US stocks were set to rebound following Wednesday's slide, after Walt Disney announced it would fire 7,000 sending its stock surging (alongside mediocre earnings) as investors assessed corporate earnings reports and awaited the latest US jobless claims data. Contracts on the Nasdaq 100 were up 1.1% at 7:30 a.m. ET while S&P 500 futures added 0.8%. Both underlying indexes slumped more than 1% on Wednesday following a barrage of hawkish commentary by Fed officials. European stocks also advanced after positive earnings updates from heavyweights Siemens and AstraZeneca, although a stinker from Credit Suisse soured the mood. Asia was also solidly in the green. The dollar slid, Treasuries edged higher after a strong rally yesterday and an index of commodities rose.

Among notable movers in premarket trading, Disney shares rose as much as 6.7% after the media company announced restructuring that includes 7,000 job cuts and $5.5 billion in cost savings. It also reported first-quarter sales and profit that beat estimates; streaming subs missed. Analysts noted strength in its Parks business and were optimistic about its Media division’s profitability. ProspectsCorp. surged as the mobile application technology company’s results exceeded estimates. Here are some other notable premarket movers:

• Tesla jumped as much as 3.3% to $208 in US premarket trading, it is poised to double in value from a January low, boosted by a breakneck rally for growth stocks and signs that big price cuts are working to spur a demand rebound for the electric-vehicle maker.
• Robinhood rises 5.1% in premarket trading after the online brokerage reported fourth-quarter adjusted Ebitda that beat estimates. Co- founders of the company also canceled about $500 million of their share-based compensation. Analysts were positive about Robinhood’s focus on achieving lean growth and eventually turning profitable.
• AppLovin shares jump as much as 30% in premarket trading after the mobile application technology company reported fourth-quarter earnings that beat expectations on key metrics. Analysts said the results and the outlook displayed resilience, noting that its next generation AXON platform could drive further growth.
• Digital Turbine sinks 19% in premarket trading after the online growth platform operator’s third-quarter adjusted earnings per share missed estimates. Roth Capital points to a weaker advertising market.
• Guardforce AI and SoundHound AI (SOUN US) lead fellow artificial intelligence-related stocks higher in US premarket trading. On Wednesday, the cohort was boosted by AI- related announcements by Alibaba and NetEase.
• MGM Resorts shares rise 6.2% in US premarket after the the casino operator posted better than expected 4Q adjusted EBITDAR and authorized additional $2 billion for share buybacks, with at least 2 analysts raising their PT as Macau recovers and Las Vegas surprised to the upside.
• Wynn Resorts shares rise 5.7% in premarket trading after the casino operator reported operating revenue that beat the average analyst estimate. “Las Vegas is starting to sizzle,” Jefferies said, while the Macau market is rapidly recovering post-pandemic.
• O’Reilly Automotive’s strong top-line performance should be enough to offset any concerns that arise around the auto parts retailer’s slightly softer margin guidance, analysts say. Shares rose 2.9% in extended trading.
• Sonos (SONO US) rose as much as 15% in premarket trading on Thursday after the audio-products maker reported first-quarter earnings and revenue that beat estimates. Raymond James analysts noted that promotions during the holiday quarter boosted demand for Sonos speakers.

US stocks have oscillated this week as optimism around an easing in central bank policy sparked by Powell's Tuesday's remarks was tempered by a string of Federal Reserve speakers who reinforced the idea that interest rates will need to keep rising to tame inflation. Michael Hewson, chief market analyst at CMC Markets UK, said market volatility is expected to remain high amid the debate between “the bullish narrative of an imminent peak in rates and the bearish narrative of a higher terminal rate.”

After a much stronger-than-expected jobs report last week, focus today will be on the latest weekly jobless claims figures. Economists expect a small increase in claims compared with the previous week.

“Investors are shaking off another case of the jitters over how far interest rates will go in the United States, as a raft of better than expected corporate results came in after the bell,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. After this week’s hawkish chorus, Fed-funds futures markets are pricing in higher rates, with some options traders betting the US policy benchmark will reach 6%.

“I don’t think the Fed will cut within this year,” Jun Bei Liu, portfolio manager at Tribeca Investment Partners, said on Bloomberg Television. “The Fed was behind the curve in terms of putting up their interest rate and they certainly are going to be very slow in cutting the interest rate.”

