US Presidents Day keeps volume light, leaders discuss Navalny and NATO

Notes/observations

- Quiet session for news as US Presidents Day holiday hinders global trading volume across most assets.

- UK banks to report earnings throughout rest of the week, including Barclays, Lloyds, HSBC and Standard Chartered.

- Geopolitically, focus is around potential repercussions from the death of Russian activist Navalny and western sanctions placed upon Russia. After Trump commented on NATO spending/participation and following the end of Munich Security Conf, several EU members have increased funding and signed major deals with European weapons manufacturers in a bid of self-reliance ahead of a potential Trump US election win and growing tensions with Russia.

- Asia closed mixed with Shanghai outperforming at +1.6%. EU indices are -0.4% to +0.4%. US futures are +0.1-0.2%. Gold +0.4%, DXY -0.1%; Commodity: Brent -0.9%, WTI -0.9%, TTF -2.2%; Crypto: BTC +0.5%, ETH +3.1%.

Asia

- China PBoC conducted CNY500M IN 1-year Medium-Term Lending Facility (MLF) with rate unchanged at 2.50% prior (as expected).

- China Q4 Preliminary Current Account: $55.2B v $62.6B prior.

- China domestic tourists Lunar New Year / Spring Festival holiday spending (CNY) 632.7B, +7.7% v 2019 pcp.

Global conflict/tensions

- Israel govt formally rejected the unilateral recognition of a Palestinian state; Israeli war cabinet member Gantz warned that unless Hamas freed all hostages held in Gaza by Mar 10th an offensive would be launched in Rafah.

- Russian military claims full control of Avdiivka after Ukraine withdraws its troops - press [**Note: Russia's biggest gain since it captured the city of Bakhmut in May 2023].

- US military conducted five self-defense strikes in Iranian-backed Houthi-controlled areas of Yemen.

Europe

- France Fin Min Le Maire cut the country’s 2024 GDP growth forecast from 1.4% to 1.0%.

- UK Feb Rightmove House Prices M/M: 0.9% v 1.3% prior; Y/Y: +0.1% v -0.7% prior (first positive Y/Y pace since Aug 2023).

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.20% at 490.60, FTSE +0.10% at 7,719.67, DAX -0.27% at 17,071.51, CAC-40 -0.34% at 7,742.01, IBEX-35 +0.46% at 9,931.50, FTSE MIB -0.29% at 31,640.00, SMI +0.24% at 11,337.90, S&P 500 Futures +0.12%].

Market focal points/key themes: European indices open lower across the board and stayed under pressure through the early part of the session; analysts suggest profit taking after last week gains as catalyst for lower open; among sectors holding on to gains are telecom and health care; among sectors leading to the downside are technology and materials; AstraZeneca top performer supporting the health care sector after regulatory approvals; La Francaise launches tender offer for Kindred; JD.com confirms preliminary talks for potential offer for Curry’s after Elliott Advisors’ offer; US and Canada closed for holiday.

Equities

- Consumer discretionary: Currys [CURY.UK] +34.5% (confirms received offer at £0.62/shr by Elliott; JD evaluates offer).

- Financials: Santander [SAN.ES] +2.5% (buyback and dividend).

- Healthcare: AstraZeneca [AZN.UK] +4.0% (data on its top-selling cancer drug).

- Industrials: Rheinmetall [RHM.DE] +2.5% (new ammunition plant in Ukraine; various EU countries pledges on defense spending), Forvia [EO.FR] +4.5% (FY23 results, initial FY24 guidance, affirmed FY27 targets).

- Materials: Icade [ICAD.FR] +2.5% (earnings; new strategy).

- Technology: Moneysupermarket.com [MONY.UK] -2.0% (earnings).

Speakers

- UK Ofgem Energy Price Cap said to drop ~15% from £1,928 to £1,635, effective from Apr 1st for 3 months, due to mild winter and high gas storage levels.

- China Foreign Min Wang Yi stated that FBI warning of Chinese malware threats was irresponsible.

