US stock-index futures dropped, reversing earlier gains before a barrage of economic data including jobless claims, housing starts and permits, and the Philly Fed as well as no less than four fed speakers, fading a two-day rally when investors welcomed buoyant US retail data and dismissed the risk of a hawkish response from the Federal Reserve trying to keep inflation in check.

S&P 500 futures traded near session lows, down 0.2% around 7.30am ET, while Nasdaq 100 futs drigted about 0.3% lower erasing an earlier gain. The tech-heavy Nasdaq 100 is up 16% this year and approaching a bull market as investors price in a growing likelihood of a soft landing for the economy. The Bloomberg Dollar Spot index retreated, lifting all Group-of-10 currencies. Treasuries advanced, mirroring gains in UK bond markets. Oil fell and gold edged higher, while Bitcoin climbed for a third day to approach $25,000 for the first time since August. 

Among premarket movers, Cisco Systems Inc. jumped 4% after the communications equipment company raised its full-year forecast, a bullish sign for spending on tech infrastructure. More than a dozen analysts raised their price targets on the stock, with several noting that the company’s ability to clear the order backlog built during the pandemic is helping it combat a slowdown in tech demand. Cryptocurrency-exposed stocks also rose in premarket trading as Bitcoin inches closer to the $25,000 level, extending gains for a third consecutive session. Riot Platforms +4.5%, Marathon Digital +3.4%. Shopify wasn't so lucky, and its shares tumbled as much as 9.7% in the premarket after the cloud-based commerce platform’s first-quarter revenue forecast was weaker than expected. Analysts said strong 4Q results were largely offset by the company’s “conservative” outlook. Here are the most notable premarket movers

• Roku shares rise as much as ~11% in premarket trading after the streaming-video platform reported fourth-quarter results that beat expectations and gave a revenue forecast that was ahead of consensus. Analysts were positive about the company’s move to check operating expenses and target to have Ebitda profitability in 2024.
• Seagen Inc. jumps as much as 7.5% in US premarket trading after the cancer-focused biotech posted a top- line beat for 4Q22 and 2023 guidance that fell in-line with estimates, prompting an upgrade at Raymond James and several other brokers to raise their price targets. Analysts note the positive outlook for the commercial expansion of the company’s cancer drugs, adding that while the biotech could start to turn a profit, management’s 2023 focus will be investing into the pipeline.
• RingCentral falls as much as ~13% in premarket trading on Thursday, after the software company forecast subscription revenue that was weaker than expected. Many analysts said the weak results should be offset by the company’s cost-cutting efforts.
• Shares in Emergent BioSolutions soar 16% in US premarket trading, after the life sciences company’s Narcan spray, used for treating opioid overdoses, got the nod from an FDA panel, which ruled the drug was safe for use without a doctor’s prescription.
• Twilio shares surge as much as ~15% in US premarket trading, set for their biggest gain in three months, after a forecast-beating profit outlook prompted analysts to raise their price targets on the software maker. While brokers said the macroeconomic backdrop could still hamper growth, they noted that Twilio’s focus on turning a profit showed it is prioritizing financial prudence. .

“A softer landing appears more likely given the strong consumer and the expectation that wages will keep heading up as labor markets remain tight,” said Louise Dudley, portfolio manager at Federated Hermes. “The positive retail sales numbers contribute to expectations that the US market can ride out the monetary tightening.”

“In light of the recent good US macro data, the market narrative is switching towards a ‘no-landing’ scenario where a recession could actually be avoided,” said Kevin Thozet, member of the investment committee at Carmignac Gestion in Paris.

“US long-term yields rising alongside risk assets suggest a recession isn’t expected in the second half of 2023,” he added.
At Swissquote, analyst Ipek Ozkardeskaya took a similar view. “The latest economic data clearly suggests that the US economy remains resilient to the interest rate hikes, and that soft landing is possible,” she said, adding that “the ‘Goldilocks’ scenario is reflected in US equity prices right now.”

