EU mid-market update: Recent AI led rally to be tested with NVDA earnings tonight; UK Public Finances misses ahead of Spring Budget in 2-weeks.

Notes/observations

- UK Public Finances for Jan registered less of a surplus than expected, casting doubt over whether UK has room to cut taxes in Spring budget, which Conservative party aims to, in bid to win votes ahead of election.

- China stocks showed some strength as China’s two main stock exchanges reportedly froze the accounts of a major quantitative hedge fund Ningbo Lingjun for three days after the money manager dumped CNY2.57B in stocks on Feb 19th.

- For EU earnings, HSBC tanked following investor focus on $3B impairment charge related to China's Bank of Communications investment. Miners Glencore and Rio Tinto also reported with weakness in HSBC and Glencore dragging down FTSE100.

- Overnight, Axios circulated the chatter saying some House Republicans have reportedly shifted from optimistically cautious to privately expecting US govt shutdown; Note: House is on vacation until Feb 28th while Mar 1st is the first deadline to avert US partial govt shutdown.

- Heavy attention on NVDA earnings after close tonight, with investor hopes on whether a beat and guidance can continue an AI fueled rally. Ahead of results, NVDA down >5% yesterday (including afterhours).

- Asia closed mixed with Hang Seng out-performing at +1.6%. EU indices are -0.9% to +0.9%. US futures are -0.2% to -0.5%. Gold +0.2%, DXY +0.1%; Commodity: Brent -0.2%, WTI -0.2%, TTF -1.9%; Crypto: BTC -1.4%, ETH -0.1%.

Asia

- Australia Q4 Wage Price Index Q/Q: 0.9% v 0.9%e; Y/Y: 4.2% v 4.1%e [annualized pace is a multi-year high).

- Australia Jan Westpac Leading Index M/M: -0.1% v 0.0% prior.

- South Korea Mar Business Manufacturing Survey: 75 v 71 prior.

- South Korea Jan PPI Y/Y: 1.3% v 1.2% prior.

- New Zealand Q4 PPI Input Q/Q: 0.9% v 1.2% prior; Output Q/Q: 0.7% v 0.8% prior.

- Japan Jan Trade Balance: -¥1.758T v -¥1.855Te; Exports Y/Y: 11.9% v 9.5%e; Imports Y/Y: -9.6% v -8.7%e.

- China’s two main stock exchanges said to have froze the accounts of a major quantitative hedge fund Ningbo Lingjun for three days after the money manager dumped CNY2.57B in stocks on Feb 19th.

Americas

- House Representatives said to have privately shifted from optimism to expecting a partial govt shutdown unless a budget or spending stopgap is passed by March 1st.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.22% at 490.80, FTSE -0.92% at 7,648.25, DAX +0.23% at 17,107.95, CAC-40 +0.25% at 7,814.64, IBEX-35 +0037% at 10,075.50, FTSE MIB +0.72% at 10,075.50, SMI -0.28% at 11,425.40, S&P 500 Futures -0.23%].

Market focal points/key themes: European indices open generally higher, with FTSE 100 notable laggard after key earnings reports; the indices traded generally sideways through the early part of the session; among sectors leading the way higher are consumer discretionary and industrial; while sectors unable to make it out of the red include financials and materials; banking subsector under pressure following results from HSBC; mining subsector weighed by results from Glencore; focus on release of Euro Zone consumer confidence and FOMC minutes later in the day; earnings expected in the upcoming US session include Nvidia, Analog Devices, Synopsys and Suncor.

Equities

- Consumer discretionary: Carrefour [CA.FR] +3.5% (earnings - post close).

- Energy: Siemens Energy [ENR.DE] +1.0% (CEO interview).

- Financials: HSBC Holdings [HSBA.UK] -7.0% (earnings; buyback), Monte Paschi [BMPS.IT] +2.0% (more press speculation that Italy may sell 10% stake).

- Healthcare: Bavarian Nordic [BAVA.DK] -7.5% (prelim FY23 results and FY24 guidance), Fresenius [FRE.DE] +3.5% (earnings).

- Materials: Glencore [GLEN.UK] -6.0% (earnings), Rio Tinto [RIO.UK] -1.5% (earnings; macro color).

Speakers

- UK Treasury Chief Sec Trott stated that would not speculate if tax cuts were affordable in budget.

- France PM Attal stated that was planning a new draft bill on food retail pricing by summer.

- Indonesia Central Bank Policy Statement noted that its decision to keep policy steady was in line with IDR currency stabilization and inflation policy. Would continue FX market intervention with triple intervention. Rate to be kept unchanged for some time but saw room to cut rates in H2 2024.

- Japan Cabinet Office (Govt) Feb Monthly Report cuts its overall economic assessment; Sees gradual economic recovery despite some sluggishness (1st time since Nov 2023). The prior Overall economic assessment was economy seen recovering at moderate pace.

Currencies/fixed income

- USD steady against the major pairs ahead of the Fed’s Jan Minutes due out later today. Price action thus far had been subdued with dealers citing a lack of major market-moving events.

- EUR/USD hovering around the 1.08 area with focus on Thursday’s major PMI data release.

- GBP/USD at 1.2610 area after UK 2023-24 borrowing data undershot OBR forecasts thus giving govt space for tax cuts ahead of looming elections.

