MARKET WRAPS

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U.K. PPI, CPI, Eurozone balance of payments; trading updates for Glencore, BAE Systems, Vodafone, Vopak, ASR Netherland, AngloGold Ashanti, Philips, MTU Aero Engines

Opening Call:

European stock futures were muted, after Asia stocks traded mixed. U.S. Treasury yields were flat and the dollar held steady. Gold fell and oil edged higher.

Equities:

European equity futures were poised for a muted open as investors digested U.S. President Trump considering tariffs of 25% or more on automobiles, semiconductors and pharmaceutical products.

Markets also awaited the minutes from the most recent Federal Open Market Committee meeting. With the Federal Reserve appearing to be on hold, Wall Street is not expecting another cut at least until December - if at all.

The Fed minutes should shed light on how much senior officials discussed tariffs and the potential responses, but it's unlikely they went far beyond their public remarks.

Forex:

The euro is considered undervalued by the most investors in nearly two years, according to Bank of America's global fund manager survey for February.

A net 28% of investors answered that they consider the euro as undervalued in February, compared to 18% in the January survey and the most since April 2023, the survey showed.

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Investors continued to expect the dollar to be the best-performing currency in 2025 although they hold slightly less conviction compared with a month ago, the Bank of America survey showed.

In the event of a full-blown trade war, the dollar is expected to be the second best-performing asset after gold, according to the survey, with long dollar positions considered the second most crowded trade after long Magnificent 7 tech stocks.

Bonds:

The 10-year Treasury yield is expected to keep within a range between 4.25% and 4.75%, Mike Sanders, head of fixed income at Madison Investments said, citing uncertainties surrounding tariff policies and with U.S. interest rates on hold for now.

For the 10-year Treasury yield to break meaningfully out of its current range would require either a recession or a reacceleration in inflation that brings rate hikes back into discussion.

"Both of which seem unlikely in the near term," Sanders said.

In the second half of the year, the impact of tariffs could cause yields to rise, though the move should be limited if the U.S. economy "weathers the tariff effects well," which Sanders believes is likely.

Energy:

Oil edged higher, supported by prospects of lessened supply.

Oil transit volumes from Kazakhstan could be reduced by around 30% owing to a Ukrainian drone attack on a major pumping station in southern Russia, according to Transneft, a Russian state-controlled company.

A disruption to Kazakhstan oil flows could rein in supplies in the near term, UOB's Global Economics & Markets Research team said.

Metals:

Gold edged lower as traders weighed continued signs of strength in the U.S. economy against policy uncertainties that have fueled a surge in demand for the haven metal.

"Trump's policies have proven to create an environment of strength," said Raddington Group CEO Yassin K. Fawaz.

With inflation still above the Fed's target and the economy on solid footing, many now think interest rates will stay high for a while, dampening the appeal of non-interest-bearing assets like gold, he added.

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Copper was lower, with supply slightly tight while demand is stable, Nanhua Futures analysts said.

However, investors closely watched tariff developments amid concerns that rising trade tensions could weigh on copper prices.

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Iron ore prices were higher amid better sentiment.

ANZ Research noted BHP's CEO Mike Henry said that they are seeing "green shoots" in China's long-beaten property sector.

Investor sentiment is boosted after Chinese President Xi Jinping's meeting with the country's tech leaders earlier this week, ANZ said, adding that Xi's message to the businesses signaled Beijing's support of the private sector.

TODAY'S TOP HEADLINES

Trump Floats 25% Tariffs on Autos, Chips, Pharmaceuticals

WASHINGTON-President Trump on Tuesday said he was considering tariffs of 25% or more on automobiles, semiconductors and pharmaceutical products.

Here's what we know:

The French Billionaire Working His Trump Ties to Spare His Luxury Empire

The day after President Trump survived an assassination attempt in Pennsylvania last summer, he received a call from a familiar French voice. It was Bernard Arnault, owner of the globe-spanning luxury empire LVMH.

Arnault wanted to check in on the man he had known for decades. Trump was also in the middle of a fierce presidential campaign, as well as several criminal proceedings.

Pope Francis Has Pneumonia, Vatican Says

ROME-Pope Francis is suffering from the first signs of pneumonia, the Vatican said on Tuesday, signaling a potentially lengthy stay in the hospital as concerns about the health of the 88-year-old pontiff grow.

A chest scan at Rome's Gemelli hospital, where the pope has been undergoing treatment since Friday, revealed "the onset of bilateral pneumonia," the Vatican said. Earlier on Tuesday the Vatican said it had canceled Pope Francis' appointments through next weekend.

HSBC Posts Quarterly Net Profit, Plans $2 Billion Share Buyback

HSBC Holdings reported a quarterly net profit, supported by higher fee income, and said it plans to start a share buyback of up to $2.0 billion.

The London-based bank said Wednesday that it booked net profit of $197 million for the three months ended December, compared with a net loss of $153 million a year ago. That beat the estimated net profit of $27.9 million in a poll of analysts by Visible Alpha.

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Expected Major Events for Wednesday

06:00/FIN: Jan CPI

07:00/UK: Jan UK producer prices

07:00/UK: Jan CPI

08:00/SPN: Dec Trade Balance

08:30/POR: Dec Balance of Payments

09:00/EU: Dec Euro area balance of payments

09:30/UK: Dec UK House Price Index

10:00/ITA: Dec Balance of Payments

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

02-19-25 0014ET