EUROPEAN OPEN: AAL LN slashes De Beers value again; AI FP profits rise; BN FP mixed results; TKA GY upgraded, ORA FP downgraded; ahead, Flash PMIs, US PCE inflation and US GDP

• EUROPEAN OPEN: European equities have started Friday’s trading with modest gains. On the week, futures of the broad Stoxx 600 and the narrower Euro Stoxx 50 futures are primed for gains after last week’s modest downside. Overnight, APAC stocks followed suit to the predominantly negative mood on Wall Street, where risk appetite was subdued amid private credit fund concerns and geopolitical risks. President Trump is weighing a limited initial military strike on Iran to pressure it into agreeing to a nuclear deal, WSJ reports citing sources; the potential strike could occur within days, and would target select military or government sites, with the possibility of a broader campaign if Iran refuses to end nuclear enrichment. On Thursday, Trump gave Iran 10-15 days to reach a deal, and warned that ‘bad things’ would happen if no deal made. The USD is set for its strongest weekly gain since October, as traders reduced expectations for Fed rate cuts amid heightened inflation concerns and recent US data; geopolitical tensions have also supported the buck. Oil trades near six-month highs after President Trump said Iran had 10-15 days to reach a nuclear deal, raising supply disruption concerns; Brent climbed above USD 72/bbl, while WTI was near USD 67/bbl. Gold steadied near USD 5,000/oz after two days of gains, but is still heading for a modest weekly decline. Copper is set for a third weekly decline, marking the longest losing run since 2024; Exchange-tracked inventories rose to an 11-month high, signalling weaker physical demand amid elevated prices. Iron ore is poised for its longest run of weekly losses since 2022, with benchmark futures in Singapore falling for an eighth straight day, and heading for a sixth weekly decline; analysts cite improved Australian supply and elevated stockpiles at Chinese ports, amid thin trading volumes during Lunar New Year holidays. In data, UK retail sales rose 1.8% M/M in January (exp. 0.2%, prev. 0.4%), with the annual rate at 4.5% Y/Y (exp. 2.8%, prev. 1.9%). The ONS said the upside surprise was driven by jewellery demand, strong artwork and antiques activity, and a surge in non-store sales helped by heavy rainfall and mail-order strength; broader categories also improved. Pantheon Macroeconomics said it expects some February payback, and possible revisions, but rising consumer confidence and finances point to decent retail prospects into 2026.
• STOCK SPECIFICS: In materials, Anglo American (AAL LN) cut the value of its De Beers unit by USD 2.3bln, halving its valuation and marking a third write-down in three years. The group reported net losses of USD 3.7bln (vs USD 3bln Y/Y). FY revenue USD 18.5bln (prev. 17.7bln Y/Y), adj. profit USD 610mln (exp. 710.8mln), adj. EBITDA USD 6.4bln (exp. 6.34bln). De Beers’ losses widened to USD 511mln (from USD 25mln), as it seeks to sell its 85% stake. Air Liquide (AI FP) confirmed its 2026 margin guidance, and set a 2027 operating margin increase target of 100bps, with a 560bps improvement vs 2022-2027; recurring operating profit rose to EUR 5.58bln in 2025 (exp. 5.56bln); will propose a dividend of EUR 3.70 per share (+12.1% Y/Y). In consumer defensive, Diageo (DGE LN) CEO plans a major overhaul of its 14-member executive committee as he seeks to address weak sales growth and streamline management, FT reports. Danone (BN FP) 2025 sales EUR 27.28bln, up 4.5% LFL (exp. 4.4%), with a recurring operating margin of 13.4% (exp. 13.4%), and cash flow of EUR 2.8bln (exp. 2.5bln); raises dividend +4.7% to EUR 2.25/shr; expects 2026 LFL sales growth of 3-5%, with recurring operating income growing faster than sales. In consumer cyclical, Moncler (MONC IM) 2025 revenue EUR 3.13bln (+1%, and +3% at CC), Q4 revenue EUR 1.3bln (+7% at CC), net profit EUR 626.7mln (exp. 596mln); ended the year with EUR 1.45bln net cash; said all regions grew positively in January and February, with strong performance in Asia and the US, and expects continued strength in Asia and the US. In healthcare, Novartis (NOVN SW) agreed to sell its 71% stake in listed unit Novartis India to a consortium of WaveRise Investments, ChrysCapital Fund X and Two Infinity Partners for around USD 159mln; the transaction concludes a strategic review announced two years ago. FDA has accepted Roche’s (ROG SW) New Drug Application for giredestrant, an investigational oral therapy, in combination with everolimus for the treatment of adult patients with breast cancer. In notable broker updates, ThyssenKrupp (TKA GY) was upgraded at Jefferies; St James Place (STJ LN) was upgraded at UBS; Segro (SGRO LN) was upgraded at Shore Capital; Telia (TELIA SS) was upgraded at Nordea; Telecom Italia (TIT IM) was downgraded at Deutsche Bank; Orange (ORA FP) was downgraded at ESN.

