MORNING BID-Wall of doubts
A look at the day ahead from Julien Ponthus and Sujata Rao.
The narrative of the reflation trade lifting world markets seems to be fizzling out and much like (recently deceased) music producer Phil Spector's "Wall of Sound" that layered pop and classical instruments to create a lush overall sound, many risk-off noises are rising in the background.
China's economy roared ahead at a better-than-expected 2.3% last year and expanded in Q4 at 6.5%, while industrial output grew 7.3% in December. But if the data gave some legs to copper and aluminium prices and lifted Chinese markets, the surging virus caseload is tempering the cheer; even in China, 28 million people are under lockdown.
Nor has the data entirely dissipated the gloom from Friday's dismal U.S. retail sales figures, keeping U.S. and European equity futures in the red and the dollar just off one-month highs.
All that's taken U.S. 10-year yields from 1.187% to 1.087%, while oil prices have fallen from 11-month highs hit last week.
It's a public holiday in the United States but there is no shortage of action elsewhere. In M&A news, Couche-Tard and Carrefour now plan to explore "partnership opportunities", Chrysler and PSA sealed a merger to create Stellantis, the world's fourth-largest auto maker while Dutch paintmaker Akzo Nobel bidding for Finnish rival Tikkurila.
Finally, quite a bit to chew on politically this week. Besides Joe's Biden's inauguration on Wednesday, Armin Laschet's election to lead Germany's main ruling party will be a relief to markets, given he is expected to continue Merkel's pro-European agenda.
Italy's ruling coalition faces two days of parliamentary votes that will decide whether it can cling to power. Even with the ECB standing behind Italy, government bond yields are inching higher in trepidation.
Key developments that should provide more direction to markets on Monday: -Janet Yellen expected to affirm Biden doesn't want weaker dollar -White knight emerges in Suez/Veolia takeover battle -French major Total buys 20% stake in India's Adani Green Energy -Trump administration notified Huawei suppliers, including chipmaker Intel, it is revoking certain licenses to sell to the company, Reuters reported. -Eurozone finmins meet to discuss global role of euro -Deliveroo has raised $180 million from existing investors, including Amazon, valuing the business at more than $7 billion. -British telecoms operator BT is facing a claim for almost 600 million pounds ($800 million) lodged by a consumer campaign group, -Philly Fed non-manufacturing survey
(Reporting by Julien Ponthus and Sujata Rao)