S&P 500 just shy of 5k, soft Chinese inflation; numerous earnings due - Newsquawk Europe Market Open

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Thursday, Feb 08, 2024 - 06:34 AM
  • APAC stocks were ultimately mixed after the fresh record levels on Wall St where the S&P 500 touched just shy of the 5k level
  • Participants also digested recent earnings releases and soft Chinese inflation data ahead of the Lunar New Year holiday
  • RBI kept the Repurchase Rate unchanged at 6.50%, as expected and maintained its stance of remaining focused on the withdrawal of accommodation
  • European equity futures indicate a slightly higher open with Euro Stoxx 50 future +0.2% after the cash market closed down 0.3% on Wednesday
  • DXY is steady around the 104 mark, JPY lags major peers, EUR/USD remains on a 1.07 handle
  • Looking ahead, highlights include US IJC, US Wholesale Inventory, Japanese M2 Money Supply, ECB Economic Bulletin, Banxico Policy Announcement, Comments from BoE’s Dhingra, Mann, ECB’s Elderson, Lane, Fed’s Barkin, RBA’s Bullock, Supply from US, Earnings from Kering, SocGen, L’Oreal, AstraZeneca, BAT, Maersk, Siemens, Take-Two, Philip Morris & ConocoPhillips.

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  • US stocks mostly continued on this year's advances with the S&P 500 and Nasdaq printing fresh record highs in which the former rose to within a whisker of the 5,000 level although futures breached the psychological level. The majority of sectors were green and heavyweight industries such as Tech, Consumer Discretionary and Communication Services all outperformed. Meanwhile, bonds were choppy and ultimately retreated from the peaks seen early in the US session on NYCB concerns which were later eased following a new executive announcement and liquidity update.
  • SPX +0.82% at 4,995, NDX +1.04% at 17,775, DJIA +0.40% at 38,677, RUT -0.17% at 1,950.
  • Click here for a detailed summary.


  • Fed's Barkin (voter) said the labour market is still tight and the challenge on inflation coming down is that it is not that broad with services and rent inflation staying more elevated. Barkin stated it makes sense to be patient on rate cuts and his forecast is uncertain as the forecast from eight weeks ago has been "confused" by recent data. Barkin also said inflation has been coming down nicely over the past seven months but is concerned the significant decline in goods prices might be a "head fake" and rebound in coming months, while he added if inflation continues on its downward path and starts to broaden out into many categories, that’s the type of signal he is looking for to start cutting rates, according to a MarketWatch interview.
  • Fed's Kugler (voter) said disinflation was rapid in H2 2023 and housing inflation has been persistent but is expected to come down, while she also commented that every meeting is live from here onwards.
  • Fed's Collins (non-voter) said economic risks have come into better balance and it is important for the Fed to be sure on its path to lower inflation, while she said the Fed does not need to go all the way back to 2% inflation to ease and that the jury is out when it comes to the neutral rate level.
  • NY Fed deputy SOMA chief Remache said the balance sheet reduction is going smoothly and is unlikely to return to the pre-pandemic size, while reserve levels remain above ample and it is possible Fed reverse repo will fall to zero, according to Reuters.
  • US CBO Budget and Economic Outlook forecasts Core PCE at 2.4% in 2024 and 2.3% in 2025, while it forecasts the unemployment rate at 4.4% in 2024 through to 2026 and real GDP at 1.5% in 2024 and 2.2% in 2025 and 2026.


  • APAC stocks were ultimately mixed after the fresh record levels on Wall St where the S&P 500 touched just shy of the 5k level, while participants digested recent earnings releases and Chinese inflation data ahead of the Lunar New Year holidays.
  • ASX 200 benefitted from strength in tech and property, while the utilities sector outperformed amid a surge in AGL Energy after it reported a four-fold increase in its core net and returned to a statutory profit for H1.
  • Nikkei 225 outperformed and approached closer to the 37,000 level as earnings drove price action and with SoftBank among the biggest gainers after shares in unit Arm Holdings surged by around 20% post-earnings.
  • Hang Seng and Shanghai Comp were mixed with the former dragged lower by weakness in tech after Alibaba shares slumped on disappointing earnings, while the mainland gained despite the soft inflation data with sentiment upbeat heading into the Lunar New Year holidays and after the PBoC injected liquidity. China also recently replaced CSRC Chairman Yi Huiman with Wu Qing who is nicknamed the “Broker Butcher” for his crackdown on traders.
  • Nifty eventually weakened in the aftermath of the RBI rate decision where the central bank maintained its rates as expected and although there was a change in the vote split with MPC external member Varma the lone dissenter favouring a 25bps cut, the language from Governor Das remained hawkish in which he stated that monetary policy must be disinflationary and the MPC is to remain resolute in bringing inflation down to 4%.
  • US equity futures took a breather after the prior day's advances with the Emini S&P sitting north of the 5k level.
  • European equity futures indicate a slightly higher open with Euro Stoxx 50 future +0.2% after the cash market closed down 0.3% on Wednesday.


