; BOJ looked at price trends for policy decisions. Reiterated stance that vital for FX to reflect economic fundamentals.

- Japan Fin Min Suzuki testified that govt would not take action just based on specific FX levels; difficult to identify factors behind Forex moves.

- RBNZ Q1 survey shows household two-year inflation expectation 3.2% v 3.0% prior.

Taiwan

- Taiwan President Tsai stated that country continue to engage with the world. Thanked the US govt for continuing to help Taiwan strengthen its defenses (**Reminder: US House China Panel Chair Gallagher (R-WI) is visiting Taiwan with a delegation of four other lawmakers).

Americas

- FOMC Jan Minutes noted that some officials saw risk inflation progress could stall; Most participants noted the risks of moving too quickly to ease the stance of policy, Judged policy rate likely at peak for the cycle.

- Fed’s Bowman (voter, hawk) commented that the time for lower rates was certainty not now. Current economic environment did not warrant the Fed cutting interest rates.

Energy

- Weekly API Crude Oil Inventories: +7.2M v +8.5M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.54% at 493.70, FTSE -0.01% at 7,661.48, DAX +1.05% at 17,298.55, CAC-40 +0.69% at 7,866.07, IBEX-35 +0.40% at 10,147.50, FTSE MIB +0.80% at 32,276.00, SMI -0.24% at 11,401.00, S&P 500 Futures +1.11%].

Market Focal Points/Key Themes: European indices open higher across the board and stayed upbeat through the early part of the session; all sectors start the day in the green; among sectors leading to the upside are technology and industrials; among lagging sectors are telecom and financials; tech stocks seen riding the Nvidia boost; Delivery Hero terminates sale of its foodpanda unit; Marlowe divests certain assets; reportedly Iberdrola looking to sell its stake in German offshore wind farm; focus on release of ECB minutes later in the session; earnings expected in the upcoming US session include Intuit, PG&E, Gannet and Hochtief.

Equities

- Consumer discretionary: Delivery Hero [DHER.DE] -7.5% (terminates negotiations of a potential sale of its foodpanda business).

- Consumer staples: Nestle [NESN.CH] -4.0% (earnings; outlook; raised dividend).

- Energy: Engie [ENGI.FR] +2.5% (earnings), Repsol [REP.ES] +5.5% (earnings).

- Financials: Axa [AXA.DE] +3.5% (earnings), Lloyds [LLOY.UK] -1.5% (earnings; provision).

- Healthcare: Indivior [INDV.UK] +18.5% (earnings).

- Industrials: Mercedes Benz Group [MBG.DE] +4.5% (earnings; buyback), Rolls-Royce [RR.UK] +6.5% (earnings).

- Technology: ASML [ASML.NL] +4.0%, Infineon [IFX.DE] +4.0%, Be Semi [BESI.NL] +16.5% (NVDA and Be Semi earnings).

- Materials: Anglo American [AAL.UK] +3.0% (earnings; acquisition).

-Telecom: Telefonica [TEF.ES] +1.0% (earnings).

-Utilities: Iberdrola [IBE.ES] -1.0% (earnings).

Speakers

- BOE’s Greene: Wage growth is heading in the right direction while services inflation was generally beginning to ease but both remain too high. Needed to see more evidence that UK inflation is becoming less entrenched before any rate cut.

- German Econ Min Habeck noted that the prospects for rate cuts had become more realistic.

- Sweden National Debt Office Borrowing Forecasts noted that it saw deficit and growing debt ahead.

- Norway Central Bank (Norges) Q1 Household Expectations Survey lowered its 12-month ahead inflation from 3.3% to 2.7% and also lowered the 24-month ahead inflation from 4.2% to 4.0%.
Japan PM Kishida commented on record Nikkei225 record close and stated he was encouraged by investor's positive assessment. Wanted to accelerate efforts to escape deflation. Noted that recent price rise was caused by external factors. Reiterated that needed wage increases that do not fall short of price rises.

