MARKET WRAPS

Stocks:

European stocks traded mostly higher on Wednesday, as investors' eyes shifted towards U.S. January retail sales later.

Investors will look to the report for evidence that "the U.S. consumer is feeling the effects of higher prices and weaker demand," CMC Markets said.

"Having finished November and December on the back foot, the milder weather that we saw in January which helped drive the jobs boom, as well as stickier inflation is likely to have prompted a surge in consumer spending if recent credit card data is any guide."

"This consumer resilience will only harden the resolve of the Federal Reserve to continue hiking, with expectations that January retail sales will see a sharp rebound of 2%, reversing the combined losses we saw from November and December," CMC added.

Stocks to Watch

Repsol's refining tailwind and shareholders returns are expected to be in focus when the company reports fourth-quarter results on Thursday, RBC Capital Markets said.

The Spanish energy major's quarterly update pointed to continued strength in refining boosted by lower energy costs, with the refining margin indicator at $18.9/bbl.

In terms of returns, RBC said that "given strong free cash flow generation as well as incremental divestment proceeds coming this quarter, expectations on the buyback remain front and centre," and forecasts a EUR2-billion buyback this year.

Repsol previously guided for a 25%-30% payout ratio, but hasn't shared any details about the use of proceeds from recent divestments, RBC added.

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Thyssenkrupp executing its announced divestments remains key for the German industrial group to crystallize its value, Deutsche Bank said.

Even small steps could provide material upside potential, it noted, after Thyssenkrupp's said in its fiscal first-quarter result that it remained committed to an IPO of Nucera without specifying further.

"We still believe that the group would ultimately benefit from an even clearer portfolio structure."

Thyssenkrupp will need to stay focused on its performance and on lowering costs, DB said, adding that an inflection point for Thyssenkrupp, given its soft steel guidance, is yet to arrive.

U.S. Markets:

Stock futures edged down ahead of more earnings and data on retail sales.

The yield on 10-year Treasurys rose to 3.742% from 3.760% Tuesday.

Data due to be released are expected to show that retail sales grew 1.9% in January from December, after falling in December.

Forex:

Remarks by ECB's Lagarde later probably won't move the euro materially, ING said.

"After her attempts and those (more successful) of her governing council colleagues to keep rate expectations high in the eurozone, we don't see how there is much she could add to the central bank's rhetoric at this stage."

EUR/USD should remain driven by dollar moves and faces near-term "downside risks" as the market raised its U.S. interest rate expectations following yesterday's higher-than-expected inflation data, ING said.

EUR/USD could fall to 1.0650-1.0700 by week-end, it added.

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Sterling fell after data showed U.K. inflation eased by more than expected in January.

Inflation decelerated to an annual rate of 10.1% in January from 10.5% in December, compared to expectations of 10.3% in a WSJ survey of analysts.

"The easing in services inflation will do the most to reassure the Bank of England that inflation is moderating as it had hoped," Capital Economics said.

"This suggests the chances of interest rates rising from 4.00% now to our forecast of 4.50% are now a bit slimmer."

"Swap markets now see just two more 25 basis points rate hikes from the BOE, with a 50/50 chance of a first rate cut by year end," Ebury said.

This is less aggressive than expected from the Fed and the ECB, which could present some near-term downside for sterling, it added.

Read Pound May Fall as Pause in Rate Rises Looms if Inflation Eases Further

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The dollar rose after yesterday's higher-than-forecast inflation data and could extend its gains on potentially strong data later today, Unicredit Research said.

The inflation data support the idea that the Fed might need to raise interest rates further and hold rates once the peak is reached, it added.

The DXY dollar index has returned to being very sensitive to the rise in long-term U.S. Treasury yields, Unicredit said.

"Against this backdrop, US data scheduled for today, including retail sales, industrial production and capacity utilization, are likely to come in on the firm side too and might all prove to be USD supportive."

Bonds:

Eurozone government bond yields edge lower but remain close to recent highs, awaiting further data, bond supply and central bankers' speeches as potential drivers, analysts said.

Participating in a plenary debate at the European Parliament about the ECB's monetary policy, Lagarde "will undoubtedly leave little doubt that the ECB continues to view price stability as its top priority," DZ Bank said.

Energy:

Oil prices tumbled as data suggested a sharp build in U.S. crude oil inventories.

