- US stocks were ultimately mixed with outperformance seen in the Nasdaq as large caps gained and semis were bid following commentary from Microsoft (MSFT) which is to spend USD 80bln on AI data centres and as attention turns to CES this week with NVDA CEO speaking overnight. Equity futures were bid early on after a report in The Washington Post that Trump's trade policies are going to focus on certain sectors, essentially a watered-down tariff proposal from what Trump was gunning for during the election, although Trump later refuted the Post's claims in which he stated the story of paring back his tariff policy is wrong and fake news.
- USD saw broad-based losses with early pressure seen following a Washington Post report that President-Elect Trump's aides are looking at universal import duties but only on certain sectors in what would be a shift from the aggressive tariff plans touted during the presidential campaign and which dragged the DXY briefly beneath the 108.00 level. However, the greenback bounced back from intraday lows after Trump later refuted the report which he said was wrong and fake news. Elsewhere, the data had little sway over price action whereby Factory Orders fell more than expected and Final S&P Global PMI data was revised downward on both the composite and services components for December.
- Looking ahead, highlights include Australian Building Approvals, Philippines CPI, Supply from Japan.
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LOOKING AHEAD
- Highlights include Australian Building Approvals, Philippines CPI, Supply from Japan.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks were ultimately mixed with outperformance seen in the Nasdaq as large caps gained and semis were bid following commentary from Microsoft (MSFT) which is to spend USD 80bln on AI data centres and as attention turns to CES this week with NVDA CEO speaking overnight. Equity futures were bid early on after a report in The Washington Post that Trump's trade policies are going to focus on certain sectors, essentially a watered-down tariff proposal from what Trump was gunning for during the election, although Trump later refuted the Post's claims in which he stated the story of paring back his tariff policy is wrong and fake news.
- SPX +0.55% at 5,975, NDX +1.09% at 21,559, DJIA -0.06% at 42,707, RUT -0.08% at 2,267.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Fed's Vice Chair for Supervision Barr is to resign from the Vice Chair for Supervision role from February 28th, 2025 but will continue to serve as Fed governor, while the Fed said it does not intend to take up major rulemakings until a successor to the Vice Chair post is confirmed and risk of 'dispute' over his position could distract from the Fed’s mission.
- Fed Governor Cook said the Fed can proceed more cautiously in cutting rates given labour market resilience and stickier inflation, while she added that risks to inflation and employment are roughly in balance. Cook added it will be appropriate to cut towards neutral over time and the labour market has cooled in the past year but remains solid.
- It was earlier reported by The Washington Post that US President-elect Trump’s aides were looking at universal import duties, but only on certain sectors, among the first big moves of his presidency, while aides are exploring tariff plans that would be applied to every country but only cover critical imports which is a key shift from his plans during the 2024 presidential campaign. However, US President-elect Trump later stated that the Washington Post story that he will pare back his tariff policy is wrong and just another example of fake news.
DATA RECAP
- US S&P Global Services PMI Final (Dec) 56.8 (Prev. 58.5)
- US S&P Global Composite Final PMI (Dec) 55.4 (Prev. 56.6)
- US Factory Orders MM (Nov) -0.4% vs. Exp. -0.3% (Prev. 0.2%, Rev. 0.5%)
- US Durable Goods R MM (Nov) -1.2% (Prev. -1.1%)
FX
- USD saw broad-based losses with early pressure seen following a Washington Post report that President-Elect Trump's aides are looking at universal import duties but only on certain sectors in what would be a shift from the aggressive tariff plans touted during the presidential campaign and which dragged the DXY briefly beneath the 108.00 level. However, the greenback bounced back from intraday lows after Trump later refuted the report which he said was wrong and fake news. Elsewhere, the data had little sway over price action whereby Factory Orders fell more than expected and Final S&P Global PMI data was revised downward on both the composite and services components for December.
- EUR benefitted from the dollar weakness and firmer-than-expected German inflation to briefly reclaim the 1.0400 handle before slightly pulling back.
- GBP was among the outperformers which saw GBP/USD return to 1.2500 territory and with the pair unfazed by weaker-than-expected UK Services PMI data.
- JPY failed to take advantage of the dollar weakness as markets were left indifferent to recent remarks from BoJ Governor Ueda who reiterated plans to increase interest rates.