European stocks advanced for a third session, reaching the highest in almost a year, as investors weighed a slew of corporate earnings and greeted a slowdown in German inflation. The Stoxx 600 Index was up 1%, trading at highest level since February 2022 lifted by better-than-forecast results from firms including Siemens AG and AstraZeneca Plc. Industrials and banking stocks led gains, while the food, beverage and tobacco subindex was the worst performer, weighed down by declines in British American Tobacco Plc after the firm’s decision to end a buyback program disappointed some investors. Adding  to positive sentiment Thursday, data showed that German inflation slowed in January to the lowest level in five months, with consumer-price growth easing to 9.2% from 9.6% in December.

Among other companies that reported earnings today, Delivery Hero SE slumped after the food-delivery company missed estimates for gross merchandise value, while Credit Agricole SA and AstraZeneca Plc both gained after profit beat estimates. Credit Suisse Group AG slid after the Swiss lender reported a fifth-straight quarterly loss, with clients pulling a record amount of funds. Here are the most notable European movers today:

• Standard Chartered jumped as much as 12% after Bloomberg reported that First Abu Dhabi Bank is pressing ahead with a potential offer for the UK lender.
• AstraZeneca gains as much as 5.5% after its 4Q earnings beat estimates and after its Covid-19 treatment Evusheld had stronger-than-expected sales.
• Legrand jumps as much as 8.2% after the French electrical-equipment manufacturer reported solid 2022 results, including adjusted operating margins that beat estimates.
• Unilever shares rise as much as 1.4% after results reassured investors, with the consumer goods giant’s pricing and volumes staying resilient.
• Aegon shares advance as much as 5.8% after the company posted a strong set of numbers and announced a buyback and dividend plan that were well received by the market.
• Ipsen shares rose as much as 5.9% after the French pharmaceuticals group published better-than expected 4Q results.
• KBC Group’s shares rise as much as 5.2% after the Belgian bank and insurer’s guidance for revenue and costs implies a “meaningful” increase to consensus, according to RBC.
• British American Tobacco shares tumbled as much as 6.4%, the most in nearly two years, after the firm’s decision to end a share buyback program disappointed some investors.
• Credit Suisse shares fell as much as 6.9% after the Swiss lender reported a fifth-straight quarterly loss and endured record client outflows that KBW analysts described as “quite staggering.”
• Zurich Insurance shares drop as much as 3.2%, with Morgan Stanley saying that investors could be concerned about a miss for key profit driver Property & Casualty.
• Delivery Hero shares fall as much as 11% after the food delivery firm failed to offer an outlook for gross merchandise value for 2023, adding to investor concerns.

Earlier in the session, Asian stocks edged higher as Chinese shares gave the region a boost, offsetting renewed concerns over the trajectory of US interest rates after hawkish comments made by Federal Reserve officials.  The MSCI Asia Pacific Index erased an earlier loss of 0.4% to rise 0.5%. Shares in China and Hong Kong jumped, fueled by the tech sector, as recent market optimism in AI-related stocks continued despite a warning against speculative trades from an official media.  Concerns on geopolitical tensions eased after President Joe Biden denied that relations with Beijing have suffered a serious blow following a US decision to shoot down an alleged Chinese spy balloon. Meanwhile, benchmarks in Australia and Taiwan fell after the most-recent string of Fed speakers reinforced the idea that US rates will need to keep climbing to quash inflation. Asian equities have lost momentum after a strong start to the year, after a US jobs report last week stoked concerns over borrowing costs.  Shares will likely remain volatile over the next few months, as the “expected softness in the economic outlook for developed markets may weigh on externally exposed sectors and markets,” said Soo Hai Lim, head of Asia ex-China equities at Barings.

Japanese equities closed mixed, as investors assessed hawkish comments from Federal Reserve officials on the need for further rate hikes in the US. The Topix Index rose 0.1% to 1,985.00 as of market close Tokyo time, while the Nikkei declined 0.1% to 27,584.35. Daiichi Sankyo Co. contributed the most to the Topix Index gain, increasing 1.4%. Out of 2,163 stocks in the index, 1,141 rose and 900 fell, while 122 were unchanged. “Growing concerns about monetary tightening and the economy in the US are also affecting Japanese stocks,” said Tetsuo Seshimo, a portfolio manager at Saison Asset Management. “Investors are also watching the quarterly earnings results and the uncertainty is increasing amid potential slowdown in US economy.”