European stocks rose for a fourth day, underpinned by positive corporate updates from Airbus SE, Standard Chartered Plc and Commerzbank AG. The Stoxx 600 rose 0.3 to its highest level in a year with media, telecoms and banks the best-performing sectors. Here are some of the most notable movers:

• Standard Chartered rises as much as 3.7% in early trading after announcing a buyback and higher returns guidance that offset an increase in impairments in the fourth quarter
• Pernod Ricard shares jump as much as 5% after the French spirits company’s first-half results comfortably beat the consensus and it announced a large stock buyback
• Orange shares rise as much as 5.5% after analysts said the telecom operator’s strategic direction and medium-term targets outlined by new CEO Christel Heydemann were reassuring
• Tenaris gains as much as 9.6%, the most intraday since July, after posting strong fourth-quarter results
• Centrica rises as much as 6.3% in early trading, with shares reaching their highest since May 2019, after the British Gas parent reported full-year operating profit that beat estimates
• Kerry shares rally as much as 5.1%, the most since Nov. 10, after the food company’s earnings, with Morgan Stanley highlighting a solid outlook against an uncertain macroeconomic backdrop
• Nestle shares fell as much as 1% after the food and beverage company reported full-year organic revenue growth that missed estimates
• Moneysupermarket shares fall as much as 9.6%, the most intraday since October, after the price comparison service’s revenue growth slowed in the fourth quarter and missed expectations
• Klepierre shares fall as much as 4.3%, the most since Jan. 10. The French mall landlord’s FY22 results are relatively solid yet analysts remain cautious on its outlook
• Heineken N.V. falls as much as 1.5% after Femsa’s board approved the sale of its stake in the brewer in the next 24 to 36 months after undertaking a strategic review
• Renault shares fall as much as 2.5% giving back initial gains, even after the French carmaker unveiled guidance for 2023 operating margin and free cash flow ahead of analyst expectations
• Sinch falls as much as 18%, the most since July, after the Swedish cloud communications firm reported fourth quarter results that missed estimates

Earlier in the session, equities advanced across Asia as traders awaited key US employment data, although initial gains in Chinese stocks evaporated on geopolitical worries. The MSCI Asia Pacific Index advanced as much as 1.4%, the most since Feb. 1. Samsung, Tencent and Alibaba were among the main contributors to the surge, also helping a rebound in the Hang Seng China Enterprises Index after it had fallen almost 10% from a January peak through Wednesday. Onshore Chinese shares closed lower as a joint communique between China and Iran on expanding cooperation acted as the negative trigger, coming weeks after the US said it would increase pressure on China to stop buying Iranian oil. The MSCI regional gauge is still down more than 3% from a Jan. 27 peak. In terms of the next near-term catalyst, traders expect to see an uptick in jobless claims in the US when the data is announced later Thursday, which could ease the pressure on the Federal Reserve for aggressive policy tightening. The bull-market run in Asian shares slipped this month as investors began to look for catalysts beyond China’s reopening with the jury still out on the pace of US interest rate hikes. Hong Kong benchmarks turned up again Thursday, however, as investors returned following the recent pullback. “I think the rebound is more likely driven by investors waiting on the sidelines looking for a good entry point into China tech,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Many have missed the sector’s rally from October, and the 10% decline in the past 3 weeks is a good opportunity.”

Japanese stocks rose, following US peers higher after strong economic data.  The Topix Index rose 0.7% to 2,001.09 as of market close Tokyo time, while the Nikkei advanced 0.7% to 27,696.44. Toyota Motor Corp. contributed the most to the Topix Index gain, increasing 2.1%. Out of 2,163 stocks in the index, 1,546 rose and 534 fell, while 83 were unchanged. US retail sales in January rose by the most in two years, with cars, furniture and restaurants gaining the most.  “Following the announcement of US retail sales, US stocks increased,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management. “It is favorable that consumer durables, which had been adjusted due to Covid special demands, was firm rather than in energy and food which were temporarily higher.” 

Australian stocks gained, with the S&P/ASX 200 index rising 0.8% to close at 7,410.30, after Australian unemployment unexpectedly jumped as the economy shed jobs for a second straight month.  The stock benchmark was boosted by gains in consumer discretionary and real estate stocks. In New Zealand, the S&P/NZX 50 index rose 0.6% to 12,157.75.