- China Bank Regulator reportedly vowed to adopt policies to boost confidence.

Currencies/fixed income

- USD was steady in quiet trading on Monday. Greenback has advanced over the past month after various data released forced market participant to dial down the number of interest rate cuts they expect from the Fed this year from approx. 145bps to under 100bps currently. Market focus now on Wed’s release of FOMC minutes.

- EUR/USD at 1.0770 area with focus on the upcoming EU PMI readings on Thursday.

- USD/JPY hovering around the 150 area as market participant debate the potential exit of BOJ from negative rates.

Economic data

- (FI) Finland Jan CPI M/M: 0.3% v 0.3% prior; Y/Y: 3.3% v 3.6% prior.

- (SE) Sweden Jan CPI M/M: -0.1% v -0.4%e; Y/Y: 5.4% v 5.0%e.

- (SE) Sweden Jan CPIF M/M: -0.3% v -0.6%e; Y/Y: 3.3% v 3.1%e.

- (SE) Sweden Jan CPIF (ex-energy) M/M: -0.5% v -0.5%e; Y/Y: 4.4% v 4.4%e; CPI Level: 412.74 v 411.85e.

- (CH) Swiss weekly Total Sight Deposits (CHF): 477.1B v 482.3B prior; Domestic Sight Deposits: 468.6B v 473.8B prior.

Fixed income issuance

- None seen.

Looking ahead

- (ES) Spain Dec Trade Balance: No est v -€2.4B prior.

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

- 05:30 ((DE) Germany to sell €3.0B in 12-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month Bills.

- 05:30 (TR) Turkey to sell Bonds.

- 06:00 (IL) Israel Q4 Advance GDP (1st of 3 readings): -10.5%e v +2.7% prior.

- 06:00 (IL) Israel Jan Unemployment Rate: No est v 3.1% prior.

- 06:00 (PT) Portugal Jan PPI M/M: No est v -0.2% prior; Y/Y: No est v -4.4% prior.

- 06:00 (BE) Belgium Debt Agency (BDA) cancels Auction of Bonds on Feb. 19.

- 06:00 (RO) Romania to sell RON500M in 7.20% May 2027 bonds.

- 06:00 (IL) Israel to sell combined ILS3.65B in 2028, 2029, 2030, 2031, 2035, 2037 and 2052 bonds.

- 06:30 (CL) Chile Central Bank Traders Survey.

- 07:00 (BR) Brazil Dec Economic Activity Index (Monthly GDP) M/M: 0.8%e v 0.0% prior; Y/Y: 0.5%e v 2.2% prior.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

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

- 08:30 (CA) Canada Jan Industrial Product Price M/M: -0.2%e v -1.5% prior; Raw Materials Price Index M/M: +0.6%e v -4.9% prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.7-7.3B in 3-month, 6-month and 12-month bills (4 tranches).

- 09:00 (US) Mid Feb Manheim wholesale used vehicle Index at ###, -% m/m, -% y/y.

- 16:00 (KR) South Korea Feb Consumer Confidence: No est v 101.6 prior.

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 82.6 prior.

- 19:30 (AU) Reserve Bank of Australia (RBA) Jan Minutes.

- 20:15 (CN) China PBOC Monthly Loan Prime Rate (LPR) Setting: Expected to leave 1-year unchanged at 3.45% while cutting the 5-year rate by 10bps to 4.10%.

- 21:30 (KR) South Korea to sell KRW800B in 20-Year Bonds.

- 22:00 (TH) Thailand Central Bank to sell THB60B in 3-month bill.

- 22:35 (JP) Japan to sell 20-Year JGB Bonds.

- 23:00 (MY) Malaysia Jan Trade Balance (MYR): 13.9Be v 11.8B prior; Exports Y/Y: +2.9%e v -10.0% prior; Imports Y/Y: 7.6%e v 2.9% prior.

- 23:30 (TW) Taiwan to sell NT$35B in 10-Year Bonds.