Indian stocks rose for a second session as software exporters continued to surge.  Adani Group stocks resumed decline after a two-day rally as index firm MSCI said it was reviewing the amount of shares linked to the group that were freely tradable in public markets. The S&P BSE Sensex rose 0.2% to 60,806.22 in Mumbai, while the NSE Nifty 50 Index advanced 0.1%. Eight out of BSE 20 sector-gauges rose while rest declined. A gauge of commodities companies was the worst performer, followed by power producers. Infosys contributed the most to the Sensex’s gain, increasing 1.8%. Out of 30 shares in the Sensex index, 17 rose, while 13 fell.

In FX, the Bloomberg Dollar Spot Index fell as the greenback weakened against all of its Group-of-10 peers while the Swedish krone outperformed after the Riskbank hiked rates 50bps and pointed to another increase in the spring. The euro rose for a first day in six and European bonds advanced, snapping a four-day run of declines, after German inflation slowed in January to the lowest level in five months. Consumer-price growth eased to 9.2% from 9.6% in December

• Sweden’s krona led G-10 gains and surged by as much as 1.3% to 11.2070 per euro, while the sovereign yield curve bear- steepened after the Riksbank announced it will begin to sell nominal and real government bonds with longer maturities at a nominal value of SEK3b and SEK0.5b respectively per month, starting in April. The central bank also raised its key policy rate by 50bps, to 3%, as widely expected. The central bank also said that “a stronger krona would be desirable”
• Japanese yen dipped after Bloomberg report suggesting there would likely be division among the country’s ruling party if Hirohide Yamaguchi was to be appointed as next BOJ governor
• Australian and New Zealand currencies both climbed with local yields as talk of a possible rate cut in China fed optimism

In rates, Treasuries were slightly richer across the curve which steepened very modestly, led by core European rates, particularly bunds and gilts, after German inflation slowed more than the median estimate in January. US yields are richer by 1bp-2bp across the curve, new 10-year around 3.59% vs Wednesday’s 3.613% auction stop; bunds, gilts outperform by 9bp and 8bp in the sector following soft German inflation. European bonds are also in the green with German and UK 10-year yields both lower by 7bps. Focal point of the US session focus is conclusion of auction cycle with 30-year bond sale at 1pm New York time.  The week's refunding auction cycle concludes today with $21BN 30-year new Treasury issue; Wednesday’s 10-year stopped 3bp below the WI level with record low dealer allotment; WI 30-year yield at 3.670% is 8.5bp cheaper than January’ auction, which stopped 2.4bp through.

In commodities, crude futures advance with WTI rising 0.3% to trade near $78.70. Russia's Kremlin says there could be delays in the Turkish Gas Hub implementation following quakes, but plans will be fulfilled. Spot gold rises roughly 0.3% to trade near $1,882.

Coinbase CEO Armstrong said he's heard rumours that the US SEC would like to ban cryptocurrency staking, but added that he hopes this is not the case as it would be a terrible path for the US if it happens, according to CoinDesk.

To the day ahead now, and data releases include the delayed German CPI release for January, as well as the US weekly initial jobless claims. From central banks, we’ll hear from BoE Governor Bailey, as well as the ECB’s Vice President de Guindos, Nagel and de Cos. Lastly, an EU leaders’ summit will be taking place in Brussels.

Market Snapshot

• S&P 500 futures up 0.7% to 4,158.25
• MXAP up 0.5% to 167.72
• MXAPJ up 0.5% to 548.10
• Nikkei little changed at 27,584.35
• Topix little changed at 1,985.00
• Hang Seng Index up 1.6% to 21,624.36
• Shanghai Composite up 1.2% to 3,270.38
• Sensex up 0.2% to 60,764.80
• Australia S&P/ASX 200 down 0.5% to 7,490.33
• Kospi little changed at 2,481.52
• STOXX Europe 600 up 0.7% to 462.87
• German 10Y yield little changed at 2.32%
• Euro up 0.4% to $1.0756
• Brent Futures down 0.1% to $84.98/bbl
• Gold spot up 0.3% to $1,880.61
• U.S. Dollar Index down 0.35% to 103.05