Indians stocks were mostly higher as investors sought cues from companies’ outlook for future earnings growth as the results season for the December quarter came to a close.  The S&P BSE Sensex was little changed at 61,319.51 in Mumbai, while the NSE Nifty 50 Index advanced 0.1%. Sixteen of BSE Ltd.’s 20 sector gauges advanced, led by realty and metal firms.  The Information technology gauge rose 1.3%, its third straight advance to the highest since Dec. 1 as most companies surprised analysts with a wider-than-expected expansion in profit and a robust outlook for clients’ spending on their services.  Tech Mahindra contributed the most to the Sensex’s gain, increasing 5.6%. Out of 30 shares in the Sensex index, 14 rose and 15 fell, while 1 was steady.

In FX, the Dollar Index is down 0.1% while the Australian dollar is the strongest among the G-10 currencies. The euro climbed 0.2% to 1.0709 and one- month implied volatility in the currency rose as the tenor now captures the next ECB decision; although the relative premium remains below parity, options may soon turn overpriced. Bunds edged up as traders pared back bets slightly for further interest-rate rises by the ECB. The pound rose 0.2% to $1.2054 after closing 1.2% lower on the day on Wednesday following cooler-than-anticipated inflation data and hotter-than-expected US retail sales. Gilts advanced for the second day, led by the shorter end of the curve, as markets priced in the possibility of less monetary tightening by the BOE. Improved risk sentiment helped the Australian dollar erase an earlier loss after the nation’s jobless rate unexpectedly climbed

In rates, Treasuries are mostly higher, led by front-end following late Wednesday pricing of Amgen’s $24b jumbo deal. 10-year TSY yields were around 3.785%, richer by ~2bp vs Wednesday’s close and outperforming bunds and gilts by ~2bp in the sector. US yields are richer by 4bp-5bp across front-end of the curve with long-end slightly cheaper on the day, extending Wednesday’s steepening move; 2s10s, 5s30s spreads wider by 3bp and 5bp. Recent steepener stop-outs have left curve positioning cleaner, setting stage for re-steepening of spreads.Gains accumulated during Asia session and London morning, led by short-maturity gilts. In Europe, front-end bonds outperform and in particular the UK where traders pared back bets on additional rate hikes by the Bank of England.  UK money markets trim BOE tightening premium by as much as 7bps, anticipating slowing inflation. The US has a $9b 30-year TIPS auction at 1pm

Crude futures decline with WTI down 0.4% to trade near $78.30. Spot gold is little changed near $1,838

Looking to the day ahead now, and data releases from the US include January’s PPI, housing starts and building permits, the weekly initial jobless claims, the February’s Philadelphia Fed business outlook. Otherwise from central banks, we’ll hear from the ECB’s Panetta, Nagel, Lane and Makhlouf, the Fed’s Mester, Bullard and Cook, BoE chief economist Pill and BoC Governor Macklem.Bitcoin is firmer on the session and at the top-end of parameters, though is yet to convincingly test the USD 25k mark to the upside.

Market Snapshot

• S&P 500 futures little changed at 4,160.00
• MXAP up 0.9% to 164.71
• MXAPJ up 0.8% to 537.38
• Nikkei up 0.7% to 27,696.44
• Topix up 0.7% to 2,001.09
• Hang Seng Index up 0.8% to 20,987.67
• Shanghai Composite down 1.0% to 3,249.03
• Sensex up 0.2% to 61,413.83
• Australia S&P/ASX 200 up 0.8% to 7,410.31
• Kospi up 2.0% to 2,475.48
• STOXX Europe 600 up 0.5% to 466.57
• German 10Y yield little changed at 2.46%
• Euro little changed at $1.0699
• Brent Futures little changed at $85.32/bbl
• Gold spot up 0.1% to $1,837.70
• U.S. Dollar Index down 0.19% to 103.72