TODAY’S AGENDA:

• DAY AHEAD: Global flash PMI data for February are released today. Stateside, the highlight is the US PCE and GDP data for December (previews below). Final University of Michigan sentiment data for February, the Conference Board’s leading index, and new home sales data are also due. Canada’s PPI and retail sales data, and the BoC’s senior loan officer survey are also set for release. In energy, Baker Hughes will publish its weekly rig count stats. Today’s CRA slate includes potential reviews from Moody’s on Sweden, and Fitch on the UK. The speakers’ slate includes: ECB President Lagarde, Fed’s Bostic (non-voter; retiring; hawk), and Fed’s Logan (2026 voter, Hawk) who will speak on bank regulation.
• US PCE (13:30GMT/08:30EST): PCE prices, the Fedʼs preferred inflation gauge, is expected to rise 0.3% M/M in December (prev. 0.2%), with the annual rate at 2.8% (unch). The core measure is expected to rise 0.3% M/M (prev. 0.2%), with the annual rate at 2.9% (prev. 2.8%). The data will be critical for policymakers and markets in assessing the future path of interest rates. Consensus expects December PCE to show firmer price pressures than recent CPI prints, with measures such as food and producer prices pointing to upside risks. Analysts note that the ‘wedgeʼ between CPI and PCE could produce a hotter PCE reading, partly because PCE places greater weight on categories where prices are rising more sharply. At his press conference following the FOMCʼs January meeting, Chair Powell said estimates based on CPI data indicate headline PCE rose 2.9% Y/Y in December, up from 2.8%, while core PCE, excluding food and energy, likely rose 3.0% Y/Y from 2.8%. He said the elevated readings largely reflect goods inflation boosted by tariffs. The Fedʼs December projections pencilled in one additional cut for 2026, though policymakers have recently indicated this depends on further progress towards the inflation target, given the labour market has outperformed expectations. Powell reiterated that decisions will be taken on a meeting-by-meeting basis, guided by data and the balance of risks. He said inflation has evolved broadly as expected but remains somewhat elevated, with no progress on core PCE last year as the overshoot was driven mainly by goods prices, tariffs and one-off factors rather than demand. Goods and tariff-related inflation are expected to peak around mid-year, with many effects already passed through. Powell said that if tariff effects on goods prices peak this year, it would signal scope to loosen policy. Short-term market-based inflation expectations have fully retraced since “Liberation Day”, while longer-term measures indicate confidence that inflation will return to 2%.
• US GDP (13:30GMT/08:30EST): The preliminary Q4 GDP estimate is expected to show US growth cooling from Q3ʼs 4.4% annualised pace, with the consensus expecting 3.0%. The Atlanta Fedʼs GDPNow tracker is modelling growth at 3.0%, revised down after softer core retail sales in December and downward revisions to November, pointing to moderation in consumer spending from the prior quarter’s 3.5% pace. Activity nevertheless appears resilient. In its December SEP, the Fed projected 2026 growth at 2.3%, upgraded from 1.8% in its September forecasts; in January, the FOMC described the economy as expanding at a “solid pace”, while Chair Powell said growth is on a firm footing despite trade policy changes, cautioning that quarterly GDP can be volatile. Vice Chair Jefferson has struck a cautiously optimistic tone on 2026, expecting growth slightly above trend. He highlighted the possibility that productivity gains, including from AI investment, could allow faster expansion without reigniting inflation, though he stressed it is too early to assess their durability. Some analysts say focus will be on whether Q4 confirms a controlled slowdown rather than a sharper loss of momentum, and the implications for policy. The Fedʼs rate path appears to hinge on further progress towards its 2% inflation goal, with most policymakers seeking clearer evidence of disinflation before backing lower rates.