Top Overnight News from Bloomberg

• Beijing lashed out at President Joe Biden for saying Chinese leader Xi Jinping faces “enormous problems,” underscoring the renewed tensions between the two nations since the US downing of a balloon in its airspace
• Japan’s LDP Said to Be Divided If Kishida Seeks BOJ Pivot
• Investors are piling into the longer end of the Treasuries market even in the face of increased anticipation that the Federal Reserve will remain hawkish enough to substantially hike its benchmark interest rate in the coming months
• The UK is in the final stages of negotiating a so-called Green Economy Framework agreement with Singapore, seeking to capitalize on its experience with new technologies to boost trade and investment post-Brexit
• Bank of France Governor Francois Villeroy de Galhau said inflation in the euro area’s second- largest economy should peak in the first half and start to ease from the middle of the year
• Italy is ready to support relaxing EU state aid rules to boost investments in green technologies in exchange for more flexibility on how to use EU recovery funds, Finance Minister Giancarlo Giorgetti told Sole 24 Ore
• Some traders in India’s bond market are betting that the central bank may have actually reached the peak of its rate hikes, even as the monetary authority sounded hawkish in its policy

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed with some cautiousness after the losses in the US where risk assets were pressured as markets focused on the hawkish aspects of the recent two-sided remarks from Fed officials. ASX 200 was dragged lower by underperformance in tech and utilities with the latter not helped by a near-10% slump in AGL Energy after H1 generation volumes fell 7% Y/Y and it cut its FY guidance. Nikkei 225 was subdued with individual stock movers influenced by the slew of earnings results. Hang Seng and Shanghai Comp. were initially lacklustre amid the absence of any major catalysts but shrugged off the opening losses and edged higher after the PBoC’s liquidity injection which provided some relief against the rising funding costs from a recent jump in loan demand.

Top Asian News

• PBoC injected CNY 453bln via 7-day reverse repos at a rate of 2.00% for a CNY 387bln net injection.
• US President Biden answered no when asked if relations with China have taken a big hit, while he added that the US is going to compete fully with China but is not looking for conflict which has been the case so far, according to a PBS interview.
• White House said Chinese balloons have been spotted over countries across five continents and the US has been in touch with allies on this issue, while Japanese Chief Cabinet Secretary Matsuno said Japan is exchanging information with the US on China's spy balloon, according to Reuters.
• China's Foreign Ministry regarding Australia ordering checks on China-made cameras within defence offices, says they hope Australia provides a fair environment for Chinese Cos.; welcomes US Treasury Secretary Yellen's willingness to visit China.
• Chinese Defence Ministry says it declined a proposed phone call with the US because the US side did not create an appropriate atmosphere.

European bourses are firmer across the board, Euro Stoxx 50 +1.5%, with the region benefitting from a particularly heavy earnings docket with heavyweights including Siemens and AstraZeneca particularly well received. As such, sectors are in the green and feature outperformance in Industrial and Healthcare names. Stateside, futures are firmer across the board as the region recovers from Wednesday's Fed speak induced downside, NQ +1.2% modestly outperforms as yields ease.

Top European News

• UK Chancellor Hunt is under pressure from the CBI to provide tax breaks in the budget to avert a recession, according to The Times.
• Germany's DIHK expects the German economy to stagnate this year vs. prev. forecast of a 3% contraction; firms are also more optimistic about the outlook.
• Leonteq Drops as ZKB Expects 2023 to Be More Difficult
• Ukraine Latest: Zelenskiy Tours Europe With Calls for More Aid
• Unilever Sees Consumer Backlash Worsening on Inflation