Top Overnight News from Bloomberg

1. China warned the US that rising tensions may jeopardize talks as both nations seek to repair ties in the aftermath of the balloon saga. Antony Blinken and Wang Yi are heading to a security summit in Germany where they may meet on the sidelines. Adding to the friction, China will impose hefty fines on Lockheed Martin and Raytheon over arms sales to Taiwan. BBG
2. The Chinese Commerce Ministry said it blacklisted Lockheed Martin and an arm of Raytheon Technologies over the companies’ arms sales to Taiwan. Putting the companies on its “unreliable entities list” prohibits them from export and import activities related to China. WSJ
3. Ukraine says the worst is probably over in terms of Russia’s attacks on its energy infrastructure thanks to improved defenses and Moscow’s exhausted military capabilities. BBG
4. The ECB should start raising its interest rates in smaller increments and avoid committing to future moves as inflation in the euro zone falls, ECB board member Fabio Panetta said on Thursday.
5. Blackstone’s Jonathan Gray expects the US Federal Reserve will raise interest rates to 5.25% to 5.5% and will then hold there an extended period of time, despite emerging signs of slowing inflation. The Federal Reserve is likely to take rates up to that level “for a while,” the president of the world’s biggest alternative asset manager said at an event in Hong Kong. The market is “too optimistic” over the economy weakening, he said. BBG
6. Credit Suisse's Michael Klein, who'll run First Boston, told the unit's staff they'll be shareholders. He said the super boutique will be profitable and that should mean this year's ugly bonus round won't happen again. The bank is exiting distressed debt and special-situations trading. It also revealed it has paid $210 million to date in its long-running legal fight with Georgian tycoon Bidzina Ivanishvili. BBG
7. Chip trouble. ASML data stolen by a China-based ex-employee were from internal software used to store technical information about machinery, people familiar said. Further afield, a US official said Russia is still procuring foreign chips and tech through intermediaries including Iran and North Korea. BBG
8. The Pentagon is reviewing its weapons stockpiles and may need to boost military spending after seeing how quickly ammunition has been used during the war in Ukraine, the most senior US military official said. FT
9. KPMG becomes the first of the “Big 4” accounting firms to cut its headcount following a sharp slowdown in its consulting business (KPMG will trim its workforce by ~2%, or 700 people). FT
10. The S&P 500 risk premium is the lowest since 2007. Very low risk premiums can portend poor returns over the next few years...

A more detailed look at global markets courtesy of Newsquawk

APAC stocks gained as the region took impetus from the US where participants digested a slew of data releases including stronger-than-expected retail sales and better-than-feared NY Fed Manufacturing. ASX 200 was firmer after several key earnings releases although gains were capped by disappointing jobs data which showed a surprise contraction in Employment Change and a higher Unemployment Rate. Nikkei 225 was led by strength in auto manufacturers including Toyota which plans to boost output next month, while data releases were varied as machinery orders disappointed but trade data was mixed. Hang Seng and Shanghai Comp. conformed to the improved risk tone with tech front running the outperformance in Hong Kong and with the mainland also underpinned by China's support pledges.

Top Asian News

• China's NDRC said shortcomings and difficulties still exist in employment, education, medical care, childcare, elderly care, housing and ecological protection. NDRC added that it will boost the income of urban and rural residents, as well as improve the consumption capacity of low and middle-income residents. Furthermore, it will support improvement in spending on housing, NEVs and elderly care services, among other areas of consumption, according to Reuters.
• China's Industry Minister said China's industrial and information development is facing a more severe and complex external environment as the US escalates suppression of China's advanced manufacturing industry, according to Reuters.
• China's Politburo Standing Committee says the current COVID prevention situation in China is good overall, declares victory in COVID control.
• Japan's Banking Lobby Chief expects the BoJ to steer an exit from massive monetary easing at some point in the future, if it can forsee sustained and stable CPI and wage growth. Policy adj. could increase volatility in capital/financial markets., prior 1.38m

European bourses are firmer across the board, Euro Stoxx 50 +0.6%, in a continuation of APAC trade with fresh developments somewhat limited ex-earnings. Sectors are mostly in the green with Media outperforming post-RELX, Telecoms bolstered by Orange & Vodafone, Banking by Commerzbank and Standard Chartered; for reference, heavyweight Nestle is lower as its headline metrics missed slightly. Stateside, futures are little changed overall after ending Wednesday's session firmer after initial data-induced weakness, ES U/C, ahead of numerous Central Bank speakers. Sony (6758 JT) Chip unit head sees limited impact from chip export curbs to China by US, Japan, and the Netherlands, expects global smartphone demand to recover in H2 this year, inventory levels a concern.

