Top officials in China continue to express concerns about the performance of the stock market, with a focus on earnings. Here are some key observations:

  • Yields in Europe are generally higher as expectations for rate cuts from late 2023 unwind. UK Gilts yields notably rise after BoE Chief Economist Pill states hesitancy in cutting rates due to inflation concerns, coupled with better-than-expected BRC LFL sales for January.
  • Chinese stocks experience significant tailwinds, with the Shanghai Composite up by 3.2%. This follows multiple government announcements regarding support for the stock market, including actions such as the China Sovereign Wealth Fund increasing ETF holdings and the CSRC backing firms increasing buybacks. Additionally, President Xi is expected to meet with financial regulators to discuss market conditions.
  • In European earnings news, Infineon reports weak Q1 performance, particularly outside the auto sector, with Q2 guidance below estimates and a cut in FY24 guidance. Conversely, BP sees a rise in its share price after reporting accelerating share buyback plans and higher Q1 production guidance. UBS faces stock declines after missing top and bottom-line expectations and announces cost reduction targets and a resumption of share buybacks in the second half of the year.
  • In upcoming US premarket earnings, companies such as AGCO, CMI, FI, HTZ, LIN, and LLY are anticipated to report.
  • Across Asia, markets close mixed with Shanghai outperforming at +3.2%. European indices open mostly higher, with improved sentiment following Germany’s strong factory orders data. Notable sectors driving gains include energy and consumer discretionary, while lagging sectors include utilities and telecom.
  • Currency-wise, the US dollar sees slight firmness overnight, with the Euro weakening after Germany’s Factory Orders miss. GBP/USD is last seen at 1.254, EUR/USD at 1.073, and USD/JPY at 148.66.
  • Economic data releases include a variety of figures from different countries, such as Brazil’s vehicle sales, Germany’s factory orders, and Italy’s consumer confidence data.
  • Looking ahead, upcoming events include debt auctions, economic data releases, and speeches from central bank officials.

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