  • DXY traded around the 104 mark amid the choppy yield environment and after the latest Fed speakers largely stuck to the script, although Kugler stated that every meeting is live from here onwards.
  • EUR/USD was little changed with price action predominantly contained within yesterday's tight parameters.
  • GBP/USD traded steadily at the 1.2600 handle where the 100dma (1.2655) and 200dma (1.2675) also reside.
  • USD/JPY rebounded from support at the 148.00 level with momentum helped by the latest BoJ rhetoric.
  • Antipodeans were choppy despite the mostly positive mood but with upside restricted after China's deflation worsened.
  • PBoC set USD/CNY mid-point at 7.1063 vs exp. 7.1911 (prev. 7.1049).
  • BoC Minutes noted they were 'particularly' concerned about persistent inflation and lowering rates 'prematurely' in the January policy-setting meeting, while the GC forecasts the risk of inflation being more persistent than expected, requiring rates to stay restrictive for longer.


  • 10-year UST futures were uneventful after yesterday's whipsawing amid supply and recent banking fears.
  • Bund futures remained subdued but with further downside stemmed after support held at the 134.00 level.
  • 10-year JGB futures recouped earlier losses and returned to flat territory with the rebound spurred by comments from BoJ Deputy Governor Uchida who said they won't aggressively hike rates and it is hard to imagine a path of continuous rate hikes.


  • Crude futures slightly extended on the prior day's gains owing to recent dollar weakness and geopolitical tensions.
  • Spot gold struggled for direction in the absence of any major pertinent catalyst and amid a lack of haven demand.
  • Copper futures nursed some of this week's losses after rebounding from a floor around USD 3.74/lb.


  • Bitcoin was rangebound and eked mild gains on a climb above the USD 44,500 level.


  • US President Biden is poised to limit Americans’ personal data going to China with the administration planning to issue an order as soon as next week, according to Bloomberg.
  • BoJ Deputy Governor Uchida said the BoJ won't aggressively hike rates even after ending negative rates and noted that Japan's real interest rate is in deeply negative territory and monetary conditions are very accommodative which is not expected to change in a big way. Furthermore, Uchida said uncertainty over the outlook remains high, but the likelihood of sustainably achieving our price target is gradually heightening and it is hard to imagine a path of continuous rate hikes.
  • RBI kept the Repurchase Rate unchanged at 6.50%, as expected, while it maintained its stance of remaining focused on the withdrawal of accommodation in which 5 out of 6 members voted in favour of the rate decision and policy stance, with MPC external member Varma the lone dissenter who voted for a 25bps cut and for a change in stance to neutral. RBI Governor Das stated that growth in India is accelerating and inflation is on a downward trajectory in India, while he added that transmission of policy rate hikes is still underway and monetary policy must be disinflationary. Furthermore, Governor Das said inflation needs to align at 4% on a durable basis and the MPC is to remain resolute in bringing inflation down to 4%, as well as noted that monetary policy has to remain vigilant and that the last mile of disinflation is always the most challenging.


  • Chinese CPI MM (Jan) 0.3% vs. Exp. 0.4% (Prev. 0.1%)
  • Chinese CPI YY (Jan) -0.8% vs. Exp. -0.5% (Prev. -0.3%)
  • Chinese PPI YY (Jan) -2.5% vs. Exp. -2.6% (Prev. -2.7%)



  • Israeli PM Netanyahu said war decisions will be made in the mini-ministerial council from now on and then referred to the war council, while he added that the war in Gaza will last for months, not years and they are on the way to a decisive victory to eliminate Hamas and return all abductees. Netanyahu also said the goals of the war in Gaza have not changed and there is no other solution except total victory with no alternative to Hamas’s military collapse which must be completed and is within reach. Furthermore, he said there should be mediated negotiations but based on the Hamas response, they are not there.
  • Israeli PM Netanyahu told US Secretary of State Blinken that he cannot end the war without eliminating Hamas in Rafah, according to Israeli Channel 12.
  • Israeli Defence Minister Gallant told US Secretary of State Blinken that Hamas’ negative response to the hostage deal proposal will push Israel to expand its ground operation in Gaza soon, according to Axios.
  • Senior Hamas official said Israeli PM Netanyahu's remarks on the ceasefire proposal show he intends to pursue the conflict in the region and Hamas is prepared to deal with all options.
  • US Secretary of State Blinken said there are clear non-starters in Hamas's response but added that the Hamas response creates space for an agreement to be reached.
  • A drone strike hit a vehicle belonging to Iraq's popular mobilisation forces in eastern Baghdad, while it was separately reported that a senior Kataib Hezbollah commander was killed in the drone strike on a vehicle in Baghdad, according to Al Jazeera.


  • UN report stated North Korea further developed its nuclear weapons last year and UN sanctions monitors are investigating 58 suspected North Korean cyberattacks since 2017 that earned USD 3bln to help fund WMD development, according to Reuters.
  • North Korea terminated inter-Korean economic cooperation law whereby the North Korean Supreme People's Assembly voted to scrap all agreements signed with South Korea on promoting economic cooperation.



  • UK RICS House Price Balance (Jan) -18 vs. Exp. -25 (Prev. -30, Rev. -29),