Top European News

• ECB's Panetta says the ECB should not unconditionally pre-commit to future policy moves, the extent and duration of monetary policy restriction matters now that rates are in restrictive territory. Headline inflation could fall below 3% towards the end of the year. Core inflation cannot turn on a dime and will eventually follow headline inflation. Wages are an upside risk and accelerating wage growth raises the spectre of a wage-price spiral.
• EU Top Court Advocate General in the Polish FX Mortgage case says Banks may not demand remuneration for use of capital in contracts rendered invalid; the possibility of demanding remuneration from banks by consumers should be based on Polish law and decision is up to Polish courts.
• UK PM Sunak and EU's von der Leyen are to speak before the end of the week with the text of the Northern Ireland protocol deal to go before the DUP on Monday, according to The Times; the text will be presented to the DUP on Monday before the cabinet gets to view it on Tuesday. Government sources are confident the deal with satisfy unionist tests for backing a deal.

FX

• DXY has come under some modest pressure throughout the morning in what is more of a consolidation than any sustained bout of pressure, index to the lower-end of 103.52-103.89 session bounds.
• Amidst this, G10 peers are firmer across the board though again magnitudes are relatively slim with specific newsflow in-line with expectations and relatively incrementally.
• Though, this does come with the modest exception of GBP among G10s amid reports that the DUP could see the text of the N.Ireland Protocol deal on Monday, Cable at 1.2074 highs vs 1.2015 trough.
• Outside of G10s, the PLN has garnered interest after the ECJ opinion ruled in-favour of mortgage holders (i.e. against domestic banks), with EUR/PLN up to 4.7775 following the announcement.
• Elsewhere, peers are little changed/modestly firmer ex-USD, with the EUR and CAD await numerous Central Bank speakers.
• PBoC set USD/CNY mid-point at 6.8519 vs exp. 6.8524 (prev. 6.8183)

Commodities

• Crude benchmarks are softer/flat on the session and towards the lower-end of circa USD 1.50/bbl parameters with fresh developments somewhat limited for the complex.
• Gas markets diverge with US Henry Hub futures are firmer above USD 2.50/MMBtu whilst Dutch TTF sees losses but remains above EUR 50/MWh.
• Spot gold is essentially unchanged as participants await fresh catalysts while base metals are mixed overall and relatively rangebound themselves.

Fixed Income

• Gilts and Bunds have run out of recovery momentum and are now essentially unchanged as Bunds failed to breach the 135.12 Fib of Wednesday's action with specific developments limited.
• In the periphery, a hefty amount of supply from France, Spain and Italian 2053 syndication have been digested with limited impact thus far, though BTPs are a handful of ticks lower than their core peers.
• Stateside, USTs are in the green though they are currently beneath their overnight peak in 112.11+ to 111.29+ parameters ahead of numerous data points and Fed speakers.

Geopolitics

• Russian embassy to the US said the destruction of Nord Stream pipelines was an act of international terrorism and the US should prove it was not involved, according to Reuters.
• US Senate passed a resolution condemning China over the spy balloon, according to Bloomberg. It was also reported that US officials said the downed Chinese spy balloon was aimed at US bases in Guam and Hawaii but was blown off course, according to NYT.
• Turkish Foreign Minister says will discuss bilateral relations, Ukraine war, Swedish and Finnish NATO with US Secretary of State Blinken next week; Turkey could evaluate Finland and Sweden's NATO applications separately.

