US Futures Jump Ahead Of Nvidia Earnings, Europe Hits Another Record

US equity futures are higher, reversing much of yesterday's drop, and European bourses are at all time high, as the market braces for NVDA earnings after today’s close. As of 7:30am, S&P futures are up 0.6% while Nasdaq futures jump 0.8% as all Mag7 names are higher premarket ex-AAPL, while NVDA rises 2.6% aiding the bid for Semis and signaling a rebound on Wall Street after Tuesday’s drop, fueled by a weaker-than-expected consumer confidence print that stirred fears of an economic downturn. Bond yields are 1-2bps higher but with little reaction to the House passing the blueprint for the next budget that is likely to materially increase the deficit.  President Trump is set to meet Zelenskiy this week to sign an agreement giving the US control over half of the war-battered country’s natural resources. Elsewhere, China plans to start re-capitalizing several of its biggest banks in the coming months while BP announced it will increase its oil and gas production. The global risk-on tone is not extending to commodities where there is weakness across all 3 complexes. To the day ahead now, and the main highlight will be Nvidia’s earnings after the US close; data releases include US new home sales for January.

In premarket trading, Super Micro Computer soars 25% after the company filed its 10-K for the period ending June 30, 2024, meeting a deadline for submitting outstanding financial reports to regain compliance and stay listed on the Nasdaq. Nvidia is leading premarket gains among the Mag 7 before its much-anticipated fourth-quarter results (Nvidia +2.4%, Tesla +2.0%, Amazon +1.1%, Meta Platforms +1.03%, Alphabet 0.8%, Microsoft +0.6%, Apple -0.5%). Power and electrical equipment companies are trading higher after a report said Meta (+1.03%) was in discussions to build a new data center campus for its AI projects that could cost more than $200 billion (SES AI +7.3%, NANO Nuclear Energy +6.6%, Oklo +7.0%, Vistra +3.7%, Celestica +4.3%, Vertiv +3.1%, Constellation Energy +1.8%, nVent Electric +0.5%). Here are some other notable premarket movers:

• Axon (AXON US) shares jump 16% after the maker of Tasers and body cameras gave a forecast for 2025 that beat analyst expectations. Analysts said that the update alleviated recent concerns over growing competition.
• Workday (WDAY US) shares climb 12% after the human-resources software company reported fourth-quarter results that beat expectations and gave a forecast.
• Intuit (INTU US) shares rise 8.7% after the tax-software company reported second-quarter results that beat expectations and affirmed its outlook. Morgan Stanley upgrades its rating to overweight.
• Lucid (LCID US) shares jump 1.5% after the electric-vehicle maker reported revenue for the fourth quarter that beat the average analyst estimate. The company will begin a search for a new leader after Chief Executive Officer Peter Rawlinson stepped aside to serve as an adviser.
• Cava (CAVA US) shares rise 1.2% after the Mediterranean restaurant chain reported fourth-quarter adjusted Ebitda and comparable sales that came ahead of estimates.
• Freeport-McMoRan (FCX US) shares advance 5.5% after US President Donald Trump signed an executive order that may open the door to tariffs on copper.
• Porch Group (PRCH US) shares soar 40% after the home-services software company reported its fourth-quarter results and gave an outlook.
• Flywire (FLYW US) shares sink 30% after the global payments enablement and software company reported fourth-quarter revenue that missed estimates. Deutsche Bank and BTIG downgraded their recommendations on the stock to a hold-equivalent rating, with the former viewing the full-year forecast as “disappointing.”

All eyes are on Nvidia todaywhich will report after the US market close. The result could determine Wall Street’s direction, especially for the technology sector, after recent months showed AI computing adoption won’t be a straight path. Options data imply share moves of about 10% in either direction around the report.

“The reality is, we need a good set of numbers from Nvidia to keep this bull track in place in the US,” said Guy Miller, chief market strategist Zurich Insurance Co. “It will be important that the numbers are good and the outlook is good. If it’s a really disappointing reading the market will be vulnerable to a further setback.”

