- APAC stocks traded mixed in a holiday-thinned start to the week, with markets in Australia, South Korea and Taiwan closed overnight, and ahead of Mainland China’s week-long holiday starting Tuesday.
- Hang Seng and Shanghai Comp were kept afloat despite the disappointing PMI data which showed headline Chinese Manufacturing PMI back in contraction territory.
- US President Trump announced the US will impose emergency 25% tariffs on all Colombian goods coming into the US which will be raised to 50% in one week after Colombia denied entry to two US deportation flights.
- Momentum is growing among US President Trump’s advisers to place 25% tariffs on Mexico and Canada as soon as Saturday ahead of negotiations, according to WSJ.
- European equity futures indicate a negative open with Euro Stoxx 50 futures down 0.9% after the cash market closed flat on Friday.
- Looking ahead highlights include German Ifo Expectations, Comments from ECB President Lagarde, Supply from the EU & US, Earnings from Ryanair, Sofi & AT&T.
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US TRADE
EQUITIES
- US stocks retreated on Friday with the majority of losses occurring in the US afternoon on likely profit taking into the weekend after Trump's first week in office which saw the SPX hit a fresh record high earlier in the week.
- Underperformance was observed in the Nasdaq with weakness in semis after soft Texas Instruments (TXN) guidance, with the sector continuing to be hit after disappointing SK Hynix forecasts on Thursday.
- SPX -0.29% at 6,101, NDX -0.58% at 21,774, DJI -0.32% at 44,424, RUT -0.30% at 2,308.
- Click here for a detailed summary.
NOTABLE HEADLINES
- US President Trump announced the US will impose emergency 25% tariffs on all Colombian goods coming into the US which will be raised to 50% in one week after Colombia denied entry to two US deportation flights. Trump also announced a travel ban and visa revocations on Colombian government officials and said he will fully impose emergency treasury, banking and financial sanctions on Colombia, while he added that the measures on Colombia are just the beginning.
- Fox News reported that Colombian President Petro backtracked and offered his presidential plane to repatriate migrants coming back from the US, although Reuters reported that Petro threatened 50% tariffs on goods from the US in retaliation to measures announced by US President Trump. However, the White House later announced that Colombia has agreed to all of President Trump's terms including unrestricted acceptance of all illegal aliens from Colombia returned from the US, while fully drafted IEEPA tariffs and sanctions on Colombia will be held in reserve and not signed but visa sanctions issued and enhanced inspections will remain in effect until the first plane of Colombian deportees is returned.
- Mexico reportedly refused a US deportation flight, according to officials cited by Reuters. However, the White House denied reports of Mexico refusing migrant flights and stated that Mexico has accepted several flights in recent days.
- Momentum is growing among US President Trump’s advisers to place 25% tariffs on Mexico and Canada as soon as Saturday ahead of negotiations, according to WSJ.
- US President Trump said he is aiming to get Saudi investment of USD 1tln, up from USD 500bln-600bln.
- Pete Hegseth was confirmed by the US Senate as Secretary of Defense through a 51-50 vote in which US VP Vance cast the tie-breaking vote.
- Elon Musk reportedly explores blockchain use in the US government efficiency effort.
APAC TRADE
EQUITIES
- APAC stocks traded mixed in a holiday-thinned start to the week as participants digested disappointing Chinese PMI data, Trump's tariff announcement on Colombia, and with Chinese start-up DeepSeek threatening US dominance in the AI sector with a low-cost model on par with OpenAi's o1. Markets in Australia, South Korea and Taiwan were closed for holidays.
- Nikkei 225 reversed opening gains and dipped back beneath 40,000 amid headwinds from Trump tariffs and Chinese PMIs.
- Hang Seng and Shanghai Comp were kept afloat on the last trading day for the mainland before the Chinese New Year holiday despite the disappointing PMI data which showed headline Chinese Manufacturing PMI back in contraction territory. Nonetheless, there was notable strength seen in some AI-related stocks after Chinese tech start-up DeepSeek's low-cost AI model was reported to be on par with OpenAI's o1.
- US equity futures were pressured from the open after Trump's tariff announcement on Colombia for blocking deportation flights and with the Emini Nasdaq 100 leading the downside as China's DeepSeek threatens US AI dominance.
- European equity futures indicate a negative open with Euro Stoxx 50 futures down 0.9% after the cash market closed flat on Friday.
FX
- DXY traded rangebound and only briefly benefitted after US President Trump announced 25% tariffs against Colombia for refusing to accept deportation planes.
- This subsequently pressured MXN with Mexico reported to have also rejected deportation planes which the White House denied, while Colombia later gave in and agreed to accept deportees.
- EUR/USD declined after failing to sustain a brief return to the 1.0500 territory as the focus this week is on central bank activity with ECB's Lagarde due to speak later and with the central bank expected to cut rates on Thursday.
- GBP/USD continued its gradual pullback from Friday's peak around the 1.2500 level with weekend newsflow light, although it was reported that UK Chancellor Reeves will call on sceptical Labour MPs to support her plans to boost the UK economy.
- USD/JPY was choppy with some early pressure seen as sentiment in Japan soured, before later rebounding off lows.
- Antipodeans conformed to the lacklustre mood seen across their major counterparts and with weakness seen in the yuan after disappointing Chinese PMI data.
- PBoC set USD/CNY mid-point at 7.1698 vs exp. 7.2295 (prev. 7.1705).
- Mexican Central Bank said it will consider larger cuts to the benchmark interest rate early this year due to slowing inflation and warned balance of risks for inflation remains tilted to the upside mostly due to the persistence of core inflation.