- Canadian PM Trudeau confirmed he is to resign and that work at Parliament is to be suspended until March 24th, while he would stay on in office until his Liberal Party can choose a new leader.
- US President-elect Trump commented on Truth Social that many people in Canada love being the 51st state and the US can no longer suffer the massive trade deficits and subsidies Canada needs to stay afloat. Furthermore, he stated if Canada merged with the US, there would be no tariffs, taxes would go down, and they would be completely secure from the threat of Russian and Chinese ships constantly surrounding them.
FIXED INCOME
- T-notes traded indecisively and swung between gains and losses as Trump refuted reports that he is dialling back his tariff policies.
COMMODITIES
- Oil prices ultimately settled lower in choppy trade amid Trump trade reports and with initial upside seen after Saudi raised its prices to Asia.
- Bloomberg OPEC Survey for December found crude output fell 120k BPD to 27.05mln BPD with output dipping as UAE improves delivery of cuts.
- US President-elect Trump said that he will unban President Biden's oil drilling ban immediately.
- Slovak Government Office said the meeting in Brussels with Ukraine and EU Commission representatives over gas transit planned for Tuesday is cancelled given the Ukrainian side will not participate and an alternative date is being sought.
- Force majeure on South Sudan oil exports was lifted after 10 months, according to Bloomberg.
- Chile’s Codelco Chairman said copper production was "slightly higher" in 2024 vs the prior year, according to a DF interview.
GEOPOLITICAL
MIDDLE EAST
- Israeli PM Netanyahu said he has approved a series of West Bank attack and defence operations.
- Some sources close to US President-elect Trump expect that he'll seek a deal with Iran before considering a strike, according to Axios.
- French President Macron said the Iranian nuclear programme is close to breaking point and he must have talks with the new US administration, while he added that they would need to ask whether to launch sanctions restoration mechanism on Iran before October 2025.
ASIA-PAC
NOTABLE HEADLINES
- US President-elect Trump said he had a great relationship with Chinese President Xi until COVID, while he added they have already been talking through their representatives and believes they will get along.
- Pentagon added Tencent (700 HK), CATL (300750 CH), Autel (688208 CH), Changxin Memory Technologies and Quectel Wireless (603236 CH) to the US list of firms alleged to help Beijing's military, while Tencent later said it is not a military company or a military supplier and that the US move is clearly a mistake.
- China's stock exchanges asked some mutual funds to restrict stock selling at the start of the year, according to Reuters sources.
- India is said to be planning some USD 3bln aid and tariff cuts for electronics, according to Bloomberg.
EU/UK
NOTABLE HEADLINES
- Austrian President Van Der Bellen is tasking the far-right Freedom Party leader Kickl with forming a coalition government.
- French President Macron said the French PM will go to China to try to make progress on cognac tariffs.
DATA RECAP
- UK S&P Global Services PMI (Dec) 51.1 vs. Exp. 51.4 (Prev. 51.4)
- UK S&P Global PMI Composite (Dec) 50.4 vs. Exp. 50.5 (Prev. 50.5)
- EU HCOB Services Final PMI (Dec) 51.6 vs. Exp. 51.4 (Prev. 51.4)
- EU HCOB Composite Final PMI (Dec) 49.6 vs. Exp. 49.5 (Prev. 49.5)
- EU Sentix Index (Jan) -17.7 vs. Exp. -18.0 (Prev. -17.5)
- German CPI Prelim MM (Dec) 0.4% vs. Exp. 0.3% (Prev. -0.2%)
- German CPI Prelim YY (Dec) 2.6% vs. Exp. 2.4% (Prev. 2.2%)
- German HCOB Services PMI (Dec) 51.2 vs. Exp. 51.0 (Prev. 51.0)
- German HCOB Composite Final PMI (Dec) 48.0 vs. Exp. 47.8 (Prev. 47.8)
- French HCOB Services PMI (Dec) 49.3 vs. Exp. 48.2 (Prev. 48.2)
- French HCOB Composite PMI (Dec) 47.5 vs. Exp. 46.7 (Prev. 46.7)
- Italian HCOB Services PMI (Dec) 50.7 vs. Exp. 50.3 (Prev. 49.2)
- Italian HCOB Composite PMI (Dec) 49.7 (Prev. 47.7)