American Petroleum Institute figures reportedly showed a 10.5 million barrel build in U.S. crude stocks in the week through Feb. 10. Signs of weak U.S. demand are undermining optimism surrounding China's growing appetite for crude oil.

"We expect oil and gas demand to increase in China but are a bit more cautious than most...Still, the wild card remains U.S. demand and whether the biggest major oil-consuming economy slips into the recession abyss," SPI Asset Management said.

Metals:

Base metals and gold prices were moving lower in early trading, with a rising dollar once again acting as a headwind for commodity prices.

Copper Outlook

Copper looks modestly bearish near-term, as net speculative positions imply the market is pricing a stronger global growth recovery than Citi Research anticipates, it said.

Short-covering of positions which Citi had expected last month hasn't materialized due to weakening macro sentiment, and copper is already pricing in a China-led growth recovery.

China's economic growth could also disappoint amid ongoing property-sector struggles and weak consumer confidence, Citi said.

Citi cut its copper-price forecast for up to three months to $8,500 a ton from $10,000 a ton previously.

DOW JONES NEWSPLUS


EMEA HEADLINES

U.K. Inflation Cools but Wage Increases Keep Central Bank on Alert

The U.K.'s annual rate of inflation fell for a third straight month in January and more sharply than expected, following a signal from the Bank of England that it may soon pause a series of rate rises that began at the end of 2021.

Consumer prices in the U.K. were 10.1% higher than a year earlier, a slower rate of inflation than the 10.5% recorded in December as transport prices cooled, the Office for National Statistics said Wednesday. That was a larger fall than the decline to 10.3% forecast by economists.


Eurozone Trade Deficit Hit Record High in 2022 as Soaring Energy Prices Boosted Imports

The eurozone posted a record-high trade deficit in 2022 as prices for imported energy soared after Russia's invasion of Ukraine.

The eurozone's trade deficit in goods-the difference between exports and imports-was 314.7 billion euros ($337.88 billion) in 2022, swinging from a EUR116.4 billion surplus a year earlier.


Barclays Profit Falls as Deal Making Declines; Shares Drop

LONDON-Barclays PLC's profit fell in the fourth quarter from a year earlier, as a downturn in deal making and raising funds for corporate clients held back its investment bank.

The British banking giant disappointed investors by missing forecasts for a key measure of profit and giving an underwhelming outlook for the year ahead, helping send its shares sharply lower.


Glencore to Return $7.1 Bln to Shareholders After Record 2022 Earnings - Update

Glencore PLC said Wednesday that it will return $7.1 billion to shareholders after reporting record 2022 earnings on the back of significant growth in its marketing and energy divisions.

The Anglo-Swiss commodity mining and trading company declared distributions of $5.6 billion and a $1.5 billion share-buyback program.


Heineken Backs 2023 Guidance After 2022 Net Profit Fell But Beat Forecasts

Heineken NV on Wednesday reported a 19% fall in 2022 net profit, but beat analysts forecasts, and backed its full-year guidance.

The Dutch brewer reiterated that it expects input costs to rise in the high-teens per hectoliter and significantly higher energy costs, particularly in Europe.


Gucci, Balenciaga Struggle Amid Designer Shakeup and Ad Controversy

PARIS-A fall in sales at Gucci and consumer outrage over Balenciaga's portrayal of children in its ads led to a slowdown in revenue at the brands' owner.

French luxury conglomerate Kering SA said its biggest brand, Gucci, booked a 14% drop in comparable sales over a three-month period ending in December in part due to pandemic restrictions that were in place in China during the quarter. Kering reported a 4% sales drop in its "other brands" segment, which includes Balenciaga, over the same period.


Why Porsche's Stock Can Keep Speeding Higher

Many may dream of having a Porsche sports car in the garage, but owning the company's stock could be just as rewarding.

Shares of Porsche (ticker: P911.Germany), maker of the iconic 911 that has resembled a futuristic spaceship since it made its debut in 1964, only recently came back on the market. Porsche was spun off by Volkswagen last year, and its stock has since risen 40%.


GLOBAL NEWS

January Retail Sales to Show Whether Consumer Spending Picked Up

A report on January U.S. retail sales will show consumers' enthusiasm for spending at stores, restaurants and online at the start of the year as job growth surged and high inflation cooled slightly.

(MORE TO FOLLOW) Dow Jones Newswires

02-15-23 0622ET