US Event Calendar

• 08:30: Jan. PPI Final Demand MoM, est. 0.4%, prior -0.5%, revised -0.4%
• PPI Final Demand YoY, est. 5.4%, prior 6.2%
• PPI Ex Food and Energy MoM, est. 0.3%, prior 0.1%
• PPI Ex Food and Energy YoY, est. 4.9%, prior 5.5%
• 08:30: Feb. Initial Jobless Claims, est. 200,000, prior 196,000
• Continuing Claims, est. 1.7m, prior 1.69m
• 08:30: Jan. Housing Starts, est. 1.36m, prior 1.38m
  • Housing Starts MoM, est. -1.9%, prior -1.4%
  • Building Permits, est. 1.35m, prior 1.33m, revised 1.34m
  • Building Permits MoM, est. 1.0%, prior -1.6%, revised -1.0%
• 08:30: Feb. Philadelphia Fed Business Outl, est. -7.5, prior -8.9
• 08:30: Feb. New York Fed Services Business, est. -17.0, prior -21.4

Central bank speakers

• 08:45: Fed’s Mester Speaks at Global Interdependence Center Event
• 13:30: Fed’s Bullard Discusses the Economy and Monetary Policy
• 16:00: Fed’s Cook Gives Welcoming Remarks at Sadie Collective
• 18:15: Fed’s Mester Discusses the Economic Outlook

DB's Jim Reid concludes the overnight wrap

So is good news, good news or bad news? Is bad news, bad news or good news? Are rising rates and yields a sign of normality or looming trouble again? Is US inflation hitting a glitch in its disinflationary journey? Is a soft, hard or no landing more likely now after what we've seen so far this year? Also are the seasonals causing havoc with the data? December's US data was particularly weak and January's particular strong.

These are the trillion dollar questions at the moment. At face value there is indeed growing evidence about the strength of the US economy, with the latest round of data releases still showing a very robust picture at the start of the year. This has helped to cement the market narrative of the last couple of weeks, which has seen investors reassess how high the Fed will need to raise rates in order to get a grip on inflation. Indeed only yesterday, 10yr Treasury yields rose a further +5.5bps, taking them up to their highest closing level of 2023 so far at 3.8%.

In terms of those different releases, first we had US retail sales for January, which posted its fastest monthly growth in nearly two years at +3.0% (vs. +2.0% expected). The components of the release also showed it to be a very broad-based gain, with not one of the major categories seeing a decline over the month either. Second, we had the New York Fed’s latest Empire State manufacturing survey, which surprised to the upside at -5.8 in February (vs. -18.0 expected). And interestingly, both the “prices paid” and “prices received” components rose on the month, so again a sign that inflationary pressures remain strong. Finally, we had the NAHB’s housing market index for February, which rebounded to 42 (vs. 37 expected), which marked the biggest monthly increase since July 2020. That’s coincided with a decline in mortgage rates since their peak in late-October/early November, and suggests that the Fed could need to tighten financial conditions even more if they want to get inflation under control.

When it comes to financial conditions, what’s striking is how accommodative they’ve remained over the last couple of weeks, even as estimates of the Fed’s terminal rate have risen to new highs. For instance, yesterday saw Bloomberg’s index of US financial conditions close at the loosest level in a year. In addition, they remain easier now than when the Fed began its hiking cycle in March, despite 450bps worth of hikes in that time. So for now at least, the economy has remained incredibly resilient in the face of the most rapid tightening cycle in a generation. A reminder here of DB's Matt Luzzetti's new 5.6% terminal call from Tuesday night which is probably the most aggressive on the Street as we have been for most of the last year.

For markets, the strong data led to a fresh push higher among longer-dated yields, with investors increasingly pondering whether rates will need to remain higher for longer given the recent releases. That meant that 10yr US Treasury yields ended the session up +5.5bps, although it was higher inflation breakevens that drove the move, with an increase of +4.5bps to 2.36%. Over at the front-end, the moves in inflation breakevens over recent weeks have been even more pronounced, which just shows how investors’ confidence has been dented in the hope that we’ll get a smooth inflation decline. In fact, the 2yr breakeven rose to 2.88% yesterday, which is up more than +80bps in less than a month, having closed at 2.04% on January 18.