FIXED INCOME
- 10yr UST futures benefitted amid softer yields and as US equity futures retreated but with further upside capped ahead of this week's supply, the FOMC Meeting and PCE data.
- Bund futures continued their rebound from Friday's trough with support seen at the 131.00 level, while participants await ECB comments and German Ifo expectations.
- 10yr JGB futures eked mild gains alongside global counterparts and after a slightly firmer enhanced liquidity auction.
COMMODITIES
- Crude futures resumed recent selling which followed comments by US President Trump over the weekend who said he spoke with Saudi Arabia’s Crown Prince and discussed bringing oil prices down.
- US President Trump said he spoke with Saudi Arabia’s Crown Prince and discussed bringing oil prices down.
- Norway’s Gassco announced an unplanned outage of 10.7 MCM/day at the Troll field for January 26th-27th.
- Spot gold trickled lower in tandem with the declines across the commodities complex and with demand constrained ahead of the FOMC meeting on Wednesday.
- Copper futures were pressured following Chinese PMI data which showed factory activity contracted in January.
CRYPTO
- Bitcoin gradually extended its recent pullback overnight and retreated to beneath the USD 101k level.
NOTABLE ASIA-PAC HEADLINES
- US President Trump said he is in talks with multiple people regarding buying TikTok and will likely have a decision on the app’s future in the next 30 days, while it was separately reported that the White House is working on a plan to have Oracle (ORCL) and an investor group takeover US TikTok.
- China’s Foreign Minister Wang is to visit the UK in February for talks with UK Foreign Secretary Lammy, according to The Guardian.
DATA RECAP
- Chinese NBS Manufacturing PMI (Jan) 49.1 vs. Exp. 50.1 (Prev. 50.1)
- Chinese NBS Services PMI (Jan) 50.2 vs. Exp. 52.1 (Prev. 52.2)
- Chinese Composite PMI (Jan) 50.1 (Prev. 52.2)
GEOPOLITICS
MIDDLE EAST
- Israeli PM Netanyahu confirmed three hostages are to be released by Hamas and that Israel will allow Palestinians to cross into northern Gaza from Monday morning. It was also reported that Hamas said it handed over to mediators the required information regarding the list of hostages to be released during the first phase of the Gaza agreement.
- Hamas said that Israel procrastinates in implementing ceasefire terms by preventing displaced Palestinians from returning to northern Gaza, while it holds Israel responsible for any delays in the implementation of the agreement and the repercussions in subsequent stages. It was separately reported that Hamas released a list of 200 Palestinian prisoners to be released by Israel, according to Reuters.
- Israeli fire killed a Lebanese soldier and injured another in southern Lebanon, while it was also reported that Israeli fire killed two people and injured 31 in southern Lebanon. It was later announced that the death toll from Israeli fire in southern Lebanon rose to eleven.
- White House said the ceasefire agreement between Israel and Lebanon will continue to be in effect until February 18th, while Lebanon, Israel and the US will also begin negotiations for the return of Lebanese prisoners captured after 7th October 2023.
- UN envoy in Lebanon and UNIFIL said conditions are not yet in place for the return of Lebanese citizens to the south, according to a statement cited by Reuters.
- US lifted the pause on delivery of 2,000-pound bombs to Israel, according to a source cited by Reuters.
- US President Trump spoke with Jordan’s King Abdullah of Jordan about moving people out of ‘demolition site’ Gaza to neighbouring countries and said he will speak with Egypt’s President El Sisi, while it was separately reported that Egypt’s Foreign Ministry said Egypt rejects any attempt to move Palestinians out of their land.
- US Secretary of Defense Hegseth spoke with Israeli PM Netanyahu and stressed the US is fully committed to ensuring Israel has the capabilities it needs to defend itself.
- US Secretary of State Rubio said he is hearing the Taliban is holding more American hostages than has been reported, while he added that the US may place a very big bounty on Taliban’s top leaders. It was separately reported that Rubio spoke with Yemeni PM Ahmed Bin Mubarak and discussed cooperation to stop Houthi attacks.
- US President Trump’s Middle East envoy Witkoff will travel to Israel on Wednesday to oversee the Gaza ceasefire.
RUSSIA-UKRAINE
- Russia said its troops captured Zelene in eastern Ukraine, according to IFAX.
- Moldovan President Sandu arrived in Kyiv for talks with Ukrainian President Zelensky.
- Belarusian exit polls showed incumbent Lukashenko won the presidential election with 87.6% of votes.
OTHER
- Baltic Sea submarine fibre optic cable between Latvia and Sweden was damaged on Sunday morning which was caused by external influence, according to Latvian public broadcaster LSM citing the cable operator.
- North Korea tested a strategic cruise missile on Saturday, according to KCNA.
- China’s Coast Guard said two Philippine vessels entered waters near the reef in the Spratly islands on Saturday, while China’s Coast Guards intercepted the vessels and drove them away.
EU/UK
NOTABLE HEADLINES
- UK PM Starmer spoke with US President Trump on Sunday and agreed to meet soon, according to the UK government.
- UK PM Starmer is expected to resist pressure from US President Trump to increase defence spending amid concerns surrounding public finances, according to The Times citing sources.
- UK Chancellor Reeves will call on sceptical Labour MPs on Monday to back her plans to boost the UK economy including the proposal to expand London’s Heathrow Airport, according to FT.
- UK Chancellor Reeves indicated the government would consider signing up to the Pan-Euro-Mediterranean Convention (PEM), a tariff-free trading scheme, according to The Telegraph.
- Fitch affirmed Netherlands at AAA; Outlook Stable.