Currencies/fixed income

- USD was slightly softer in the session. Wed FOMC Minutes reinforced the view that many members were unclear about when the rate cuts that the market had already priced in might begin to occur.

- EUR/USD initially moved higher during the session as better-than-expected French PMI data data provided market participants with better insight on timing ECB rate cuts. Markets reduced its bets on total ECB 2024 rate cuts to under 100bps. German PMI reading was not as buoyant.

- GBP/USD was higher at 1.27 level after BOE member Greene hinted that she was not yet ready to back rate cuts as she sought more signs of persistent pressures easing.

- USD/JPY holding around the 150 level. Dealers noted that persistently weak Japanese economic data suggested BOJ could keep policy ultra-easy well beyond the April policy tweak expected by a number of market watchers.

Economic data

- (MY) Malaysia mid-Feb Foreign Reserves: $115.4B v $114.8B prior.

- (HU) Hungary Dec Average Gross Wages Y/Y: 16.0% v 13.8%e.

- (FR) France Feb Business Confidence: 98 v 99e; Manufacturing Confidence: 100 v 99e; Own-Company Production Outlook: 5 v 7 prior; Production Outlook Indicator: -8 v -7 prior.

- (ES) Spain Dec House Transactions Y/Y: -15.6% v -15.1% prior.

- (ES) Spain Dec Total Mortgage Lending Y/Y: -14.3% v -15.8% prior; Mortgage Approvals Y/Y: -17.0% v -19.1% prior.

- (AT) Austria Jan Final CPI M/M: -0.2% v -0.2% prelim; Y/Y: 4.5% v 4.5% prelim.

- (RU) Russia Narrow Money Supply w/e Feb 16th (RUB): 18.09T v 18.02T prior.

- (FR) France Feb Preliminary Manufacturing PMI: 46.8 v 43.5e (14th month of contraction); Services PMI: 48.0 v 45.6e; Composite PMI: 47.7 v 45.0e.

- (DE) Germany Feb Preliminary Manufacturing PMI: 42.3 v 46.0e (20th month of contraction); Services PMI: 48.2 v 48.0e; Composite PMI: 46.1 v 47.5e.

- (HK) Hong Kong Jan CPI Composite Y/Y: 1.7% v 2.1%e.

- (EU) Euro Zone Feb Preliminary Manufacturing PMI: 46.1 v 47.0e (20th month of contraction); Services PMI: 50.0 v 48.8e; Composite PMI: 48.9 v 48,4e.

- (IT) Italy Jan Final CPI M/M: 0.3% v 0.3% prelim; Y/Y: 0.8% v 0.8% prelim.

- (IT) Italy Jan Final CPI EU Harmonized M/M: -1.1% v -1.1% prelim; Y/Y: 0.9% v 0.9% prelim; CPI Index (ex-tobacco): 119.3 v 118.9 prior.

- (IS) Iceland Jan Wage Index M/M:0.5 % v 0.2% prior; Y/Y: 7.0% v 6.7% prior.

- (PL) Poland Jan Real Retail Sales M/M: -19.5% v -20.6%e; Y/Y: 3.0% v 1.4%e; Retail Sales (current prices) Y/Y: 4.6% v 3.4%e.

- (UK) Feb Preliminary Manufacturing PMI: 47.1 v 47.5e (19th month of contraction); Services PMI: 54.3 v 54.1e; Composite PMI: 53.3 v 52.9e.

- (EU) Euro Zone Jan Final CPI Y/Y: 2.8% v 2.8% advance; CPI Core Y/Y: 3.3% v 3.3% advance; CPI M/M: -0.4% v -0.4% advance.

- (CY) Cyprus Jan CPI Harmonized M/M: -1.2% v -1.2% prior; Y/Y: 2.1% v 1.9% prior.

Fixed income issuance

- (SE) Sweden sold total SEK500M vs. SEK500M indicated in 2026 and 2030 I/L Bonds.