Nvidia’s shares rose about 3% in premarket trading, signaling a recovery from the previous session’s 2.8% drop. Shares in the company are down almost 6% year-to-date, after blistering gains in the past couple of years. The concerns have rippled across the technology sector, pushing the Magnificent Seven group of bellwether tech stocks into correction territory on Tuesday.

Europe's Stoxx 600 rises 0.8% to a record high, boosted by solid corporate earnings and optimism around a potential peace deal in Ukraine. Anheuser-Busch InBev shares surged the most in more than three years after growth in organic earnings topped estimates. Basic resources also outperform as copper prices rise on Trump’s tariff threat.
Sentiment was also boosted by strong results from a slew of companies including Banco Santander SA, Fresenius SE and Alcon AG while automaker Stellantis slipped on its latest numbers. Here are the biggest movers Wednesday:

• Anheuser-Busch InBev shares jump as much as 9.9%, the biggest intraday advance since October 2021, after the brewer reported fourth-quarter organic adjusted Ebitda that came ahead of estimates
• Fresenius SE shares gain as much as 7.5% after the German health-care group reported its latest earnings and updated guidance, with both 4Q sales and adjusted Ebit slightly ahead of projections
• Wienerberger gains 12%, the biggest daily advance since 2020, after the Austrian brick and roof-tile maker reported in-line earnings which Stifel says might mark the beginning of the end of a difficult period
• Novonesis gains as much as 5.6%, the most since June, after the Danish biopharma company reported its latest earnings which analysts see as solid and should reassure after some investor caution
• Adecco jumps as much as 6.1% after its results beat expectations. RBC Capital Markets analysts say the sector is approaching the trough, noting improved momentum seen in early 2025
• JDE Peet’s rises as much as 8.2%, the most in four months, after annual results were ahead of expectations. Jefferies said consensus may nudge higher following a “reassuring” outlook
• European mining shares are the best-performing sector on the Stoxx 600 as copper futures surged after President Donald Trump ordered the US Commerce Department to examine possible import tariffs
• Stellantis shares fall as much as 5.8% in Milan after the carmaker posted 2025 margin guidance that analysts called light, as questions around new leadership, tariffs and dealer inventories persist
• Wolters Kluwer sinks as much as 10%, the steepest intraday drop since 2020, after the Dutch information-services provider reported results that Morgan Stanley analysts described as a “mixed bag”
• Hikma falls as much as 12%, the most since 2017, after the UK drugmaker reported earnings. While the company met expectations, Panmure Liberum says the merely in-line print might not be enough
• ASMI shares fall as much as 4.1% as the Dutch chip equipment maker reported fourth quarter orders that missed estimates, driven by lower demand from Chinese clients
• Saab falls as much as 4.6% after it was reported US will ban the sale and use of US-made military components, parts, systems or technology for Saab’s Gripen fighter jets destined for Colombia
• Novartis shares drop as much as 2.8% after the Sandoz family sold a roughly 1.2% stake in the Swiss pharmaceutical group for CHF2.6 billion through an accelerated placement at a discount

Earlier in the session, Asian stocks were set to gain for the first time in three days after equities in mainland China and Hong Kong staged a strong rally amid a slew of positive developments. The MSCI Asia Pacific Index rose as much as 0.9%. Hong Kong shares rallied strongly, after Chinese AI platform DeepSeek reopened access to its core programming interface after nearly a three-week suspension. Chinese e-commerce giants Alibaba and Meituan were among the top contributors as a meeting between the regulator and some firms was seen as promoting fair competition and improving the market environment. Bank stocks climbed following a Bloomberg News report that China plans to start re-capitalizing several of its biggest lenders in coming months, following through on a broad stimulus package unveiled last year to shore up the struggling economy. Elsewhere, Thailand’s benchmark equity index jumped more than 2% after its central bank unexpectedly cut rates. Equities in Japan fell while Indian markets was shut for a holiday.