This pattern was echoed in Europe too, with yields on 10yr bunds (+3.8bps), OATs (+4.4bps) and BTPs (+10.9bps) all rising on the day. The main exception to this pattern of sovereign bond losses came from UK gilts, with the 10yr yield down -3.4bps. That followed the latest CPI data for January, which showed inflation falling more than expected to +10.1% (vs. +10.3% expected). Core inflation also surprised on the downside at +5.8% (vs. +6.2% expected), raising the prospect that the BoE wouldn’t need to be as aggressive with rate hikes as some had thought.

Equities posted a decent performance on both sides of the Atlantic yesterday as the optimistic narrative prevailed. It was a tougher climb in the US right after the retail sales data, but the S&P 500 (+0.28%) was nevertheless propelled into the green in the last hour of trading after dropping c.-0.70% earlier in the session, with two-thirds of the members up for the day. Positive growth data lifted consumer discretionary (+1.16%) and industrials (+0.63%) sectors that raced ahead of the more defensive staples (+0.19%) and healthcare (-0.51%) stocks. Big tech left its mark too, as communications was the S&P 500’s top performing sector (+1.17%) and the NYSE FANG+ index rose by +0.56%. Such a backdrop naturally favoured the Nasdaq 100 (+0.77%), especially vis-à-vis the Dow Jones (+0.11%) index, but with strong growth data being the key narrative, the small cap Russell 2000 (+1.09%) was the relative outperformer for the day. On the flip side, energy (-1.78%) suffered the most amid another leg down in oil prices (WTI -0.71%), in part due to inventory headlines, and disappointing results from Devon Energy (-10.49%), which made the stock the worst performer in the index for the day.

Over in Europe, the relative outperformance of 2023 continued, with the broader STOXX 600 (+0.42%) hitting its highest level in just under a year. The broad-based rally, with roughly 75% of members in the green for the day, was underpinned by strong performance in economy-sensitive industrials (+1.52%) and consumer discretionary (+1.41%). Laggards were clustered in energy (-0.28%) and real estate (-0.80%).

Asian equity markets are making strong gains this morning. As I type, the Hang Seng (+2.31%) is leading gains in the region ending a four-day run of declines. This is followed by the KOSPI (+1.78%), the CSI (+0.97%), the Shanghai Composite (+0.77%) and the Nikkei (+0.67%). In overnight trading, US equity futures are printing fresh gains with those on the S&P 500 (+0.16%) and NASDAQ 100 (+0.38%) moving higher. Meanwhile, yields on the 10yr USTs (-2.31 bps) have pulled back overnight, trading at 3.78% as we go to press.

In early morning data, Australia's unemployment rate unexpectedly rose from +3.5% to +3.7% in January, its highest level since the RBA started lifting interest rates from record lows. In January, the economy shed 11,500 jobs, lifting the number of unemployed by 21,900 people, indicating that the nation’s labour market might be starting to weaken after the central bank began hiking interest rates nine months ago.

Turning to the political sphere, in the UK we saw the surprise resignation of Scotland’s First Minister Nicola Sturgeon yesterday. Sturgeon has led the devolved government there since late-2014, shortly after the independence referendum that resulted in a 55-45% vote for Scotland to remain part of the UK. Her plan had been to make the next UK general election a de facto independence referendum, but has now said it will be up to the rest of the SNP to decide how best to win independence. That follows a Supreme Court ruling in November that said the devolved administration in Scotland wasn’t able to unilaterally call a referendum, and would require the consent of the UK government.

Looking at yesterday’s other data, US industrial production was unchanged in January (vs. +0.5% expected), and capacity utilisation unexpectedly fell to 78.3% (vs. 79.1% expected).

To the day ahead now, and data releases from the US include January’s PPI, housing starts and building permits, the weekly initial jobless claims, the February’s Philadelphia Fed business outlook. Otherwise from central banks, we’ll hear from the ECB’s Panetta, Nagel, Lane and Makhlouf, the Fed’s Mester, Bullard and Cook, BoE chief economist Pill and BoC Governor Macklem.