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US stocks gained amid strength in tech and communications following the Stargate announcement and Netflix earnings - Newsquawk Asia-Pac Market Open

  • US stocks were predominantly bid throughout the session with SPX printing a fresh record high although the advances were led by the Nasdaq with Tech and Communication names the only sectors truly in the green with the upside in heavyweight stocks supporting the overall market. Nonetheless, tech was underpinned after US President Trump unveiled Stargate which is a USD 500bln AI infrastructure project which supported AI names like Nvidia (NVDA) and Oracle (ORCL), while Communication names were also underpinned following the recent stellar earnings report from Netflix (NFLX).
  • USD was relatively flat on the day after the DXY recovered from an initial dip beneath the 108.00 level amid a quiet data calendar and as participants mulled over the recent tariff threats from President Trump, while the attention now turns to Trump's pre-taped interview with Fox News at 21:00 EST/ 02:00 GMT and remarks at Davos on Thursday.
  • Looking ahead, highlights include South Korean GDP, Japanese Trade Data, Australian NAB Business Confidence, Singapore CPI, US President Trump Interview, Supply from Australia & Japan.

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LOOKING AHEAD

  • Highlights include South Korean GDP, Japanese Trade Data, Australian NAB Business Confidence, Singapore CPI, US President Trump Interview, Supply from Australia & Japan.
  • Click for the Newsquawk Week Ahead.

US TRADE

  • US stocks were predominantly bid throughout the session with SPX printing a fresh record high although the advances were led by the Nasdaq with Tech and Communication names the only sectors truly in the green with the upside in heavyweight stocks supporting the overall market. Nonetheless, tech was underpinned after US President Trump unveiled Stargate which is a USD 500bln AI infrastructure project which supported AI names like Nvidia (NVDA) and Oracle (ORCL), while Communication names were also underpinned following the recent stellar earnings report from Netflix (NFLX).
  • SPX +0.61% at 6,086, NDX +1.33% at 21,853, DJIA +0.30% at 44,157, RUT -0.61% AT 2,304.
  • Click here for a detailed summary.

NOTABLE HEADLINES

  • White House said President Trump signed a memorandum for emergency price relief which seeks to lower housing and healthcare costs.
  • White House said US President Trump signed an executive order to suspend physical entry of migrants through the southern border, while the order directs the DHS, DoJ, and State Department to take all necessary action to immediately 'repel, repatriate, and remove illegal aliens' across the southern border. It was separately reported that the US military is preparing to send about 1,000 additional active-duty troops to the border with Mexico following Trump’s executive order, according to Reuters citing sources.
  • US Senate Finance Chair Crapo hopes that a full Senate confirmation vote for Treasury nominee Bessent could occur next week.

DATA RECAP

  • US Leading Index Change MM (Dec) -0.1% (Prev. 0.3%, Rev. 0.4%)

FX

  • USD was relatively flat on the day after the DXY recovered from an initial dip beneath the 108.00 level amid a quiet data calendar and as participants mulled over the recent tariff threats from President Trump, while the attention now turns to Trump's pre-taped interview with Fox News at 21:00 EST/ 02:00 GMT and remarks at Davos on Thursday.
  • EUR ultimately softened after failing to sustain the gains seen during the European morning with the single currency not helped by President Trump's recent tariff threat against the EU, while there was a slew of ECB commentary including from Lagarde who does not believe the ECB is behind the curve and stated that gradual moves in rates "come to mind currently".
  • GBP swung between gains and losses with price action in GBP/USD contained within the 1.2300 handle amid light pertinent catalysts.
  • JPY weakened despite expectations of a looming BoJ rate hike on Friday with the USD/JPY making headway after returning above the 156.00 level amid gains in stocks and mild upside in US yields, while Japanese trade data is scheduled for release overnight.

FIXED INCOME

  • T-notes were sold across the curve amid Trump tariff reports and supply but the downside stemmed after a strong 20yr auction.
  • SNB Chair Schlegel said they are not discussing a new CHF cap at the moment and cannot exclude negative rates but he does not like negative rates. Furthermore, he is not currently uncomfortable with inflation, while he noted that intervention has worked in the past and would be willing to do it again.

COMMODITIES

  • Oil prices were choppy following Trump's tariff threats and settled in the red as the dollar rebounded from lows.
  • Lyondell is to begin closure of Houston refinery this weekend, according to Reuters sources.
  • Port Freeport, Texas has reopened following the winter storm, while Houston and Galveston ports remained closed. However, Port Houston announced that all facilities would resume normal operations on January 23rd.
  • Kazakhstan plans to supply up to 127k tons of oil to Germany via the Druzbha pipeline in January, according to Interfax citing Kaztransoil.