In FX, the Bloomberg Dollar Spot Index halves a 0.2% advance as chances for early action on Trump’s tax cut plans improved after House Republicans passed a budget blueprint; month-end flows into the Tokyo fix offered support, also boosted by chances for early action on Donald Trump’s tax cut plans after House Republicans passed a budget blueprint.  EUR/USD slips 0.1% to 1.0500, versus 1.0487-1.0525 day range; euro struggles near year-to-date highs and the latest rejection opens up risk for a correction as the volatility skew remains in favor of the greenback across the curve. USD/JPY rises as much as 0.4% to 149.63, before halving the advance; focus on Friday’s Tokyo CPI data. GBP/USD down 0.1% at 1.2656, versus 1.2636 day low; BOE rate-setter Swati Dhingra set to speak.

In bond markets, treasuries halt a five-day rally after House Republicans passed a budget blueprint; Treasury yields rose across the curve with 10-year yields around 4.305% or ~1bp cheaper on the day, trailing bunds and gilts in the sector by 3bp-4bp; front-end underperformance flattens 2s10s spread by ~1bp. 10-year yield initially rose by as much as 4bps before losing traction and steadying after an 11-basis-point decline overnight took it to the lowest level since mid-December. Price action unwinds a portion of Tuesday’s steep flight-to-quality gains spurred in part by soft data and helped by strong demand for 5-year note auction. European government bonds climb, led by OATs with French 10-year yields falling 4 bps to 3.16%. German 10-year borrowing costs fall 2 bps to 2.43%. Money markets have raised their bets on Federal Reserve policy easing, and now price more than two quarter-point interest-rate reductions in 2025. Treasury’s $44b 7-year note auction follows strong demand for 2- and 5-year note sales earlier this week; the WI 7-year yield at ~4.24% is ~22bp richer than January’s, which stopped through by 0.9bp

In commodities, copper futures surged after the latest tariff threat, while gold traded just off the latest all-time high hit on Monday. Spot gold is flat near $2,915/oz. Bitcoin also steadies at around $89,000. Oil prices are treading water, with WTI near $69 a barrel.

Looking at today's calendar, US economic data calendar includes January new home sales and building permits (10am). Fed speaker slate also includes Barkin (8:30am) and Bostic (12pm)

Market Snapshot

• S&P 500 futures up 0.5% to 5,999.25
• STOXX Europe 600 up 0.8% to 558.39
• MXAP up 0.6% to 188.96
• MXAPJ up 1.2% to 596.29
• Nikkei down 0.2% to 38,142.37
• Topix down 0.3% to 2,716.40
• Hang Seng Index up 3.3% to 23,787.93
• Shanghai Composite up 1.0% to 3,380.21
• Sensex up 0.2% to 74,602.12
• Australia S&P/ASX 200 down 0.1% to 8,240.68
• Kospi up 0.4% to 2,641.09
• German 10Y yield little changed at 2.44%
• Euro down 0.2% to $1.0497
• Brent Futures up 0.3% to $73.23/bbl
• Gold spot up 0.0% to $2,915.54
• US Dollar Index up 0.14% to 106.46