Central Banks

• Riksbank raises its Policy Rate by 50bps vs exp. 50bps to 3.00%; decided to reduce Riksbank asset holding at a faster pace, effective from April; The policy rate will probably be raised further during the spring. Peak 3.33% (prev. 2.84%). adding, a stronger SEK would be desirable.
• Riksbank's Governor Thedeen says the rate path indicates either a 25bps or 50bps hike in April, recent weakness in the SEK is hard to explain.
• BoE Governor Bailey says expects inflation to come down rapidly this year, very tight labour market. Current high level of inflation reflects the very high level of first-round effects, not second-round effects. Base effects will provide powerful negative trajectory on UK inflation in 2023.
• BoE Chief Economist Pill says we are now seeing some signs of loosening in labour market data; expect some margin of economic slack to emerge. There is substantial monetary policy tightening still to come through as a result of lags in transmission; that said, there is no room for complacency. Inflation remains unacceptably high.
• BoE's Tenreyro says in her views rates are currently too high.
• BoE's Haskel says he finds his expectations for inflation to be towards the upper part of that distribution. Economic theory suggests that uncertainty around the persistence of inflation should be met with more forceful action, and so shall remain alert to indications that inflation is more persistent than we expected, and act forcefully if necessary.
• Japan's ruling LDP is said to be divided if PM Kishida seeks a BoJ pivot. Reports notes that people say Yamaguchi as BoJ head choice would be controversial. Elsewhere, the Japanese government plans to present nominees for new BoJ governor and officials with parliament early next week, according to NHK; TBS suggest February 14th.

FX

• Swedish Crown flies following hawkish Riksbank hike and comments from the new Governor, EUR/SEK breaches tech and psych supports on the way down from 11.3510 to sub-11.1600.
• Dollar suffers fallout as DXY slips through 103.000 with additional loss of safety premium amidst buoyant risk appetite; down to 102.80 at worst.
• Kiwi, Aussie and Pound post strong gains due to high beta and cyclical properties, NZD/USD scales 0.6350, AUD/USD above 0.6975 and Cable over 1.2150.
• PBoC set USD/CNY mid-point at 6.7905 vs exp. 6.7900 (prev. 6.7752)

Fixed Income

• Core benchmarks are bid and at the top-end of the session's ranges following the delayed release of sub-consensus German Prelim. CPI.
• Specifically, Bunds have tested 137.00 at best while Gilts are just above 105.50 and USTs at the top-end of 113.23 to 113.13+ parameters.
• Stateside, yields are lower across the curve after Wednesday's upside following hawkish Fed speak and ahead of IJC and a 30yr outing.

Commodities

• Crude benchmarks are consolidating in relatively narrow sub-USD 1/bbl parameters after yesterday's stronger settlement and amid a weaker USD and improving broader risk sentiment.
• Spot gold has been meandering higher as the USD continues to retreat, though the yellow metals remains someway from USD 1900/oz near Wednesday's USD 1886/oz peak.
• Russia's Kremlin says there could be delays in the Turkish Gas Hub implementation following quakes, but plans will be fulfilled.

Geopolitics

• German Chancellor Scholz said will continue to support Ukraine as long as necessary, while he added Russia must not win the war and that Ukraine belongs to the European family, according to Reuters.
• Russian Kremlin, on Ukraine's request for UK fighter planes, says this will draw out the conflict.
• North Korea unveiled a potentially new solid-fuel ICBM during a night-time parade, according to analysts citing commercial satellite imagery. Yonhap reported that North Korean leader Kim oversaw the military parade and North Korean state media later confirmed that a military parade was held in Pyongyang which displayed ICBMs and demonstrated the greatest nuclear strike capability, as well as featured tactical nuclear operations units, according to KCNA

US Event Calendar

• 08:30: Jan. Continuing Claims, est. 1.66m, prior 1.66m
• 08:30: Feb. Initial Jobless Claims, est. 190,000, prior 183,000

DB's Jim Ried concludes the overnight wrap

Readers from yesterday's EMR will be pleased to know the glamour of business travel is back after three very nice meals in Paris over the last 24 hours after a disastrous late-night trawl of the back streets for food the night before. I had to go to the gym at 5am and 6pm to offset it though. I suspect intake still exceeded output! We had a big DB macro dinner last night and the view I found most interesting was the bearishness on Euro government rates. A vast majority of the table voted for higher Euro rates over lower as the next move. It was a bit more neutral to slightly bullish for Treasuries. Our co-head of Euro rates sales warned that the retail flows we're seeing in Euro Government bonds were relatively small in ticket size but relentless this year and maybe caution against the European trade a little.

