EUROPEAN OPEN: VOW3 GY higher than expected cash flow; ML FP free cash flow tops guidance; GLE FP confirms will cut 1,800 jobs; ABF LN’ Primark LFL sales fall in Xmas quarter; DB1 GY to acquire Allfunds for EUR 5.3bln

• EUROPEAN OPEN: European equities are starting Thursday higher, supported by US President Trump withdrawing his tariff threats on the EU members; Trump said the US had discussed a “framework” for a future deal on Greenland with NATO SecGen (details will be revealed in the future), and would not impose threatened tariffs on European allies; he repeated his desire to acquire Greenland but ruled out force. Overnight, APAC stocks traded entirely in the green, tracking the rebound on Wall Street. Copper rose as risk appetite improved after Trump softened threats against European partners. Following three days of gains, gold fell off record highs after Trump withdrew tariff threats, and is currently trading around flat. Goldman Sachs has raised its December 2026 gold price forecast by more than 10% to USD 5,400/oz (prev. saw USD 4,900/oz), citing sustained private investor holdings alongside strong demand from central banks and ETFs. Oil prices steadied as tensions over Greenland eased, offsetting supply concerns; Brent traded sub-USD 65/bbl, while WTI was near USD 61/bbl; weekly API data reportedly showed larger than expected builds for headline crude and gasoline, while distillates posted a smaller than expected draw. The docket is busy today, and includes final Q3 US GDP/PCE, October and November PCE inflation, weekly jobless Claims, Eurozone January flash consumer confidence, ECB meeting minutes from its December confab, a Norges Bank policy announcement (unchanged at 4% expected), a CBRT policy announcement (100bps cut to 37% expected). There will be further commentary from Davos, including from US President Trump. European leaders are still set to hold a meeting on the Greenland situation.
• STOCK SPECIFICS: In consumer sectors, AB Foods (ABF LN) confirmed that underlying sales at its Primark clothing business fell 2.7% in the Christmas quarter, following a profit warning issued earlier in January; for the 16-weeks to 3rd January, AB Foods' Revenue was GBP 6.75bln. Volkswagen (VOW3 GY) reported 2025 automotive net cash flow of approximately EUR 6bln, exceeding forecasts, resulting from delayed projects and investment cuts during an electric-vehicle strategy overhaul, increased net liquidity to over EUR 34bln; the results outperformed the its earlier expectations of flat cash flow. Michelin (ML FP) said 2025 FCF before M&A was EUR 2.1bln (vs guidance of EUR 1.5–1.8bln), and confirmed segment operating income of between EUR 2.6–3.0bln; the outperformance was driven by capex discipline and a tight steering of operations impacting working capital. In communications, Ubisoft (UBI FP) said it will reorganise into five creative divisions from early April, cancel six games and delay seven; it sees FY26 net bookings of EUR 1.5bln and an operating loss of EUR 1bln. Telenor (TEL NO) agreed to sell its 24.95% stake in Thailand’s True Corporation to Arise Digital Technology Company for NOK 39bln, as it continues to scale back Asian operations. In financials, Deutsche Boerse (DB1 GY) will acquire Allfunds for EUR 8.80/shr in cash and stock, valuing the firm at about EUR 5.3bln; the deal targets EUR 60mln cost synergies, and EUR 30mln capex savings, with completion expected in H1 2027. EQT (EQT SS) agreed to acquire Coller Capital to enter secondaries, buying the firm with nearly USD 50bln in assets under management for a base consideration of USD 3.2bln in shares plus up to USD 500mln contingent cash. Coller Capital will operate independently within EQT. The deal expected to close in Q3. Societe Generale (GLE FP) confirmed reports that it is accelerating the simplification of the business, and will reduce the net number of positions by 1,800. In industrials, Air France KLM (AF FP) said the group hopes to comprise one or two additional airlines by the end of 2026. In energy, Venture Global (VG) said an arbitration tribunal ruled in its favour in a dispute with Repsol (REP SM) over LNG deliveries from the Calcasieu Pass project under a 20yr contract; the ruling follows earlier cases involving BP (BP/ LN) and Shell (SHEL LN). In notable broker updates, Admiral (ADM LN) was downgraded at RBC; Barry Callebaut (BARN SW) was downgraded at Kepler; Norsk Hydro (NHY NO) was downgraded at Danske Bank.