Top Overnight News

• President Donald Trump signed an executive order on Tuesday instructing the Department of Commerce to investigate whether to impose tariffs on copper and derivative products, key industrial materials, in order to protect national security. This sets the stage for more trade friction with Canada and Mexico, as well as Chile and Peru. Politico
• Ukraine and Washington have struck a minerals rights deal, and Zelensky is expected to travel to Washington later in the week for a signing ceremony w/Trump. NYT
• House Republicans approved a budget framework for President Donald Trump’s sweeping domestic policy agenda Tuesday — a major victory for Speaker Mike Johnson who worked with Trump and fellow leaders in a chaotic last-ditch effort to win over naysayers within the GOP ranks. Politico
• US President Trump said will begin a program to sell 'Trump gold cards' for USD 5mln for foreigners who want to come to the US and create jobs with the sale of gold cards to start in about two weeks.
• The US House Ways and Means Committee has reportedly had discussions about options like ratcheting up taxes on public companies’ stock buybacks or adjusting limits on deducting executive pay, according to sources cited by Punchbowl. "Proposals such as raising endowment taxes on universities and significant cuts to clean energy tax credits are being viewed as even more likely"
• Super Micro (SMCI +21% premkt)  shares surged premarket after it filed documentation to become compliant with Nasdaq rules. BBG
• China plans to inject at least $55 billion into three of its biggest banks, people familiar said. The plan may be completed as soon as June and follows through on a broad stimulus package unveiled in 2024. BBG
• Hong Kong Financial Secretary Paul Chan forecasts 2%-3% GDP growth in 2025, as he looks to shrink the city’s deficit. Stamp duty will be lowered for some cheap homes, he said in his budget speech. The government will also invest in AI and cut about 10,000 civil service jobs. BBG
• Thailand’s central bank unexpectedly cut its policy rate by 25bp to 2% (the consensus was anticipating rates staying unchanged). WSJ
• Ukraine latest: French Finance Minister Eric Lombard said he believes the US has agreed to provide backup for European troops after a ceasefire. Budget airlines Ryanair and Wizz are already jostling to introduce routes ahead of any deal. BBG
• BP will boost oil and gas investment to about $10 billion a year, cut capex spending and boost cost-savings targets. It’s also reviewing its Castrol business, possibly worth as much as $10 billion if it were sold.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed as a tech rally in China offset the weak handover from Wall St where the Nasdaq led the declines once again and risk appetite was sapped by weak consumer confidence data. ASX 200 was led lower by weakness in mining, materials and consumer staples as participants digested disappointing Construction Work data which feeds into Australia's GDP and with supermarket operator Woolworths pressured post-earnings. Nikkei 225 fell beneath the 38,000 level for the first time this year with the index underperforming following recent currency strength although was off worst levels as the yen then pared some of its recent advances. Hang Seng and Shanghai Comp gained with Hong Kong leading the advances amid tech strength and recent earnings, while Hong Kong continued to record a higher deficit for this year in the Budget and will increase the scale of bond issuances.

Top Asian News

• China to reportedly start recapitalizing banks with at least USD 55bln, according to Bloomberg sources.
• Chinese President Xi urged to maintain stability across and calmly address domestic and international challenges.
• Hong Kong Financial Secretary delivered the Budget address and noted Hong Kong continues to record a higher budget deficit this year and will increase the scale of bond issuance, while the government aims to reduce accumulated expenditure by 7% in the fiscal year 2027-2028. Hong Kong's government announced a reduction in salaries tax payable by 100% capped at HKD 1,500 and the HKMA is to launch a new CNY 100bln facility for renminbi trade financing liquidity support for banks.
• China's NFRA and NDRC held a meeting on additional support for private firms; NFRA is to increase support for tech and private companies, according to Bloomberg. Has vowed to optimise the equity investment environment.

European bourses (STOXX 600 +0.8%) opened stronger across the board and have continued to slowly grind higher as the session progressed; currently at highs. European sectors hold a strong positive bias; Basic Resources is by far the clear outperformer, lifted by strength in metals prices (amid US Commerce Secretary Lutnick's copper comments). Media and Telecoms are both hampered by post-earning losses in Wolters Kluwer (-5%) and Deutsche Telekom (-3.8%) respectively.

Top European News

• BRC warned 160k part-time retail jobs are at risk of being axed over the next 3 years due to higher employer taxes announced in the Budget and regulatory changes.
• EU Commission proposes to mobilise EUR 100bln of funding to support EU-made "clean" manufacturing; EUR 1bln from current budget will be part of guarantees.