- 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

- (UK) Jan Public Finances (PSNCR): -£23.3B v £12.9B prior; PSNB (ex-banking groups): -£17.6B v -£18.4Be; Net Borrowing: -£16.7B v -£18.5Be; Central Govt NCR: -£19.5B v £18.7B prior.

- (TR) Turkey Feb Consumer Confidence: 79.3 v 80.4 prior.

- (ID) Indonesia Central Bank (BI) left the BI Rate unchanged at 6.00% (as expected).

- (CH) Swiss Jan M3 Money Supply Y/Y: -2.0% v -2.0% prior.

- (ZA) South Africa Jan CPI M/M: 0.1% v 0.2%e; Y/Y: 5.3% v 5.4%e.

- (ZA) South Africa Jan CPI Core M/M: 0.3% v 0.2%e; Y/Y: 4.6% v 4.5%e.

- (PL) Poland Feb Consumer Confidence: -12.6 v -11.1e.

- (PL) Poland Jan Construction Output Y/Y: -6.1% v 5.5%e.

- (BE) Belgium Feb Consumer Confidence: -5 v -2 prior.

Fixed income issuance

- (LX) Luxembourg opens book to sell EUR-denominated 10-year bonds via syndicate; guidance seen at +20bps to mid-swaps.

- (IN) India sold total INR340B vs. INR340B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK2.79B in 2026 and 2033 DGB Bonds.

- (UK) DMO sold £4.0B in 4.5% Jun 2028 Gilts; Avg Yield: 4.095% v 3.946% prior; bid-to-cover: 3.34x v 2.86x prior; Tail: 0.4bps v 1.2bps prior.

- (SE) Sweden sold SEK7.5B vs. 7.5B indicated in 3-month Bills; Avg Yield: 3.9503% v 3.982% prior; Bid-to-cover: 4.87x v 3.51x prior.

Looking ahead

- (AR) Argentina Jan Leading Indicator: No est v -6.8% prior.

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

- 05:30 (DE) Germany to sell €4.5B in 2.2% Feb 2034 Bunds.

- 05:30 (GR) Greece Debt Agency (PDMA)to sell €625M in 6-month Bills.

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.25-1.5B in 6-month and 12-month Bills.

- 05:30 (PL) Poland to Sell 2026, 2029 and 2033 Bonds (4 tranches).

- 06:00 (UK) Feb CBI Industrial Trends Total Orders: -27e v -30 prior; Selling Prices: 11e v 9 prior.

- 06:00 (IE) Ireland Dec Property Prices M/M: No est v 0.8% prior; Y/Y: No est v 2.9% prior.

- 06:00 (EU) EU Commission to sell combined €2.0B in 3-month and 6-month bills.

- 06:00 (CZ) Czech Republic to sell variable Aug 2043 Bonds.

- 06:00 (RU) Russia OFZ Bonds.

- 07:00 (US) MBA Mortgage Applications w/e Feb 16th: No est v -2.3% prior.

- 07:00 (MX) Mexico Dec Retail Sales M/M: 0.1%e v 0.1% prior; Y/Y: 2.4%e v 2.7% prior.

- 07:00 (MX) Mexico Dec Gold Production: No est v 6.7K prior; Silver Production: No est v 312.0K prior; Copper Production: No est v 37.3K prior.

- 07:00 (ZA) South African finance minister to present annual budget.

- 07:00 (UK) Weekly PM Question time in House.

- 08:00 (US) Fed's Bostic.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (UK) BOE's Dhingra.

- 10:00 (EU) Euro Zone Feb Advance Consumer Confidence: -15.5e v -16.1 prior.

- 11:00 (RU) Russia Jan PPI M/M: No est v -3.1% prior; Y/Y: No est v 19.2% prior.

- 11:30 (US) Treasury to sell 2-Year FRN Reopening.

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

- 12:00 (CA) Canada to sell 10 Year Bonds.

- 13:00 (US) Treasury to sell 20-Year Bonds.

- 14:00 (US) FOMC Jan Minutes.

- 16:30 (US) Weekly API Oil Inventories.

- 16:45 (NZ) New Zealand Jan Trade Balance (NZD): No est v -0.3B prior; Exports: No est v 5.9B prior; Imports: No est v 6.3B prior.

- 17:00 (AU) Australia Feb Preliminary PMI Manufacturing: No est v 50.1 prior; PMI Services: No est v 49.1 prior; PMI Composite: No est v 49.0 prior.

- 18:00 (NL) Netherlands Jan House Price Index M/M: No est v 0.2% prior; Y/Y: No est v 1.6% prior.

- 19:30 (JP) Japan Feb Preliminary PMI Manufacturing: No est v 48 prior; PMI Services: No est v 53.1 prior; PMI Composite: No est v 51.5 prior.

- 20:00 (KR) Bank of Korea (BoK) Interest Rate Decision:Expected to leave 7-day Repo Rate unchanged at 3.50%.

- 20:00 (CN) China Jan Swift Global Payments (CNY): No est v 4.1% prior.

- 22:00 (ID) Indonesia Q4 Current Account: -$0.1Be v -$0.9B prior.

- 22:30 (JP) Japan to sell 3-Month Bills.

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