TODAY'S AGENDA:

• DAY AHEAD: In Europe, the Norges Bank is expected to maintain rates at 4.00%, the CBRT is expected to lower rates by 100bps to 37%; the ECB will release minutes from its December policy meeting, where it kept policy unchanged, retained meeting-by-meeting approach, revised 2026 inflation up and 2027 down. In data releases, US final Q3 GDP is expected to be revised up to 4.3% from 3.8%. Weekly jobless claims for the 17th January week are seen around 204k from 205k (note: this week's data coincides with the BLS' traditional survey window for the January jobs data); continuing claims for the week of 10th January are seen at 1.88mln from 1.884mln. October and November's PCE inflation data is due (preview below). In energy, API data reportedly showed crude crude stocks posting a larger than expected build of +3.0mln bbls (exp. +1.8mln), Cushing +1.2mln bbls, distillate saw a smaller than expected draw of -0.03mln bbls (exp. -0.2mln), while gasoline posted a larger than expected build of +6.2mln bbls (exp. +2.5mln); the more widely followed DoE weekly inventory data is due later today. US President Trump will speak from Davos again on Thursday; other speakers at the gatherings include: Tesla (TSLA) CEO Musk, Pfizer (PFE) CEO Bourla, and Novartis (NOVN SW) CEO Narasimhan. Despite an easing of tensions on the Greenland front, European leaders are still set to meet today over the Greenland situation. Notable US corporate earnings due today include: GE, MKC, HBAN, MBLY, PG, NTRS, ABT, FCX, CSX, INTC, COF, ISRG, AA; in Europe, MC FP will report after the close. Elsewhere, healthcare insurance executives are set to testify at a congressional hearing today.
• PREVIEW - US PCE (15:00GMT/10:00EST): Analysts expect both October and November's headline PCE to rise +0.2% M/M, and the core rate is expected to rise +0.1% M/M. The Bureau of Economic Analysis said US personal income and outlays for October and November 2025, including PCE inflation data (the Fedʼs preferred gauge), will be released on 22nd January. The BEA was unable to produce normal monthly PCE inflation data during the government shutdown because of missing data sources and will approximate October and November PCE using CPI averages. Analysts said differences between CPI and PCE mean November CPI may disproportionately influence the delayed and partly modelled PCE inflation estimates. In November, headline producer prices rose 0.2% M/M, with annual PPI running at around 3.0%. Meanwhile, November CPI showed inflation of 2.7% Y/Y, undershooting expectations and partly distorted by missing data collection during the shutdown. Looking ahead to the December PCE report, due on 20th February, the data are likely to show firmer price pressures than suggested by the latest CPI. While December CPI showed headline inflation at 2.7% Y/Y and core inflation at 2.6%, underlying components point to upside risks for PCE: food prices rose 0.7% M/M, the largest increase since October 2022, and economists noted a widening gap between CPI and PCE measures. PCE places greater weight on categories where prices are currently rising, reflecting actual consumer spending patterns more closely than CPIʼs fixed basket. Analysts at Barclays and Morgan Stanley raised their December PCE forecasts to just under 0.5% M/M, according to Reuters, which could lift the annual rate to 2.8-2.9%. BNP Paribas also warned that PCE inflation is likely to run significantly hotter than CPI. Together with firmer producer price trends, the data suggest PCE may remain close to 3%, reinforcing expectations that price pressures will ease only gradually. Writing after the December inflation data, WSJ Fedwatcher Nick Timiraos said the latest trends are unlikely to alter the Fedʼs wait-and-see stance, as officials want clearer evidence that inflation is levelling off; he added that rate cuts would likely require either weakening job market conditions or further signs of fading price pressures over the coming months. Most Fed officials speaking this year have said that while inflation is easing towards its 2% target, it remains above that level, favouring a cautious stance on policy adjustments; they view current monetary policy as appropriately restrictive, with any cuts contingent on clearer disinflation progress. At the time of writing, money markets are assigning a 5% probability that rates will be cut at the 28th January confab, and just over a 20% chance of a 25bps cut by the 18th March meeting, according to CME data. Through to the end of the year, the statistical mode sees rates at 3.00-3.25% in December (vs the Fedʼs December projections of 3.25-3.50%, and vs the current 3.50-3.75%).