- US stocks gained on Monday despite tariff escalation talk over the weekend, namely that President Trump is to announce 25% tariffs on all steel and aluminium coming into the US. NDX outperformed which was supported by advances in the Technology sector with broad-based semiconductor manufacturers' strength as Evercore added Nvidia to its Tactical Outperform list, while Energy was the best-performing sector amid firmer crude prices on the aforementioned tariff developments and also geopolitical woes.
- USD was firmer following President Trump's tariff comments over the weekend in which he noted they will announce 25% tariffs on all steel and aluminium coming into the US on Monday, as well as reciprocal tariffs on Tuesday or Wednesday. However, the gains in the dollar were limited amid relatively light catalysts and a quiet data calendar, while the attention turns to Fed Chair Powell's looming testimony in Congress.
- Looking ahead, highlights include Australian Westpac Consumer Sentiment & NAB Business Confidence, Chinese New Yuan Loans & Aggregate Financing, Japanese Holiday.
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LOOKING AHEAD
- Highlights include Australian Westpac Consumer Sentiment & NAB Business Confidence, Chinese New Yuan Loans & Aggregate Financing, Japanese Holiday.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks gained on Monday despite tariff escalation talk over the weekend, namely that President Trump is to announce 25% tariffs on all steel and aluminium coming into the US. NDX outperformed which was supported by advances in the Technology sector with broad-based semiconductor manufacturers' strength as Evercore added Nvidia to its Tactical Outperform list, while Energy was the best-performing sector amid firmer crude prices on the aforementioned tariff developments and also geopolitical woes.
- SPX +0.67% at 6,066, NDX +1.23% at 21,757, DJIA +0.38% at 44,470, RUT +0.36% at 2,288.
- Click here for a detailed summary.
TARIFFS
- White House economic advisor Hassett said President Trump will act to stop waivers on steel at a time of his own choosing and noted that India has 'enormously high' tariff rates, according to CNBC.
- UK PM Starmer's spokesperson said Britain has not seen any detailed proposals from the US on steel and aluminium tariffs, while they will engage as appropriate. It was later reported that PM Starmer is to meet with US President Trump before the end of February, according to The Telegraph.
- UK played down the threat of US President Trump’s steel and aluminium tariffs, while Downing Street refuses to say if Britain would retaliate and the industry warned that levies on exports would be ‘devastating’, according to FT.
- French Finance Minister Lombard said Europe will answer to US tariff moves as strongly as the position of the US and they are prepared to do whatever is necessary to be balanced, while Lombard added they are ready and noted that the national digital tax is unrelated to the trade war and will not be changed.
- German steelmakers lobby group said tariffs planned by US President Trump will lead to more steel trade volumes being diverted to Europe.
- EU Commission spokesman said in response to a question on reciprocal tariffs idea that the Commission said none of the measures outlined by Washington were justified.
NOTABLE HEADLINES
- US House Republican leaders are looking to cut federal spending by USD 2tln to USD 2.5tln, according to Punchbowl sources. House GOP negotiators now believe they will have to dig deeper into Medicaid spending to meet those targets, while Punchbowl believes Washington is drastically underestimating the chance for a government shutdown after March 14th.
DATA RECAP
- NY Fed Survey of Consumer Expectations (Jan.): 1-year 3.0% (prev. 3.0%), 3-year 3.0% (prev. 3.0%), 5-year 3.0% (prev. 2.7%)
FX
- USD was firmer following President Trump's tariff comments over the weekend in which he noted they will announce 25% tariffs on all steel and aluminium coming into the US on Monday, as well as reciprocal tariffs on Tuesday or Wednesday. However, the gains in the dollar were limited amid relatively light catalysts and a quiet data calendar, while the attention turns to Fed Chair Powell's looming testimony in Congress.
- EUR marginally softened against the dollar in relatively rangebound trade with the single currency just about holding on to the 1.0300 status.
- GBP was mildly pressured in which GBP/USD trickled lower following a break beneath the 1.2400 handle with participants awaiting looming comments from BoE's Bailey and Mann.
- JPY ultimately weakened against the dollar although price action in USD/JPY was choppy and Japanese markets are closed on Tuesday for National Foundation Day.
