EUROPEAN OPEN: ROG SW backs guidance; BC IM sales rise; SYM1 GY to buyback shares; UBSG SW chief to step down in 2027; judge says ORSTED DC can resume Revolution Wind; ASM NA downgraded

• EUROPEAN OPEN: European equities are opening mostly higher ahead of a busy session, which includes US CPI and bank earnings. Overnight, APAC stocks followed on from Monday’s gains, with equities mostly in the green. Oil rose to the highest level since November after US President Trump said countries doing business with Iran would face a 25% tariff; Brent traded near USD 64/bbl, while WTI was near USD 60/bbl. The White House provided no further details on Trump’s remarks. In central bank speak, Fed’s Williams (voter) said monetary policy was well positioned, with no near-term need to cut rates, as he expects a healthy economy in 2026; Williams said inflation should return to 2% by 2027 while avoiding undue risks to the labour market. BlackRock fixed income chief Rick Rieder, who has reportedly been interviewed for the Fed Chair role, reiterated his view that the central bank should cut interest rates to 3%, calling it closer to equilibrium, and said he was not concerned about Fed independence. WSJ reports that some Trump administration officials and allies fear the DoJ’s criminal investigation into Fed chair Powell could unsettle markets and complicate Senate confirmations, with Treasury Secretary Bessent warning the president of potential fallout for nominees. US Treasury yields edged higher slightly overnight ahead of December CPI data due today (preview below). The JPY fell to its weakest level against the USD since July 2024 after speculation that PM Takaichi may call a snap election. Former BoJ board member Makoto Sakurai said the central bank could raise its benchmark interest rate as early as April as concerns over PM Takaichi’s fiscal policy keep the JPY weak, adding that a hike must come by June/July. The KRW weakened for a ninth straight day vs the USD, heading for its longest losing streak since 2008, as investors moved funds overseas. Gold steadied overnight near USD 4,580/oz after surging to fresh record highs on Monday amid concerns over the Fed’s independence following Trump administration threats against Chair Powell. State Street’s analysts said that gold now has over a 30% chance of reaching USD 5,000/oz this year, citing price momentum, geopolitics, global debt, Fed policy and central bank buying. Aluminium traded near its highest level since early 2022 and tin extended gains as expectations of tighter global supply boosted metals markets. In data, the BRC said UK retail sales growth slowed for a fourth straight month in December as shoppers delayed spending ahead of post-Christmas discounts; total sales rose 1.2% Y/Y in 2025 (vs 3.2% in 2024).
• STOCK SPECIFICS: In healthcare, Sanofi (SAN FP) expects to maintain double digit growth for next half decade; elsewhere, the US FDA approved efficacy supplement of CEREZYME. Roche (ROG SW) affirmed its FY25 guidance. A Bayer (BAYN GY) exec said its pharmaceuticals unit is returning to growth as new cancer and kidney disease drugs offset revenue lost to patent expirations, describing the business as turning a corner and a comeback story. Of note for EssilorLuxottica (EL FP), Meta Platforms (META) plans to cut around 10% of its Reality Labs staff as it shifts priorities from Metaverse Virtual Reality products towards AI, reallocating budgets, data centres and wearables, NYT reports; augmented reality teams, including smart glasses, are largely expected to be spared. In consumer sectors, Sudzucker (SZU GY) reported 9-month revenue of EUR 6.35bln (prev. 7.46bln Y/Y) and EBITDA of EUR 367mln (prev. EUR 502mln); revenue fell in sugar, special products, CropEnergies and starch, but rose in fruit, and the group confirmed its FY2025/26 outlook, while flagging weaker operating results and a significant ROCE decline from 5.2% in 2024/25. Brunello Cucinelli (BC IM) reported prelim. FY revenue +11.5%, driven by strong Americas and Asia demand; Q4 sales +11.9%, with both retail and wholesale showing growth, and it reaffirmed guidance for 10% revenue growth in 2026. Lindt & Sprungli (LISN SW) reported higher FY25 sales, slightly beating expectations, and maintained its FY26 outlook; the chocolatier said performance reflected continued demand across its markets. In materials, Symrise (SYM1 GY) will buy back shares for EUR 400mln, and will divest its terpenes business taking a non-cash impairment of around EUR 150mln in Q4, which it said will have a negative impact on EBITDA. In financials, UBS (UBSG SW) chief executive Sergio Ermotti plans to step down in April 2027 after leading the integration of Credit Suisse, FT reports citing sources; his planned departure comes as UBS disputes Swiss proposals to raise capital requirements by about USD 24bln and prepares a succession process. Ermotti said proposed Swiss banking reforms go too far and risk undermining competitiveness, calling the process political. In utilities, a US judge ruled that Orsted (ORSTED DC) can resume construction of the Revolution Wind project off Rhode Island while it challenges a federal stop-work order, Bloomberg reports. The court said the nearly 90%-complete project would suffer irreparable harm if halted during litigation. In notable broker updates, ASM International (ASM NA) was downgraded at Jefferies; HSBC downgrades Ferrari (RACE IM) and Heineken (HEIA NA); Pirelli (PIRC IM) was initiated with Buy rating at Berenberg; AB Foods (ABF LN) was downgraded at Goldman Sachs; BAE Systems (BA/ LN) was downgraded at Deutsche Bank; Land Securities (LAND LN) was upgraded at Kempen.

