Nikkei 225 closes lower by 0.86% at 29,408.17

A softer mood in Asia as the rebound yesterday falters

Nikkei 03-02
The risk mood is keeping on the softer side, after China warned of bubbles and financial risks earlier – tempering with the mood in Asian equities today. For the Nikkei, the key trendline support is still holding for the time being.
The Hang Seng is down 1.5% while the Shanghai Composite is down 1.8%. Elsewhere, US futures are also looking more subdued as the bounce yesterday hits a stumbling block despite the bond market keeping a calmer mood so far on the day.
In the major currencies space, the dollar is more bid across the board with the loonie lagging behind as oil prices are also tracking lower just below $60 in anticipation of the OPEC+ meetings later on in the week.

Economic data coming up in the European session

Eurozone February inflation data due today

Inflation
After the broader rebound yesterday, the market is failing to find much reprieve on Tuesday so far with a lack of fresh cues to work with.
A firmer dollar is also making its way into the market narrative today and that is weighing on sentiment a little across the board, even as bonds remain calmer.
Asian equities are down alongside US futures, with the greenback keeping higher across the board. Notably, EUR/USD is testing its 100-day moving average while USD/JPY is slowly making its way towards the 107.00 handle.
Elsewhere, the pound’s upside momentum continues to stall as EUR/GBP keeps above key near-term levels around 0.8642-45 to trade around 0.8660 levels currently.
Oil is also down a little over 1%, trading back under $60 as traders get a bit jittery ahead of the OPEC+ meetings at the end of the week.
Risk sentiment remains the key focus with the market continuing to keep a watchful eye on bonds once again today. Fedspeak will be among the things to be mindful about this week and we’ll be getting more of that later today (I’ll outline in a separate post).
0700 GMT – UK February Nationwide house prices
Prior release can be found here. The surge in the housing market since last year – due to the stamp duty holiday – is running into a bit of moderation as of late and that might stay the case until there is a decision made on the stamp duty holiday expiration (which is set to carry on until 31 March for the time being).
0700 GMT – Germany January retail sales data
Prior release can be found here. After the massive slump in December, German retail sales is expected to improve slightly to start the new year but conditions are still relatively subdued due to lockdown measures still in place for most of Q1.
0855 GMT – Germany February unemployment change, rate
Prior release can be found here. German labour market data continues to be distorted somewhat by the furlough and short-time work schemes, so it is tough to really draw much conclusions from the report above still.
1000 GMT – Eurozone February preliminary CPI figures
Prior release can be found here. The main inflation reading is expected to keep steady at +0.9% y/y but the core reading is expected to fall slightly to +1.1% y/y from +1.4% y/y in January. Base effects will continue to play a factor in keeping the price trend more choppy and volatile in 1H 2021, so expect the ECB to keep brushing aside any positive ticks in inflation over the next few months.
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

GameStop ‘Roaring Kitty’ aka DeepF******Value’ is no longer a licensed broker

Via Reuters (citing US FINRA records) comes the news of the central character in the GME surge

Keith Gill, known as Roaring Kitty on YouTube and DeepF***ingValue on Reddit

  • no longer a registered financial broker
  • no longer licensed to act as a broker buying and selling securities on behalf of clients or as an investor adviser providing advice about securities to clients.
Gill was a huge bull on GME, which proved an outstandingly good call (no pun intended).
FINRA is  the Financial Industry Regulatory Authority
Via Reuters (citing US FINRA records) comes the news of the central character in the GME surge

Oil – OPEC+ meeting week – Russia, Saudi are potentially on opposite sides of the pump it up debate

  • PEC+ will be making a decision on April output, with many expecting the cartel and its allies will bump production higher from April. Saudi Arabia is, however, urging caution on supply increases (at least its doing so publicly), while Russia is signalling it wants to push output higher. 
Via Platts now, a little more:

 

  • Many analysts, including OPEC’s own, have concluded the market can likely absorb a 1.5 million b/d production increase without tipping into surplus, but releasing all that crude at once risks spooking traders and unraveling the price rally. Maintaining the cuts, however, could overheat the market and erode still fragile oil demand.
  • Potentially on opposing sides once again are Russia, which has consistently pushed to pump more, and Saudi Arabia, whose energy minister Prince Abdulaziz bin Salman has urged the alliance to go slow.

 

Here is the link to Platts for much more (may be gated)

The background to the meeting is an improving picture for oil demand:
  • Fiscal stimulus
  • coronavirus vaccine rollout
  • commodities on a price upswing
  • tightening oil market
  • Texas deep freeze shut-in US production temporarily

Higher US rates = Buy USD/JPY? Not that simple this time – BofA

US dollar strategy from Bank of America

 Bank of America Global Research discusses JPY outlook and now w forecast USD/JPY at 104 for mid-year and 106 for year-end. BofA forecasts EUR/JPY at 122 for year-end.

“As US rates have risen, USD/JPY has responded. Will higher US rates boost USD/JPY as it did in 2013 before QE3 tapering or in 2018 when USD/JPY was supported by higher US rates despite general JPY strength?,” BofA notes.

We think three factors will limit JPY’s downside in 2021 and increase the risk of a JPY rally in case of a correction in the equity market: • Low FX carry compared to 2013 and 2018 .  • Stretched positioning in risk assets, outpacing the economic cycle • Less unhedged demand for US assets (pension rebalancing complete, lifers focus on hedged bonds),” BofA adds.

Jamie Dimon: There’s a very good chance there will be a gangbuster economy

Comments from the JPMorgan CEO

Jamie Dimon
  • I wouldn’t worry too much about the economy overheating
  • There will be a gangbuster economy this year and next
  • Let me be very clear, I would not buy 10 year Treasuries
  • We were late to the SPAC game. I think you have to cautious
  • Clearly there’s a lot of hype and a lot of sponsors you shouldn’t be doing business with
  • Says he’d like to remain CEO for 5 years
  • Remote work will reduce need for commercial real estate

US 10-year yields look to be pushing above 1.45% a short time ago but they’re back below now. Dimon has a lot of power but he can’t move 10s.

European equity close: Big rebound

Closing changes for the main European bourses:

  • UK FTSE 100 +1.5%
  • German DAX +1.6%
  • French CAC 40 +1.6%
  • Spain IBEX +2.0%
  • Italy MIB +1.8%
It’s a big day for risk assets everywhere and a strong bounce from the trouble at the end of last week.
There was a bit of a lull in the market midway through the European day but markets got a second lift from Villeroy and US enthusiasm.