FX

• USD is attempting to claw back Tuesday's losses which were in part triggered by the ongoing pullback in US yields with the latest leg lower led by a disappointing Consumer Confidence print. Elsewhere, events on Capitol Hill are increasingly in focus after the US House passed the Republican budget blueprint for advancing the Trump agenda and sent the measure to the Senate. DXY has ventured as high as 106.55 vs. Tuesday's 106.78 peak. Note, if DXY reverses course, the YTD low sits at 106.16.
• EUR is marginally softer vs. the USD. Aside from ongoing focus for the bloc on efforts to fund the EU's increased defence needs, macro drivers are relatively light. This morning's GFK consumer sentiment data fell short of expectations, however, this has been largely shrugged off given the need to see how the coalition building process in Germany develops. EUR/USD is currently pivoting around the 1.05 mark.
• USD/JPY hit a fresh YTD low overnight at 148.56 in the aftermath of yesterday's risk-averse moves in the US which acted as a drag on US yields. Fresh macro drivers out of Japan are lacking and therefore the USD leg of the equation may remain the driving force for the pair in the near-term. USD/JPY has ventured as high as 149.63 with focus on a potential reclaim of the 150 level.
• GBP marginally softer vs. the USD and flat vs. the EUR. Fresh macro drivers for the UK are lacking aside from yesterday's announced increase in defence spending which is ultimately not set to move the dial on the fiscal front given that money from elsewhere will be reassigned to fund it. Cable is currently contained within Tuesday's 1.2606-78 range, ahead of BoE's Dhingra.
• Antipodeans are both softer vs. the broadly stronger USD. AUD/USD is now down for a fourth consecutive session after printing a YTD peak on Feb 21st at 0.6408. Overnight data saw disappointing Construction Work data (which feeds into Australia's GDP) and an in-line print for monthly CPI (Weighted CPI YY 2.50% vs. Exp. 2.50%, Prev. 2.50%).
• Deutsche Bank month-end model: a reasonable shift towards USD buying, most pronounced vs European equities and as such points toward EUR/USD supply.
• PBoC set USD/CNY mid-point at 7.1732 vs exp. 7.2526 (prev. 7.1726).

Fixed Income

• An upward bias is present, though USTs remain in the red, a move off lows which began in the European morning despite a lack of specific drivers at the time and was potentially a function of a bout of pressure in the crude space weighing on yields. As it stands, USTs are at the mid-point of a 110-08 to 110-19+ band and while they have been in the green on a few occasions the moves have been fleeting at best and minimal in nature. Today’s session is largely a waiting game until the after-hours numbers from NVIDIA. However, we do get Fed’s Barkin & Bostic alongside a 7yr auction and more executive orders from POTUS beforehand.
• Bunds are firmer, picked up in the early European morning in tandem with the mentioned move in USTs. Aside from energy dynamics, drivers behind the move at the time were limited. Since, with newsflow quiet and despite a pick-up in the crude benchmarks, EGBs remain in the green and just off best. Specifically, Bunds picked up from a 132.24 base to opening levels of 132.47 in the early morning and then extended to a 132.76 peak after the cash open. Ahead traders will keep an eye out for remarks from French President Macron who is set to provide other EU leaders with a summary of his meeting with US President Trump. No move to the 2038/2036 Bund auctions.
• Gilts are in-fitting with EGBs. UK specifics have been very light so far as we await UK PM Starmer’s PMQs appearance for fresh insight into the defence spending increase he announced on Tuesday and details ahead of his US trip on Thursday. Gilts at the upper-end of a 93.07 to 93.48 band.
• Germany sells EUR 1.252bln vs Exp. EUR 1.5bln 1.00% 2038 and EUR 400mln vs exp 500mln 0.00% 2036 Bunds

Commodities

• Choppy trade across the crude complex once again after prices tumbled on Tuesday as soft consumer confidence data added fears to the demand side of the equation. Newsflow for the complex has been light this morning, although a mild dip was seen around the time Trafigura's Global Oil Head Lockock suggested the oil market is pricing out geopolitical risk, and that OPEC will be pragmatic in its approach to oil supply. Brent Apr in a USD 72.40-72.81/bbl parameter.
• Upward bias across precious metals in what is seemingly a recovery of recent losses and come despite the firmer Dollar this morning. Spot gold resumed its gradual rebound from yesterday's trough with the precious metal back above the USD 2,900/oz level.
• Copper futures continue to be underpinned following a power surge in Chile which affected all of state miner Codelco's mines and prompted a state of emergency declaration, while prices were further boosted overnight on reports that the Trump administration will investigate the possible imposition of tariffs to rebuild the US copper industry. 3M LME copper trades on either side of USD 9,500/t in a USD 9,454.90-9,558.00/t range.
• US Private Inventory Data: Crude -0.6mln (exp. +2.6mln), Distillate -1.1mln (exp. -1.5mln), Gasoline +0.5mln (exp. -0.9mln), Cushing +1.2mln..
• Serbia's increases crude oil and fuel reserves to supply market for at least three months, according to the energy minister.