TODAY’S AGENDA:

• DAY AHEAD: The data highlight is the US CPI print for December (preview below). The ADP will also report its weekly jobs figures. Elsewhere, the NFIB’s business optimism index, new home sales data for September and October, and the RCM/TIPP economic optimism index for January are due. In later trade, the US monthly budget statement will be released. On the energy front, the EIA will publish its monthly STEO report, and afterhours, the API will publish its weekly inventory data; this week, the street looks for headline crude stocks to draw down by 2.8mln bbls, distillates are expected to build by 4.9mln bbls, and gasoline stocks are seen building by 4.4mln bbls. Today’s speakers’ slate includes: Fed’s Musalem (2028 voter, hawkish) and Fed’s Barkin (2027 voter, neutral) will speak on the outlook; BoE Governor Bailey and BoE’s Lombardelli are due to deliver remarks. US President Trump will visit Michigan to promote US manufacturing, touring a Ford (F) factory in Dearborn, and addressing the Detroit Economic Club; the trip aims to counter job market and affordability concerns amid tariffs, reduced EV incentives and Democratic criticism of his economic policies. Trump is due to deliver remarks at 14:00EST/19:00GMT. In supply, the UK will sell GBP 900mln of 2035 linkers; Italy will sell EUR 3.5-4bln of 2029 BTPs; Germany will sell EUR 6bln of 2031 Bobls; US Treasury will auction USD 22bln of 30yr bonds. Today’s corporate earnings docket includes: JPMorgan (JPM), Delta Air (DAL), Bank of New York Mellon (BK).
• PRIMER - US CPI (13:30GMT/08:30EST) - The consensus looks for headline CPI to rise by 0.3% M/M in December (prev. 0.3%), and the annual rate to remain unchanged at 2.7% Y/Y. The core rate is expected to rise 0.3% M/M (prev. 0.2%), with the annual rate of core CPI seen rising to 2.7% Y/Y (from 2.6%). Wells Fargo expects US CPI to rebound on a monthly basis in December after November’s unusually soft reading, with headline CPI seen rising 0.35% M/M and core CPI 0.36% M/M. It expects the annual rates to hold at 2.7% Y/Y for headline inflation and 2.8% Y/Y for core, remaining below September levels and signalling a continued disinflationary trend. Goldman Sachs expects December US CPI to exceed consensus, with core CPI forecast at 0.35% M/M (2.78% Y/Y) and headline CPI at 0.37% M/M, reflecting firmer food and energy prices. GS says the upside is largely technical, driven by distortions from earlier government shutdown–related data issues, which are expected to temporarily boost inflation through the unwinding of delayed and missed price collection. Goods prices are expected to rebound more sharply than services on holiday discount payback, while tariff pass-through appears to be moderating. Services inflation should also firm, notably in travel-related categories, while shelter inflation is seen following its pre-shutdown trend. Statistical quirks persist, particularly in housing, where CPI sampling rotations mean shutdown-related softness in shelter inflation may linger until April. Health and motor vehicle insurance prices are also expected to restrain CPI in the coming months. Among other inflation gauges, the New York Fedʼs monthly survey of consumer expectations rose in December, with consumers expecting 3.4% price growth over the next year, up from 3.2% in November, while longer-term expectations were steady. In December, ISM data, manufacturing prices remained in expansion, matching November, while the services prices index fell to its lowest since March 2025, though it has still exceeded 60 for 13 straight months. Goldman views the inflation strength as transitory, and expects some further firmness from start-of-year price resets before disinflation resumes later in 2026 as housing, labour market and tariff effects fade, consistent with inflation returning close to target. Meanwhile, Wells sees inflation continuing to ease, supporting a patient Fed stance.