Squawk Box Europe Express

U.S. inflation is down in January but still comes in hotter than expected at 6.4 per cent. Global markets are slightly down with only the Nasdaq posting a positive session. TSMC shares sell off after Berkshire Hathaway cuts its stake in the chip maker by more than 85 per cent while increasing its Apple holdings. In luxury news, LVMH appoints U.S. rapper Pharrell Williams to lead its menswear design arm.

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Japan’s government confirms Kazuo Ueda as its nominee to lead the BoJ with market analysts anticipating the new governor will keep the country’s monetary policy loose but to scrap yield curve control. We await today’s U.S. CPI data with investors hoping on seeing further signals of inflation easing despite Fed officials remaining hawkish. There are suggestions the EU may swerve recession with attention now focusing on the bloc’s heavy debt load. EU Commissioner Valdis Dombrovskis tells CNBC that the EU’s economy remains robust despite slow growth rates. U.S. and Chinese authorities are reportedly considering a face-to-face meeting at this weekend’s Munich Security Conference amid ongoing spy balloon accusations.  

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The S&P 500 and Nasdaq finish their worst week in more than a month as investors brace themselves for U.S. CPI data out later this week as well as further rate hikes to rein in inflation. The weak sentiment crosses the Pacific with Japan’s Nikkei leading losses. Questions linger over whether prospective BoJ governor nominee Kazuo Ueda would move against the country’s ultra-loose monetary policy. The U.S. Air Force has shot down a fourth flying object in American air space in just eight days – this time over Lake Huron – as Washington moves to blacklist 6 Chinese firms suspected of being linked to the spy balloon downed over the coast of South Carolina. And in sports news, the Kansas City Chiefs beat the Philadelphia Eagles 38-35 in Superbowl LVII.   

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Standard Chartered shares dip sharply in Hong Kong after First Abu Dhabi Bank denies reports it is lining up a $35bn takeover of the Asia-focused UK lender. Inflation data in China comes in below expectations as factory gate prices continue to fall while CPI surges. The proxy fight between Disney and billionaire investor Nelson is now over after CEO Bob Iger announced vast reorganisation and cost-cutting plans at the entertainment giant. The two have now told CNBC that they will now share a joint vision for the company. In luxury news, L’Oréal sees Q4 profits jump by 8 per cent, helped along by strong showings in Europe and the U.S. However, strict Covid restrictions in China slowed growth in the quarter. 

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We have a slew of European corporate earnings. Credit Suisse posts a consecutive net loss of CHF7.29BN for last year. However the outflow of business grabs the headlines with up to CHF111BN leaving the lender. Siemens smashes Q1 forecasts and raises its FY sales and profits guidance. Stateside, Disney stocks are up in after-hours trade after returning CEO Bob Iger announces a raft of reforms, including 7,000 job cuts and $5.5bn in cost-cuts. And Alphabet shares plunge following an error made by its A.I. chatbot in a promotional video clip.   

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President Biden addresses Congress in his State of the Union speech, taking aim at China and big business while hailing his own economic agenda in its role in fighting inflation. The dollar is down and Treasury yields rise following Federal Reserve Chairman Jerome Powell’s comments that further rate hikes may still be on the table if inflation fails to stabilise. French lender Société Générale posts Q4 net income falling by 35 per cent but still beating expectations. Volkswagen reports a rise in FY sales and profit despite weak deliveries. There is little progress following Inflation Reduction Act talks between French and German economy ministers. WTO director-general Ngozi Okonjo-Iweala tells CNBC she hopes Brussels and Washington can still avoid a trade confrontation.   

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Softbank posts a fourth consecutive quarter of losses at the investor’s Vision Fund. CEO Masayoshi Son is to miss the earnings call for the fist time ever. French lender BNP Paribas reports a 9 per cent rise in full-year profits but CFO Lars Machenil tells CNBC that the macro environment remains uncertain. Q1 net loss more than doubles at Siemens Energy due to charges at its wind division Gamesa. However CEO Christian Bruch the pipeline is still strong. U.S. President Joe Biden is due to deliver his second State of the Union address and is expected to hail his landmark climate legislation but he is likely to be dogged by questions over his handling of a suspected Chinese spy balloon. And in south-eastern Turkey the death toll continues to rise after the region was hit by two massive earthquakes on Monday morning.  

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The US shoots down a suspected Chinese spy balloon, drawing an angry response from Beijing as Secretary of State Antony Blinken cancels what would have been the Biden administration's first cabinet visit to China. Wall Street takes a step back after the January jobs report blows past forecasts, but tech stocks still see a five-week rally - the longest run since November 2021. The yen dips as the market digests reports that one of the most dovish candidates, Masayoshi Amamiya, has been sounded out as a potential successor to Haruhiko Kuroda at the head of the BOJ. Adani's stock slide enters a third week, as Adani Enterprises reportedly postpones a bond sale, and Moody's downgrades its outlook on two of the group's companies.

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Apple posts its first profit miss in seven years as demand for its high-end iPhones drops on production issues and a softer macroeconomic environment. In other tech earnings news, Alphabet flags slower ad revenues, and Amazon struggles on weaker consumer sentiment. Meta surges to one of its best days in almost a decade, pushing the Nasdaq to its highest level since September. Top executive Nicola Mendelsohn tells CNBC the tech giant's strategy shift is paying off. The ECB and BOE both hike rates by 50 basis points, while a change in wording at the Bank of England sparks speculation rates are now at or near the peak. Governor Andrew Bailey tells CNBC it's too soon to be sure. Adani Group losses spiral past $100 billion since late January, as a short-seller's accusations of fraud spark an intensifying crisis at the Indian conglomerate.

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We have a slew of European corporate earnings this Super Thursday including Deutsche Bank, Roche and Santander, ahead of key central bank decisions. Stateside, the Federal Reserve slows the pace of rate hikes to deliver its smallest increase in a year. Chairman Jerome Powell hints that the central bank will again hike in March despite signs of cooling inflation. We await interest rate decisions from the BoE and the ECB later today as euro zone inflation eases for a third consecutive month.

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