So consistent inflows versus hawkishness seems to be sizing up to be a decent battle at the moment and over the last 24 hours the hawkish drumbeat from central bankers continued and a rise in yields and terminal was the prevailing theme for most of the day. As Europe went home, 10yr Treasuries hit 3.69% and US terminal 5.18% - a level that would have marked the highest close of the cycle had it held. However, after a surprisingly strong 10yr US auction, 10yr yields rallied -8bps into the bell and closed down -6.4bps on the day to 3.61%. The rally would have been bigger if not for higher inflation breakevens, with the 10yr breakeven up to a 2-month high of 2.356%, whilst the 2yr breakeven hit its highest level in nearly 3 months at 2.629%. So that fits into a picture of growing doubt over recent days about whether inflation will remain as calm as previously hoped, particularly given a few indicators like higher used car prices which we talked about in yesterday’s EMR and in our CoTD (link here).

Interesting the S&P 500 barely budged from European closing level even with the c.+8bps rally in 10yr US yields from that point. The damage from the earlier hawkish commentary held and we closed -1.11%. But even with this decline, it’s worth noting that the index is still just above the levels before Fed Chair Powell started speaking on Tuesday, so this is only bringing us back to that point. Even with the late rally in rates, the NASDAQ (-1.68%) also closed at around its European levels. US markets weren't helped by Alphabet closing -7.68% after its new AI tool Bard showed inaccuracies in a demo. The company lost around $100bn of market cap in the process which shows the high stakes and competitive pressures of the new technology.

Back in Europe, equities here were an outperformer with the STOXX 600 hitting its highest intraday level since April before losing a bit of ground into the close to finish up just +0.28%.

In terms of the hawkish remarks themselves, New York Fed President Williams opened the day, saying that he thought a terminal rate of 5-5.25% was still a reasonable view. But he also commented the wage growth was still “well above” levels consistent with the Fed’s inflation target, and acknowledged that “there’s definitely scenarios where inflation ends up being more persistent for various reasons”. Then Fed Governor Cook struck a similar tone to Fed Chair Powell last week, and said “I think we are not done yet with raising interest rates”. Later on in the day, Governor Waller joined the chorus and further noted that “It might be a long fight, with interest rates higher for longer than some are currently expecting.” Lastly, Minneapolis Fed President Kashkari (FOMC voter this year) told the Boston Economic Club that “There’s not yet much evidence, in my judgment, that the rate hikes that we’ve done so far are having much effect on the labor market...we need to do more”. He also stated that he needed to see wage growth around 3% to feel confident that inflation was coming back to trend.

Before the late US rally, yields on 10yr bunds (+1.4bps) and OATs (+2.2bps) both hit a one-month high. That followed a similar round of comments from ECB officials, including Vice President de Guindos who said that “it might well be that financial markets are too optimistic with regard to inflation and our monetary-policy response”. That was followed up with comments from the ECB’s Knot, who said that “if underlying inflation pressures do not materially abate, maintaining the current (50bps) pace of hikes into May could well remain warranted.” Watch out for the delayed German inflation numbers this morning just after we go to press.

The overnight losses on Wall Street are weighing on Asian equity markets this morning. As I type, the Nikkei (-0.32%) and the KOSPI (-0.15%) are in the red while the S&P/ASX 200 (-0.56%) is also trading in negative territory. Bucking the negative trend are Chinese stocks with the CSI (+0.75%), the Shanghai Composite (+0.62%) and the Hang Seng (+0.34%) all edging higher, after reversing initial losses. Outside of Asia, US stock futures are showing a bit of a rebound with those on the S&P 500 (+0.22%) and NASDAQ 100 (+0.27%) trading higher.

On the oil front, prices have somewhat stabilised overnight after advancing more than +6% over the last three trading sessions with Brent futures (-0.04%) trading at $85.06/bbl as we go to print.

Elsewhere, financial markets in Turkey have continued to slump following the devastating earthquake on Monday. Yesterday saw the BIST 100 index shed a further -7.09%, before trading on the stock exchange was suspended until February 15, marking the first time in 24 years that trading has been stopped. Furthermore, all trades executed yesterday before the closure were cancelled. Up until the closure, the index had been down -16.24% since the start of the week.

To the day ahead now, and data releases include the delayed German CPI release for January, as well as the US weekly initial jobless claims. From central banks, we’ll hear from BoE Governor Bailey, as well as the ECB’s Vice President de Guindos, Nagel and de Cos. Lastly, an EU leaders’ summit will be taking place in Brussels.