• Market Round Up: Yesterday, equity markets had a positive day, with the S&P up 0.62%, the Nasdaq +0.65% and Euro Stoxx 600 +0.58%. The market continues to be driven by investor optimism on AI and further Fed rate cuts. Metals and Mining stocks rose 3.6% driven by Gold and Copper prices. Semiconductor Materials and Equipment rose 4.7%, as the SOX Semi index rose 2.7%. Asian markets this morning are trading down with Tokyo -0.77%, China -0.3% and Hong Kong -1.0%. Ongoing Japan/China trade tensions and profit taking after a strong start to the year are impacting this morning. The Yen was slightly stronger against the US Dollar and JGB yields declined c. 1.5bps across the curve to the 10 years.
• Day Ahead and Market Drivers: Equities: The UK’s Composite and Services PMI final read was revised lower than expected for December, as was the US’s and Eurozone’s but to a lesser extent. This morning’s negative and weaker than expected German Retail Sales for November point to ongoing weak consumer spending, whilst looking ahead to today’s data, French consumer confidence and German unemployment data released later this morning will set the tone in Europe. In the US, Mortgage Applications, ADP Employment Change (+50K expected), ISM Services Index, and JOLTS job openings (7600K) will provide a view into the consumer side of the economy, which has had mixed signals recently.
• Stocks in focus: Smurfit Westrock (Overweight PT $52.80 31% upside) - We highlight new data that points to a bottoming of the container board and box market. ICG (Overweight PT €6.90 12.4% upside) - Upward revision of price target given continued revenue growth and positive outlook on future volume growth. Kingspan (Overweight PT €84.70 22.3% upside) - Update on cancellation of ADVNSYS IPO
• Bonds: Bond yields moved 3bps lower in Europe yesterday as CPI data from France and Germany came out below estimates and the ECB’s Villeroy pointed to lower inflation being good news for favourable rates. In the US, Fed members Miran and Barkin spoke. Miran continued to push for more than a full point cut in 2026, whilst Barkin awaits new clean data especially on labour situation but expects less uncertainty in 2026. It is a busy day ahead for bond issuers with the UK, and Germany issuing 5- and 10-year bonds, as well as Bill issuance from across a number of minor European markets. The key data point today in Europe for rates is the preliminary December Eurozone CPI (0.2% MoM expected).
• Commodities: After a steady start to the day, oil prices fell yesterday (WTI -2.04%) and have continued to decline this morning (-1.7%). This is likely driven by ongoing supply excess, with Venezuelan oil starting to flow into the US market, and ongoing movement towards a Ukrainian peace deal. After a couple of strong days, Gold is down 0.98% this morning. Copper (closed above $13k/mt for the 1st time) continued its strong run up on new tariff fears, which are leading to continued inventory build in US exchange warehouses.

Opportunities this week:

• Given what appears to be an increasingly confident view from management on fares for summer 2025, and a potential fuel-cost tailwind, we believe it appropriate to reiterate our BUY rating on Ryanair. BUY PT: €23.70.
• This morning Irish Continental Group issued a mixed set of FY24 results, with revenue growth of 5.6%, EBITDA was flat and 1% below limited consensus and adjusted diluted EPS was also flat, 3% below consensus. BUY PT: €6.20.
• Following the release of FY earnings in early February and last week’s Investor Day we continue to rate PayPal as a BUY. PT: $102