EUROPEAN OPEN: RR/ LN seen announcing GBP 1.0-1.5bln buyback; HON cuts JMAT LN’s Catalyst deal price to GBP1.325bln; UK in talks with GLEN, LN RIO LN, AAL LN on minerals; IFX GY to buy back 4mln shares; activists now hold one-third of PSON LN

• EUROPEAN OPEN: European equities are starting the week mostly lower. APAC stocks were mixed amid trade uncertainty as the region digested the latest tariff developments after the SCOTUS ruled against IEEPA tariffs on Friday, prompting President Trump to initially announce the imposition of 10% tariffs using a trade law permitting them for five months without approval; Trump then on Saturday said these tariffs would be at a rate of 15%, with exemptions for USMCA-compliant Canadian and Mexican goods, Section 232 products and certain DR-CAFTA textiles. On the tariff uncertainty and impact, the UK is now subject to a 15% rate (previously 10%), while the European Parliament’s trade chief said he will propose freezing ratification of the EU’s trade deal on Monday until a comprehensive legal assessment and clear US commitments are provided. Overnight, Chinese stocks in Hong Kong rallied after the SCOTUS tariff ruling. The USD fell, extending Friday’s decline in thin trading, and the CHF, JPY, EUR advanced. US equity futures fell as uncertainty over trade policy weighed on sentiment. Bitcoin slid nearly 5%, below USD 65k, while gold rose amid the trade uncertainty and USD weakness. Oil declined, as investors assessed prospects for a US-Iran nuclear agreement ahead of further talks on Thursday, despite US forces gathering in the Middle East; Brent fell below USD 71/bbl, despite Trump considering a limited military strike, while WTI was below USD 66/bbl; Morningstar said a potential limited US strike on Iran would likely have limited impact on oil prices, as global supply remains adequate and any move would not disrupt physical flows. While the economic calendar is thin today, traders will continue to digest the US trade situation; there will also be focus on geopolitics, amid this week’s upcoming talks between US-Iran (Thursday). Additionally, in Europe, EU Foreign Policy chief Kallas is not optimistic about potential progress in peace talks with Russia, adding that strong statements from Hungary suggest it will not change its stance on Russian sanctions; Hungary on the weekend said that it plans to block EU decisions on Ukraine, including a new Russia sanctions package and EUR 90bln in loans, until Druzhba pipeline flows resume.
• STOCK SPECIFICS: In consumer sectors, Carnival Corporation (CCL) and Carnival plc (CCL LN) entered into a unification agreement to combine their dual listed company structure under a single entity, Carnival Corporation; Carnival plc will become a wholly owned UK subsidiary. In industrials, Rolls-Royce (RR/ LN) is expected to announce a new GBP 1.0-1.5bln share buyback alongside its annual results this week, in addition to a final dividend, highlighting strong free cash flow and record profits as the company continues its turnaround under CEO Erginbilgic after facing significant financial pressure during the Covid pandemic, Sky News reports. In materials, the UK is in talks with Glencore (GLEN LN), Rio Tinto (RIO LN) and Anglo American (AAL LN) to secure supplies of critical minerals for defence amid concerns over reliance on China, The Telegraph reports; options include reserving output shares and stockpiling metals. Honeywell (HON) agreed to reduce the price of its acquisition of Johnson Matthey’s (JMAT LN) Catalyst Technologies business to about GBP 1.325bln, according to Bloomberg; HON had considered walking away, but reached a last-minute agreement to salvage the transaction. In tech, of note for tech capex, OpenAI told investors it plans USD 600bln compute spending by 2030 (vs USD 1.4tln previously), targets over USD 280bln revenue in 2030 (after USD 13.1bln in 2025) and sees an USD 8bln cash burn. Infineon (IFX GY) announced a share buyback of up to 4mln shares. In communications, activist investors now hold about one-third of Pearson’s (PSON LN) shares as pressure builds on the company, The Times reports, amid a 30%+ share slide over the last amid concerns that AI could hit some of its products. In notable broker updates, ABN Amro (ABN NA) was upgraded at BofA; Caixabank (CABK SM) and Bankinter (BKT SM) were upgraded at Deutsche Bank; Santander (SAN SM) was upgraded at RBC; Norsk Hydro (NHY NO) was upgraded at Citi; Renault (RNO FP) was downgraded at Deutsche Bank; Elisa (ELISA FH) was downgraded at Danske; Orange (ORA FP) was downgraded at Santander; Icade (ICAD FP) was downgraded at Morgan Stanley.

TODAY’S AGENDA:

• DAY AHEAD: In Europe, Germany’s Ifo data for February is due, and final inflation stats from Italy. The US Day is thin, with the Chicago Fed’s NAI for January and Dallas Fed manufacturing for Feb the only notable releases. Today’s speakers’ slate includes: BoE’s Taylor, who is due to speak at a fireside chat; Fed’s Waller (voter, dove) will speak at a NABE conference. In supply, the EU will sell EUR 7bln of 2028, 2030 and 2038 debt. Today’s corporate reporting includes: DPZ, D, FANG, KEYS, OKE, HIMS. While the economic calendar is thin today, traders will continue to digest the US trade situation; there will also be focus on geopolitics, amid this week’s upcoming talks between US-Iran (Thursday). Additionally, in Europe, EU Foreign Policy chief Kallas is not optimistic about potential progress in peace talks with Russia, adding that strong statements from Hungary suggest it will not change its stance on Russian sanctions; Hungary on the weekend said that it plans to block EU decisions on Ukraine, including a new Russia sanctions package and EUR 90bln in loans, until Druzhba pipeline flows resume.
• WEEK AHEAD: Highlights include NVDA earnings, Aussie CPI, Tokyo CPI, PBoC LPR, and the BoK.
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