- Market Round Up: Equity market generally had a poor day yesterday with the S&P500 down 1.6%, and the Nasdaq down 2.0%, with IT the weakest sector, whilst in Europe the Stoxx 600 performed better at -0.49%. In Europe, Schroders jumped 29% as Nuveen confirmed that it was buying the asset manager. In Luxury, EsillorLuxottica +4.2% and Hermes +2.55% performed well as Meta glasses and Birkin bags drove sales, whilst on the FinTech side Adyen fell 22% on disappointing guidance. CRH was weak (-4.9%) on news that the German chancellor said the EU should be open to weakening its carbon market, thus reducing the value of the cement industry’s carbon mitigation strategies. On the macro side, initial jobless claims declined 5K to 227K but was 4K higher than expected, whilst continuing claims ticked higher both on a month-on-month basis in January and versus expectations. Existing homes sales reversed to a -8.4% MoM decline in January, worse than expected, but likely weather impacted. Nevertheless, the level remains well below 10-year previous lows. Overnight in the US DraftKings was down 15% on weak headline guidance for Revenue and EBITDA, as well as tepid player numbers in the quarter. Its conference call is at 1.30pm today so the thinking behind the guide will be clearer then. Flutter reacted negatively to the news down a further 6% overnight. Other US overnight movers included Applied Materials and Arista Networks, which in contrast to peer Cisco (-12.3%) rose over 10% in the aftermarket. Both tech companies reported strong sales guidance. Asian markets are trading weaker this morning, with Japan -1.6%, Hong Kong -1.7% and China down 1.3% following a string of positive days, taking its lead from the US tech weakness. The Yen is also weaker by 0.7 Yen to the Dollar this morning.
- Day Ahead and Market Drivers: Equities: Today the market will be focused on US Headline and Core CPI, which is expected to be lower than last month at +2.5% YoY and +0.3% MoM in January. We also get overall Eurozone Employment data and, in the US, we have Weekly and Hourly average earnings for January, providing further colour this week on the jobs market. On the earnings front we have NatWest, Safran, and Moderna reporting today. This is ahead of next week’s Kerry Group, CRH, Nestle, Rio Tinto and IRES full year reports
- Stocks in focus: L’Oreal (Neutral PT €410 +5% Upside) – Revised lower price target to €410, from €432 after FY25 results. FedEx (Overweight, PT $392, 6.2% upside) – PT increase following FedEx ex Freight investor day meeting
- Bonds: As noted, core CPI is the focus for today. bond prices were broadly higher yesterday, in spite of Wednesday’s strong jobs data and the market is driven by fragile risk sentiment. US yields fell 7bps yesterday on the 10-year. There are no auctions scheduled today. The ECB’s centrist De Guindos, and the BoE’s Pill will be speaking today.
- Commodities: This morning WTI oil price is relatively unchanged at -0.14% following -2.8% yesterday, as concerns about oil oversupply persist based on an International Energy Agency report, as well as optimism about US/Iran talks. Both gold and silver are up +1.1% and 2.7% respectively.
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