GEOPOLITICAL

MIDDLE EAST

  • Israeli parliament voted on a bill to impose Israeli "sovereignty" over the Jordan Valley in the West Bank, according to Sky News Arabia.
  • Lebanese media reported an Israeli drone attack in the Hasbaya area in southern Lebanon, according to Kan 11's Kais.
  • Two Iranian cargo vessels carrying a crucial chemical ingredient for missile propellant will sail from China to Iran over the next few weeks, according to FT citing intelligence from security officials in two Western countries.

RUSSIA-UKRAINE

  • Ukrainian President Zelensky said the US must be part of any peacekeeping force and that ending the war must be a victory for US President Trump, not Russian President Putin.
  • US President Trump commented on Truth that he is not looking to hurt Russia and always had a very good relationship with Russian President Putin but added if they don’t make a deal soon, he has no other choice but to put high levels of taxes, tariffs and sanctions on anything sold by Russia to the US.
  • Russian Deputy Foreign Minister Ryabkov said as of today, there is a "small window of opportunity" for agreements with the new US administration, according to Interfax.
  • Russia's deputy UN envoy said in response to US President Trump's remarks on Ukraine, that it is not merely the question of ending the war and it is about addressing the root causes of the Ukrainian crisis, while they have to see what Trump thinks a deal means and said that Trump has the power to stop malicious US policy in Ukraine.

ASIA-PAC

NOTABLE HEADLINES

  • China is to allow foreign financial institutions to offer new types of financial services in some free trade zones, similar to those provided by Chinese financial institutions, according to Reuters. China is to support cross-border purchases of certain types of financial services at some free trade zones and is to facilitate the transfer of inbound and outbound funds related to foreign investors' investments at some free trade zones.
  • China released a plan for promoting the entry of medium- and long-term funds into the market, while it is to increase the ratio of insurance money in the stock market and guide big state-owned insurers to raise share investments. China will also expand the scale of swap facilities for securities firms, as well as promote the use of refinancing tools to support share buybacks and increases in holdings.
  • China will increase support for grain production, enhance grain production subsidies, implement purchase price policy and it issued a comprehensive rural revitalisation plan for 2024-2027, according to Xinhua
  • Japan is to vet investments by firms under China state influence with Japan set to introduce regulations for foreign investors that could cooperate with foreign governments to collect intelligence, particularly Chinese companies, according to Nikkei report.
  • Japanese PM Ishiba is to present an investment plan to US President Trump at a summit, according to Kyodo.
  • Indian PM Modi is reportedly considering lowering tariffs and increasing imports to counter threats from US President Trump, while India could purchase additional whisky, steel and oil from the US, according to Bloomberg citing sources.

EU/UK

NOTABLE HEADLINES

  • ECB's Lagarde said no immediate US tariffs were her expectation and that it is a smart approach, but that does not mean to say that tariffs won't happen and it will be more selective, according to CNBC. Furthermore, Lagarde said she is not overly concerned about the export of inflation in Europe and noted that the exchange rate will be of interest and may have consequences, while does not believe the ECB is behind the curve and stated that gradual moves in rates "come to mind currently".
  • ECB's Escriva said the ECB will not pre-commit to a decision but noted markets expect a 25bps rate cut which is the most likely scenario.
  • ECB's Holzmann said inflation gauges are still very strong and there is a danger of cutting rates and then hiking again, while he added it would be better to wait a bit longer on rate cuts although he can be persuaded on a cut if there are good arguments.
  • ECB's Makhlouf said high levels of uncertainty in the global macro-financial environment call for prudence in deciding monetary policy.
  • ECB's Nagel said confident that EZ inflation will return to the 2% target by mid-year, according to Spiegel.
  • ECB's Rehn said they are now confident that inflation will stabilise at its target as predicted.
  • ECB's Stournaras said rates should be lowered at the order of 25bps each time to get close to the 2% target by the end of the year and it is possible that US tariffs would speed up rate cuts in the Eurozone.
  • ECB's Villeroy said it is too early to tell but inflationary effects from the new US administration could be expected, while he added disinflation in Europe is still on track and there could be a decoupling between the ECB and Fed on rates, but it is not an issue.

via January 22nd 2025