- US stocks saw upside bias throughout the session and the major indices surged higher into the close in which all sectors closed in the green with Health and Industrials sitting atop of the pile, while Tech lagged behind its peers as semiconductor names saw weakness after SK Hynix warned of steeper demand declines in commodity memory chips. The main highlight of the day was President Trump's virtual appearance at Davos, whereby he touched on numerous subjects but notably sent the crude complex lower after noting he will be asking Saudi Arabia and OPEC to bring down the cost of oil.
- USD marginally softened on the day with only brief upside seen after US President Trump's virtual appearance at Davos where he stated the "message to business is to make your product in America, and if you don't, you will have to pay a tariff". Nonetheless, the support for the dollar petered out given the lack of specifics regarding tariffs, while the latest data releases resulted in a muted reaction.
- Looking ahead, highlights include Australian Flash PMIs, Japanese CPI & Flash PMIs, New Zealand Credit Card Spending, Singapore Industrial Production, BoJ Policy Decision & Governor Ueda's Post-Meeting Press Conference, Supply from Australia.
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LOOKING AHEAD
- Highlights include Australian Flash PMIs, Japanese CPI & Flash PMIs, New Zealand Credit Card Spending, Singapore Industrial Production, BoJ Policy Decision & Governor Ueda's Post-Meeting Press Conference, Supply from Australia.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks saw upside bias throughout the session and the major indices surged higher into the close in which all sectors closed in the green with Health and Industrials sitting atop of the pile, while Tech lagged behind its peers as semiconductor names saw weakness after SK Hynix warned of steeper demand declines in commodity memory chips. The main highlight of the day was President Trump's virtual appearance at Davos, whereby he touched on numerous subjects but notably sent the crude complex lower after noting he will be asking Saudi Arabia and OPEC to bring down the cost of oil.
- SPX +0.53% at 6,119, NDX +0.22% at 21,901, DJIA +0.92% at 44,565, RUT +0.47% at 2,315.
- Click here for a detailed summary.
NOTABLE HEADLINES
- US President Trump said during his address to Davos that the US has the largest amount of oil and gas of any country, and is going to use it, while he added they started the largest deregulation movement in history and that Congress will pass the largest tax cut in American history. Furthermore, he said the message to businesses is make your product in America, and if you don't, you will have to pay a tariff.
- US President Trump reiterated during a Q&A that the EU treats the US very badly and EU tariffs make it very difficult to bring products into Europe, as well as noted that the EU should not be going after big US tech companies like Apple (AAPL), Meta (META) and Google (GOOGL). Furthermore, Trump said they will bring corporate tax down to 15% if products are made in the US, while they are going to be demanding respect from other nations including Canada and are dealing with Mexico very well.
- US President Trump said he expects the Fed to listen to him on interest rates and would consider talking to Chair Powell on interest rates.
DATA RECAP
- US KC Fed Manufacturing (Jan) -9.0 (Prev. -5.0)
- US KC Fed Composite Index (Jan) -5.0 (Prev. -4.0)
- US Initial Jobless Claims w/e 223.0k vs. Exp. 220.0k (Prev. 217.0k)
- US Continued Jobless Claims w/e 1.899M vs. Exp. 1.862M (Prev. 1.859M, Rev. 1.853M)
FX
- USD marginally softened on the day with only brief upside seen after US President Trump's virtual appearance at Davos where he stated the "message to business is to make your product in America, and if you don't, you will have to pay a tariff". Nonetheless, the support for the dollar petered out given the lack of specifics regarding tariffs, while the latest data releases resulted in a muted reaction.
- EUR was choppy and oscillated around the 1.0400 level against the dollar but ultimately eked marginal gains.
- GBP mildly outperformed with the UK not anticipated to be a Trump tariff target, while participants look ahead to PMI data.
- JPY gradually strengthened throughout the day ahead of the BoJ policy decision with source reports all pointing to a hike.
- SNB's Chairman Schlegel said the policy mix was very effective, but don't claim victory and stated the CPI forecast is well inside the SNB's range, while he added that they cannot exclude negative rates.
- CBRT lowered its Weekly Repo Rate by 250bps to 45.0% (prev. 47.50%), as expected.
- Norges Bank held rates at 4.50% as expected and reiterated that the policy rate will likely be reduced in March.
