- Market Round Up: Global equities traded lower yesterday as investors paused after a recent rally in growth and momentum styles. The S&P500 fell 0.3%, the Nasdaq dropped 0.6% whilst the Eurostoxx 600 declined by 0.1%. Luxury consumer discretionary names lifted performance in Europe with Kering (+10.9%) and Ferrari (+10.2%) leading the way after both companies issued resilient outlooks in what has been a challenging market. In the US, Alphabet raised c.$32bn in debt funding in less than 24 hours, illustrating healthy investor demand as well as the enormous funding needs to support AI projects. US retail sales for the month of December came in weaker than expected at 0% (Est, 0.4%) as a bump in festive spending failed to materialise. The Federal Reserve’s Hammack also stated that rates could be on hold for “some time” unless the market showed new “material weakness”, further underscoring the importance of today’s jobs data. Asian equity markets have started on a positive note this morning, in particular in Japan with stocks up 1.9%. The jump has been fuelled by expectations that Takaichi’s election win will support increased fiscal spending and cuts to sales taxes. In Hong Kong, the market is up 0.2% whilst in China, equities are 0.2% lower.
- Day Ahead and Market Drivers: Equities: In relation to macro news today, all focus will be on the release of US Nonfarm Payroll data for the month of January (Est, 68k), and the subsequent unemployment rate (Est. unchanged at 4.4%). Other prints to look out for include US MBA Mortgage Applications for the week ended the 6th February. Looking at earnings today, from a coverage perspective we have FY25 results from TotalEnergies and Smurfit Westrock. In wider Europe we have results from Heineken, Simens Energy and Dassault Systems. In the US we have results from McDonalds, Cisco, Kraft Heinz and AppLovin, to name just a few.
- Stocks in focus: TotalEnergies: (Overweight PT €65, +4%) – Update post Q4 and FY25 results.
- Bonds: Global bond yields fell yesterday with the US 10-year dropping 6bps to 4.14% as weak retail sales data indicated a strain on consumer spending whilst the NFIB Small Business Optimism index also moved lower to 99.3 (Est. 99.8). The German 10-year fell by 3bps to 2.81%. It’s a soft day for bond auctions; however, Germany will issue €1.5bn 2.5%, 2054 bonds as well as €1bn 2.9% 2056 bonds. Central bank speakers today include the ECB’s Cipollone and Schnable whilst Fed speakers include Schmid, Bowman and Hammack.
- Commodities: Gold weakened slightly yesterday, falling 0.6% but has already reversed those losses this morning, gaining 0.7% as traders see the price stabilising around $5000. Typically, yesterday was a more volatile day for silver, dropping 3.2% before rebounding this morning, up 2.7% as yesterday’s US retail sales data supported the theory for further rate cuts. WTI fell by 0.3% to $63.96 p/b as traders await diplomatic talks between the US and Iran. Some traders see the price rising to as high as $75 p/b (+17%) should talks fail and result in US strikes on Iran.
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