Looking ahead

- (NG) Nigeria Q4 GDP Y/Y: 2.4%e v 2.5% prior.

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

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-year, 5-year and 10-year bonds.

- 06:00 (IL) Israel Dec Manufacturing Production M/M: No est v 2.5% prior.

- 06:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave One-Week Repo Rate unchanged at 45.00%.

- 06:00 (IE) Ireland Jan PPI M/M: No est v -0.6% prior; Y/Y: No est v 2.1% prior.

- 06:00 (RO) Romania to sell RON200M in 7.9% Feb 2038 Bonds.

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 07:00 (MX) Mexico Q4 Final GDP Q/Q: 0.1%e v 0.1% prelim; Y/Y: 2.4%e v 2.4% prelim; Nominal GDP Y/Y: 7.8%e v 7.8% prior; 2023 GDP Y/Y: No est v 3.1% prelim.

- 07:00 (MX) Mexico Dec IGAE Economic Activity Index (Monthly GDP) M/M: -0.6%e v -0.5% prior; Y/Y: 0.7%e v 2.3% prior.

- 07:30 (EU) ECB Account of Jan Meeting (Minutes).

- 08:00 (PL) Poland Jan M3 Money Supply M/M: -0.2%e v 1.3% prior; Y/Y: 8.0%e v 8.5% prior.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Feb 16th: No est v $580.4B prior.

- 08:30 (US) Initial Jobless Claims: 216Ke v 212K prior; Continuing Claims: 1.89Me v 1.895M prior.

- 08:30 (US) Jan Chicago Fed National Activity Index: -0.22e v -0.15 prior.

- 08:30 (CA) Canada Dec Retail Sales M/M: +0.8%e v -0.2% prior; Retail Sales (ex-auto) M/M: +0.6%e v -0.5% prior.

- 08:30 (BR) Brazil Jan Tax Collections (BRL): 279.0B v 231.2B prior.

- 09:00 (BE) Belgium Feb Business Confidence: No est v -16.4 prior.

- 09:45 (US) Feb S&P Preliminary Manufacturing PMI: 50.5e v 50.7 prior; Services PMI: 52.4e v 52.5 prior; Composite PMI: 51.8e v 52.0 prior.

- 10:00 (US) Jan Existing Home Sales: 3.97Me v 3.78M prior.

- 10:00 (MX) Mexico Central Bank (Banxico) Feb Minutes.

- 10:00 (US) Fed’s Jefferson.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 13:00 (US) Fed’s Bowman.

- 13:00 (US) Treasury to sell 30-Year TIPS.

- 14:00 (AR) Argentina Dec Economic Activity Index (Monthly GDP) M/M: -2.0%e v -1.4% prior; Y/Y: -3.2%e v -0.9% prior.

- 14:00 (US) Fed’s Harker.

- 16:45 (NZ) New Zealand Q4 Retail Sales Q/Q: -0.2%e v 0.0% prior.

- 17:00 (US) Fed's Cook at conference.

- 17:00 (US) Fed's Kashkari on panel discussion on outlook.

- 19:01 (UK) Feb GfK Consumer Confidence: -18e v -19 prior.

- 19:35 (US) Fed’s Waller.

- 20:30 (CN) China Jan New Home Prices M/M: No est v -0.5% prior.

- 21:35 (CN) China MOF to sell 3-year and 10-year bonds.

- 21:35 (CN) China MOF to sell 3-month Bills.

- 22:00 (TH Thailand to sell THB30B in 6-month Bills.

- 22:30 (TH) Thailand Jan Customs Trade Balance: -$2.1Be v $1.0B prior; Exports Y/Y: 7.8%e v 4.7% prior; Imports Y/Y: -3.5%e v -3.1% prior.

- 22:30 (JP) Japan to sell 3-Month Bills; Avg Yield: % v -0.1157% prior; bid-to-cover: x v 2.70x prior.

- 23:00 (MY) Malaysia Jan CPI Y/Y: 1.6%e v 1.5% prior.