FIXED INCOME
- T-notes were little changed on Trump tariff threats and with attention this week on inflation data, Powell's testimony and supply.
COMMODITIES
- Oil prices gradually advanced as Trump's tariff talk and punchy geopolitical rhetoric supported prices amid light newsflow.
- Russia said crude output has fallen further below the OPEC+ target as its oil output fell to 8.962mln BPD last month, according to Bloomberg.
GEOPOLITICAL
MIDDLE EAST
- Israeli PM Netanyahu's government spokesman said the war in Gaza will not end until its full goals are achieved, according to Sky News Arabia.
- Israeli Defense Minister Katz said in response to Hamas delaying Israeli hostages that this is a complete violation of the ceasefire agreement and he instructed the IDF to prepare for any scenario in Gaza.
- Israel Broadcasting Corporation reported the cabinet will meet on Tuesday to discuss the second phase of the prisoner and detainee exchange deal, according to Cairo News.
- IDF Central Command expanded open-fire regulations in the West Bank in which it decided to apply the same method of the Gaza war in the northern West Bank, according to Sky News Arabia.
- Gaza ceasefire mediators fear a breakdown of the agreement and talks have been postponed until clear indication from the US on a continuation of the phased plan, according to Reuters citing Egyptian security sources. Hamas told mediators that Israel was not serious about carrying out the phased ceasefire and US guarantees for the ceasefire are no longer in place given Trump's displacement plan.
- Negotiations for the second phase of the Gaza agreement have not started and Israeli PM Netanyahu has broken the date due to his visit to the United States, according to Sky News Arabia citing Hamas leader Musa Abu Marzouq although he said he expects that the negotiations will proceed and take their normal course.
- Hamas armed wing spokesperson said they will delay hostage release planned for Saturday until further notice, citing Israeli violations.
- US President Trump said there is no right of return for Palestinians under the Gaza takeover plan, according to AFP.
- Washington called on Israel to withdraw from southern Lebanon before February 18th, according to Sky News Arabia citing Jerusalem Post.
- Iran's Defence Minister said it is not possible to reach a nuclear agreement with the current US government, according to Sky News Arabia.
RUSSIA-UKRAINE
- Ukrainian President Zelensky said US officials are to visit Ukraine this week before the Munich security conference and he plans to have a meeting with VP Vance.
- US sources stated that President Trump's envoy for Russia and Ukraine is preparing options to end the war in Ukraine to present to Trump, according to Sky News Arabia.
- Russia's Deputy Foreign Minister said US supplies of modern weapons to Ukraine have made the "US a party to the conflict" and they are ready for dialogue on the conflict but "only on an equal basis", while he noted regarding dialogue with the US on strategic stability, that the situation does not look promising.
ASIA-PAC
NOTABLE HEADLINES
- China's Cabinet said it will increase residents’ income and promote reasonable growth of wage income, as well as place greater emphasis on boosting consumption. China will better meet housing consumption needs and support new forms of consumption, while it will introduce more practical and effective measures to stabilise foreign investments. Furthermore, China will encourage foreign businesses to carry out equity investments in China and optimise rules for mergers and acquisitions for foreign businesses.
EU/UK
NOTABLE HEADLINES
- French President Macron said that France is back in the AI race now and the European AI strategy is to be announced on Tuesday.
- ECB President Lagarde said the conditions for a recovery remain in place and inflation is set to return to the 2% medium-term target in the course of this year, with risks on both the upside and downside. Lagarde added the ECB is not pre-committing to a particular rate path and the frequency of shocks is likely to remain high in the future.
- ECB de Guindos said it is very important to avoid a trade war and to have a prudent and intelligent approach regarding the latest tariff announcement, while he added that analysis regarding tariffs is that it leads to an impact on supply and inflation is less clear. Furthermore, he said they have to take into account all factors on monetary policy and he sees inflation converging to the goal, as well as noted that the decision on policy will be taken meeting-by-meeting.
- EU Commission President von der Leyen will meet US VP Vance on Tuesday, according to an EU spokesperson.
DATA RECAP
- EU Sentix Index (Feb) -12.7 vs. Exp. -16.3 (Prev. -17.7)
