- US stocks closed in the green with the Russell 2000 and Nasdaq leading the gains although sectors were mixed as defensives lagged, while Energy, Communications and Tech were bid. Market focus remained on tariff updates with the US having agreed to delay implementation of tariffs on Canada and Mexico by 1 month, although the additional 10% tariffs on China took effect which prompted retaliatory measures although the response was ultimately being framed as limited.
- USD weakened following the one-month delay to tariffs on Mexico and Canada, while the additional 10% tariff on China took effect and was met with immediate retaliation but resulted in a limited reaction. Furthermore, weaker-than-expected data releases and the latest Fed rhetoric did little to shift the dial.
- Looking ahead, highlights include Australian PMIs, Japanese Labour Cash Earnings, Chinese Caixin Services PMI, Singapore Retail Sales, Comments from Fed's Jefferson.
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LOOKING AHEAD
- Highlights include Australian PMIs, Japanese Labour Cash Earnings, Chinese Caixin Services PMI, Singapore Retail Sales, Comments from Fed's Jefferson.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks closed in the green with the Russell 2000 and Nasdaq leading the gains although sectors were mixed as defensives lagged, while Energy, Communications and Tech were bid. Market focus remained on tariff updates with the US having agreed to delay implementation of tariffs on Canada and Mexico by 1 month, although the additional 10% tariffs on China took effect which prompted retaliatory measures although the response was ultimately being framed as limited.
- SPX +0.72% at 6,038, NDX +1.26% at. 21,567, DJIA +0.30% at 44,556, RUT +1.41% at 2,290.
- Click here for a detailed summary.
TARIFFS
- US President Trump said he will speak to Chinese President Xi at the appropriate time and is in no rush, while he responded 'that's fine' when asked about China’s retaliatory tariffs.
- White House spokesperson said no updates on when the Trump-Xi call will take place but it is being scheduled and will happen "very soon".
- US President Trump's Trade Advisor Navarro said US President Trump’s call with China will happen today, while he added that if a trade study indicates damages from USD 1tln global US trade deficit are significant, there is potential for a supplemental global tariff. Navarro also said that USTR nominee Greer will "recalibrate" Section 301 tariffs on Chinese imports.
- WSJ initially reported that US President Trump is to speak with Chinese President Xi today but later reported the two leaders are not speaking today.
- China may adjust retaliatory actions against the US, according to CCTV.
- China is reportedly now looking at a formal probe into Intel (INTC) although the nature of the probe into Intel is unclear, according to sources cited by FT.
NOTABLE HEADLINES
- Fed Chair Powell is to deliver his semi-annual monetary policy report to the Senate on February 11th.
- Fed's Daly (2027) voter said the economy is in a very good place and the Fed can take its time to look at data and policy changes. Daly also noted there is continued momentum in the economy although there is uncertainty and business contacts are optimistic. Furthermore, Daly said the Fed has not finished the job on inflation yet and has to make sure the Fed gets inflation down, as well as noted that the Fed is in a good position to wait and see.
- US House Republicans are split on how deeply to cut federal spending, while the disputes are slowing their plans to reduce taxes and increase border enforcement, according to the WSJ.
- US House Financial Services Chair noted that both chambers of Congress are to form a crypto working group.
DATA RECAP
- US Factory Orders MM (Dec) -0.9% vs. Exp. -0.7% (Prev. -0.4%, Rev. -0.8%)
- US JOLTS Job Openings (Dec) 7.6M vs. Exp. 8.0M (Prev. 8.098M, Rev. 8.156M)
FX
- USD weakened following the one-month delay to tariffs on Mexico and Canada, while the additional 10% tariff on China took effect and was met with immediate retaliation but resulted in a limited reaction. Furthermore, weaker-than-expected data releases and the latest Fed rhetoric did little to shift the dial.
- EUR benefitted from the dollar weakness and advanced firmly above 1.0300 with the single currency unfazed by comments from ECB's Villeroy who noted that there will probably be more ECB rate cuts.
- GBP mildly strengthened although the upside in GBP/USD was capped after hitting resistance just shy of the 1.2500 level.
- JPY strengthened amid the recent upside in Japanese yields, while participants look ahead to labour cash earnings data from Japan.
FIXED INCOME
- T-notes traded higher throughout the session following China's announcement of retaliatory tariffs against the US and with weaker-than-expected data.
COMMODITIES
- Oil prices settled lower on what was a choppy session with early heavy losses on tariff delays but then rebounded from lows on punchy geopolitical rhetoric.
- Private Inventory Data (bbls): Crude +5.0mln (exp. +2.0mln), Distillate -7.0mln (exp. -1.5mln), Gasoline +5.4mln (exp. +0.5mln), Cushing +0.1mln.
- Russia's February crude oil exports from Western ports revised up by 300k BPD to 1.9mln BPD.
- Lebanese President Aoun told Qatar’s PM they are looking forward to resuming oil and gas exploration with TotalEnergies (TTE FP) soon.
GEOPOLITICAL
MIDDLE EAST
- IDF said its military operation in the northern West Bank continues, according to Al Jazeera.
- Israeli PM's office said they are preparing to send a delegation to Doha to discuss continued implementation of the Gaza ceasefire agreement. It was separately reported that US Envoy Witkoff repeated his request to Israel PM Netanyahu that Israel send a delegation to Qatar and Netanyahu decided to comply, according to Axios citing sources.
- Hamas said talks on the second phase of the Gaza ceasefire deal have started.
- US President Trump signed a memorandum regarding maximum pressure on Iran and said he was torn on signing the memo on Iran and called it very tough. Trump said hopefully they will not have to use it and will see if they can work out a deal with Iran, while he added that Iran cannot have a nuclear weapon and they have the right to block the sale of Iranian oil to other nations but noted he would hold talks with his Iranian counterpart and would reach out to Iran. Furthermore, Trump said if Iran were to retaliate and try to kill him, Iran would be obliterated.
OTHER
- Azerbaijani government source said a plane that crashed on 25th December was hit by a Russian surface-to-air missile and Azerbaijan has a fragment of the missile, according to Reuters.
ASIA-PAC
NOTABLE HEADLINES
- BoK minutes stated that board member Sung-Hwan said downside risks to growth are increasing due to US policy uncertainty, and political turmoil. It was also stated that a sharp depreciation in the KRW due to domestic factors is unlikely to give ample FX reserves unless political turmoil widens further, while the impact of a policy rate cut on USD/KRW would be limited.
- Panama is said to mull cancelling its port deal with a Hong Kong firm, according to Bloomberg.
EU/UK
NOTABLE HEADLINES
- ECB's Rehn said the EU should retaliate if US President Trump imposes tariffs, according to FT.
- ECB's Villeroy said there will probably be more ECB rate cuts and they are nearing the 2% inflation target, while he does not see a recession in France and expects a recovery in 2026 and 2027.
- EU Commission President von der Leyen said the EU will protect its own interests and will focus on strengthening economic ties that deliver for Europeans, while they are ready for US negotiations and will find solutions. Furthermore, she said the EU can find agreements that could expand trade and investment ties with China, while the EU will keep de-risking the economic relationship with China and has room to engage constructively.