Geopolitics: Middle East

• Mediators in Egypt and Qatar with the US administration are reportedly pushing towards the start of negotiations for the second phase of the Gaza agreement", according to Palestinian sources cited by Al-Sharq
• Egypt Investment Minister says the details of the Gaza plan will be decided on the 4th of March.
• Israeli air force targeted military bases of the former Syrian army and destroyed "weapons means" in Damascus, while Israel's Defence Minister said they will not allow a repeat of the experience of southern Lebanon in southern Syria and will not allow the stationing of Syrian forces in the buffer zone.
• Hamas appointed new commanders and is regrouping its military forces for a potential return to fighting with Israel in Gaza as mediators work to salvage the ceasefire that expires this weekend, according to WSJ.
• US Secretary of State Rubio and Saudi Arabia's Defence Minister discussed ways to promote peace and stability in Syria, while they also discussed ways to promote peace and stability in Lebanon, Gaza, and across the region
• Israel is said to be pursuing an indefinite extension to the first phase Gaza ceasefire rather than moving to a planned second stage meant to end the conflict, according to FT sources.

Geopolitics: Ukraine

• Russia's Kremlin says expert-level talks with the US are being prepared; no current plans for a US President Trump/ Russian President Putin call, but may take place if necessary; still interested in implementing economic cooperation in "different" areas.
• US President Trump said Ukrainian President Zelensky would like to sign a minerals deal with him, while Trump stated that they have pretty much negotiated their deal on rare earths and would like to get access to Russian rare earths.
• Russian Foreign Minister Lavrov says they don't consider the option of European troops deployment in Ukraine.

Geopolitics: Taiwan

• Taiwan dispatches forces after China announces 'shooting' drills off island, says Taipei defence ministry via AFP

US Event Calendar

• Jan. Building Permits MoM, prior 0.1%
• Jan. Building Permits, prior 1.48m
• 07:00: Feb. MBA Mortgage Applications, prior -6.6%
• 10:00: Jan. New Home Sales MoM, est. -2.6%, prior 3.6%
• 10:00: Jan. New Home Sales, est. 680,000, prior 698,000

Central Banks

• 08:30: Fed’s Barkin Repeats Speech on Inflation
• 12:00: Fed’s Bostic Speaks on Economic Outlook, Housing

DB's Jim Reid concludes the overnight wrap

Markets saw another decent risk-off move over the last 24 hours, as concerns about the US economic outlook continued to mount. There wasn’t a single catalyst, but there’s been some disappointing US data recently, and yesterday we found out that the Conference Board’s consumer confidence indicator hit an 8-month low. By the close, no asset class was immune from the slump, with equities losing ground, credit spreads widening, bond yields falling, and commodities selling off too. In fact, it’s now been the biggest 4-day decline for the S&P 500 since early September, and the Magnificent 7 was back in technical correction territory, having now shed more than -10% since their peak back in December. So that’s heightening the focus on Nvidia’s earnings after the US close tonight. Meanwhile for Bitcoin (-5.59%), it was the biggest daily fall since early September.

In terms of yesterday’s developments, it had looked like markets would start to stabilise again, with the S&P 500 broadly flat at the time of the US open. But a more negative tone quickly began to develop, particularly after the Conference Board’s indicator fell to just 98.3 in February (vs. 102.5 expected), making it the biggest slump on the previous month (-7pts) since August 2021, back when inflation was starting to surge and the delta variant of Covid was spreading. Moreover, the labour market indicators also worsened a bit, with the difference between those saying jobs were plentiful and hard to get down to a net 17.1%, which is the weakest since October. So collectively, this added to concerns that the US economy was slowing, a bit like we saw moving into last summer.

With all that in hand, US equities saw a decent slump yesterday, with a notable underperformance relative to Europe. For instance, the S&P 500 was down -0.47%, posting a 4th consecutive decline for the first time since the new year, and that was actually a recovery from an intraday low of -1.25%. The declines were concentrated among big tech stocks, with the Magnificent 7 (-2.25%) moving into correction territory, led by a -8.39% slump for Tesla as its European sales fell -45% year-on-year in January. By contrast, most of the S&P 500’s constituents actually put in a steady performance, with the equal-weighted index (+0.13%) eking out a second consecutive gain, whilst the Dow Jones was up +0.37%. So this wasn’t a broad-based decline.