FIXED INCOME
- T-notes settled lower and the curve steepened with focus on Trump's speech ahead of supply, the FOMC and PCE next week.
COMMODITIES
- Oil prices were lower and primarily weighed on by US President Trump's remarks to the WEF in Davos in which he stated that he will be asking Saudi Arabia and OPEC to bring down the cost of oil.
- US EIA Weekly Crude Stocks w/e -1.017M vs. Exp. -2.1M (Prev. -1.962M).
- US President Trump said he will be asking Saudi Arabia and OPEC to bring down the cost of oil and will ask Saudi’s Crown Prince to increase US investment to USD 1tln.
- Iraq's December total exports at 101.2mln (prev. 98.9mln in Nov) barrels, according to the oil ministry cited by Reuters.
- Ireland's EU Commissioner McGrath suggested the EU will bring forward proposals to buy more US oil and LNG as a way of building relations with the new Trump administration.
GEOPOLITICAL
MIDDLE EAST
- Israel reportedly conducted heavy tank fire on the city centre of Rafah in the Southern Gaza Strip, according to Al Jazeera, while it later reported that an Israeli tank killed two Palestinians west of Gaza's Rafah, according to Reuters.
- Israel is seeking 30 more days to withdraw from Lebanon, citing Hezbollah violations, according to Times of Israel.
- Hezbollah said the Lebanese state should push for a guarantee that Israel will completely withdraw as agreed, while it added that any breach will not be accepted.
- White House said US President Trump and Saudi Crown Prince MBS spoke about efforts to bring stability to the Middle East, bolster regional security and combat terrorism. They also spoke about Saudi Arabia's international economic ambitions over the next four years as well as trade and other opportunities.
- US President Trump said it would be nice if issues with Iran could be worked out without Israel striking military facilities. It was earlier reported that Trump is expected to place responsibility for the Iranian issue on his Middle East envoy Steve Witkoff which is a sign Trump wants to try and reach a new nuclear agreement with Iran, according to two senior US officials cited by Axios's Ravid.
RUSSIA-UKRAINE
- US President Trump said he would really like to be able to meet Russian President Putin soon, while he sees US-China relations being 'very good' and stated they need to have a fair relationship, Furthermore, he said hopefully China can help us stop the war in Ukraine and that he would like to see denuclearisation with Russia and China, as well as stated that Russian President Putin liked the idea of cutting way back on nuclear.
- US President Trump said Ukrainian President Zelensky told him that he's ready to make a deal, while Trump wants to meet immediately with Russia's President Putin and noted that China has a lot of power over Russia.
OTHER
- US President Trump said not sure they should be spending anything on NATO and that they're protecting NATO but it is not protecting the US.
CRYPTO
- US President Trump said he's signing an order related to AI and crypto to develop the national digital asset stockpile and is signing an order related to establishing a commission on science and technology, according to Bloomberg.
ASIA-PAC
NOTABLE HEADLINES
- BoJ is poised to vote for a rate hike at Friday's meeting and has so far viewed the economic and market conditions following Trump's inauguration as being relatively calm, according to Nikkei sources. The bank had considered forgoing any hike if the inauguration resulted in a rollercoaster market ride, but several officials believe that "the situation is such that the bank can raise interest rates as expected". Furthermore, Jiji also reported that the BoJ will hike at this policy meeting.
- China's MOFCOM said regarding US President Trump's tariff threats that tariffs are not good for China, the US, and the world, while China is willing to work with the US to promote a stable and healthy development of economic and trade ties.
- A record number of US companies are considering moving some of their operations out of China or are in the process of doing so, according to a study cited by the FT.
- ByteDance is exploring alternatives to an outright sale for TikTok US, according to Bloomberg.
EU/UK
NOTABLE HEADLINES
- UK Chancellor Reeves said she will announce new fiscal measures if needed on March 26th and that recent bond yield moves this year are in line with peers. Furthermore, she is confident that the government can get growth numbers up and noted there are still two months until the OBR publishes its forecasts.
- ECB's Escriva said the ECB still has restrictive policy and needs to be moving towards a neutral stance, while he added that markets are too complacent.
DATA RECAP
- EU Consumer Confidence Flash (Jan) -14.2 vs. Exp. -14.2 (Prev. -14.5)