On the rates side, the weaker data led markets to dial up their expectations for Fed rate cuts this year. So by the close, futures were pricing in 57.5bps of cuts by the December meeting, up +7.8bps on the day. Bear in mind the FOMC’s most recent dot plot in December only had 50bps of cuts pencilled in, so that’s the first time since the dot plot was released that the market is pricing a more dovish path than the Fed have signalled. And with investors growing more confident about rate cuts, that led to a significant decline in Treasury yields across the curve. For instance, the 2yr yield (-8.0bps) fell back to 4.10%, its lowest level since October, whilst the 10yr yield (-10.6bps) fell to 4.29%, its lowest since early December.

The risk-off tone was clear more broadly, with pretty much every asset class affected by the moves. Commodities took a particular hit given fears about economic demand, and Brent crude oil prices fell back to their lowest since December, at $73.02/bbl, whilst Bloomberg’s Commodity Spot Index (-0.67%) fell back for a third day running. In credit, US HY spreads moved up +5bps to 277bps, their widest in six weeks. And in the FX space, investors moved into havens, with the Japanese Yen moving up to its strongest level against the US dollar since October, whilst the Swiss Franc was another outperformer, strengthening +0.47% against the US Dollar. In the meantime, Bitcoin closed at a 3-month low of $88,702, leaving it -16.94% beneath its closing peak on January 21.

Elsewhere yesterday, there was significant news on European defence, as the UK announced that defence spending would increase to 2.5% of GDP from 2027, funded by a cut to overseas aid spending. Prime Minister Starmer also announced an aim to reach 3% in the next parliament (expected 2029-34). Meanwhile in Germany, discussions continued over a defence package, although CDU leader Friedrich Merz said he could “neither confirm nor deny” whether €200bn of additional investment in defence was being discussed. He also said that talks on a coalition with the SPD were already underway. Lastly in the US, there were also developments on the fiscal side, as the House of Representatives passed the Republican budget resolution. That includes $4.5tn of tax cuts, along with $2tn in spending cuts over the next decade. It only passed by 217-215, with just one Republican voting against, reflecting the Republicans’ narrow majority in the new Congress.

Amidst the prospect of higher spending, European equities put in a mixed performance yesterday. The STOXX 600 moved up +0.15%, closing just over half a percent beneath its all-time high from last week. But there was some divergence across the continent, with Germany’s DAX (-0.07%) and France’s CAC 40 (-0.49%) both losing ground, whilst Italy’s FTSE MIB (+0.63%) and Spain’s IBEX 35 (+0.80%) both advanced. German mid-caps continued to outperform though, with the MDAX index up +0.60%, and Rheinmetall (+0.15%) also saw a modest gain. Otherwise, there was a more consistent performance for sovereign bonds, which rallied across the continent. UK gilts saw the strongest performance, with the 10yr yield down -5.5bps, but yields on 10yr bunds (-1.9bps), OATs (-2.9bps) and BTPs (-3.0bps) also fell back.

Overnight in Asia, we’ve seen markets put in a stronger performance again, with the Hang Seng surging by +3.18%. That leaves its YTD gains at +18.47%, making it the top performer among the major global equity indices so far in 2025. Otherwise, there’ve also been gains for the Shanghai Comp (+0.75%), the CSI 300 (+0.44%) and the KOSPI (+0.36%). And looking forward, US equity futures have recovered as well, with those on the S&P 500 up +0.38%. However, Japanese equities are the main outlier, with the Nikkei down -0.70% after the yen closed at its strongest level in four months against the US Dollar yesterday, at 149.03. And in Australia, the S&P/ASX 200 (-0.14%) has also lost ground, despite the CPI data for January coming in slightly softer than expected at +2.5% (vs. +2.6% expected).

To the day ahead now, and the main highlight will be Nvidia’s earnings after the US close. Otherwise, central bank speakers include the Fed’s Barkin and Bostic, along with the BoE’s Dhingra. And data releases include US new home sales for January.