Geopolitical anxiety in financial markets, corporate news, gold and yen
Stock market news
• Lots of noise - neutral result. Although US stock indices managed to update the historical maximum. The minutes of the Fed were not as scary as some feared. But in Asia, stocks are getting cheaper in the morning - Hong Kong and Japan are falling by 1.5-2%, slightly pressing down futures on US stock indices. Bitcoin is really stable at around $97 thousand.
Are investors tired of buying? The 10% drop in PLTR stocks yesterday could become a canary in the coal mine for other similar rocket stocks.
• A slew of tariff news this week coupled with geopolitical worries has left investors tired and jittery, sending stocks lower in Asian trading, gold to a record high and the yen to its highest in two months as sentiment remains volatile.
Futures suggest European stock markets will be cautious on Thursday after the pan-European STOXX 600 index fell almost 1% in the previous session, its biggest daily drop in two months. Remember, the benchmark index, like other European bourses, has started the year strongly, posting double-digit gains in 2025, significantly outperforming U.S. stocks.
Markets have grown accustomed to US President Donald Trump’s repeated promises of tariffs, with many analysts seeing the threats as the first step in a protracted negotiation with both foes and friends. But Trump’s condemnation of Ukrainian President Volodymyr Zelensky as a “dictator” and warning that he must act quickly to secure peace or risk losing his country has brought geopolitical concerns to the forefront, undermining risk appetite.
• Risk aversion saw the yen, already bolstered by rising chances of another interest rate hike by the Bank of Japan, become the main driver of moves among currencies, hitting its highest since early December and last trading at 150.48 per dollar.
• Gold prices hit another record high on safe-haven flows, extending their 2025 gains to 12%. For those keeping track, this marks the ninth time the metal has hit an all-time high this year. And that's after a 27% gain last year, its strongest annual performance in more than a decade.
Both Citi and Goldman have raised their price targets on gold this month, forecasting it will top $3,000. Much of the bullish sentiment is due to robust demand from central banks. Perhaps in these uncertain times, gold is all that shines.
• Strategy (MRST) Announces $2B Convertible Notes for Future BTC Purchases The company announced plans to privately place $2 billion in zero-coupon convertible senior notes due March 1, 2030.
• BOJ's Takata:
- Financial conditions remain easy after January hike
- Need to be cautious about possible acceleration in inflation due to weak yen and large wage hikes
- Inflation expected to approach BOJ's target due to domestic factors
- However, long-term inflation expectations are gradually rising
- Companies are likely to raise wages significantly this year
- BOJ should be cautious in changing policy due to uncertainty about the U.S. economy and difficulty in determining the neutral rate level
• Nikola (NKLA) filed for bankruptcy. The company's shares were worth $2,000 per share in 2020.
• DeepSeek is considering outside investment for the first time, with potential partners including Alibaba (BABA) and Chinese state funds.
• Rheinmetall has signed a contract with Germany worth hundreds of millions of dollars. The framework agreement will run for three years with the possibility of extension.
• Newly founded chip design startup AheadComputing said Wednesday it has raised $21.5 million in seed funding.
The company, co-founded by several former Intel CPU engineers and executives, plans to build technology and chips based on an open-source architecture called RISC-V, pronounced “risk five.”
Microsoft (MSFT) Unveils Mojarana Quantum Chip 1
The quantum computing wars are heating up.
• X in talks to raise funds at $44 billion valuation - Bloomberg.
• Europe, Asia face $130 billion in listing outflows as US appeal grows - Bloomberg. European and Asian companies could soon flood the US market with new listings as the lure of higher valuations and greater liquidity drives capital out of their countries.
• Swiss navigation device maker Garmin (GRMN) forecast full-year results Wednesday above Wall Street estimates, betting on further momentum in its outdoor and auto segments.
The company's U.S.-listed shares rose 13%.
• AI startup Humane is winding down its wearable badge business and selling assets to HP.
The deal gives HP access to the startup's Cosmos operating system, technical talent and intellectual property, which will help bolster the personal computer maker's AI portfolio amid a weak recovery in its core market. The acquired talent will form a new HP Innovation Lab focused on integrating Humane's machine learning capabilities.
• Apple's iPhone 16e costs more than expected, but it has AI. The fourth generation of Apple's budget iPhone lineup, formerly called the iPhone SE, costs $599. That's below the iPhone 16's $799 starting price, but still about $50 higher than Wedbush Securities analyst Dan Ives expected.
Stocks reacted to Apple's presentation with zero reaction.
• CVNA after the report in the premarket -10% after the report.
• Landmark Mastercard deal challenged in UK class action funding probe
• Vanguard suspends corporate meetings due to new ESG guidelines.
• HSBC's bonus pool will remain unchanged in 2024 amid cost cuts; headcount will be cut by 3%.
• ASR Nederland sees opportunity to accelerate $548m share buyback programme
• EFG International reports profit growth on acquisition of private bank Cité Gestion.
• HSBC expects $1.8bn in restructuring costs as new CEO seeks to boost profits
• Singapore's UOB hits record high after fourth-quarter profit beat and return of capital was $2.2 billion.
• Brazil's XP reports 16% revenue growth to $213 million in fourth quarter.
• Citi increases CEO Fraser's compensation by 33% to $34.5 million for 2024.
• Citigroup hires Nicole Giles from JPMorgan as chief accounting officer.
• Southwest Airlines transformation chief Ryan Greene resigns.
• New generation weight loss drugs are aimed at preserving muscle.
• Electric truck maker Nikola files for Chapter 11 bankruptcy protection.
• Etsy misses holiday quarter sales expectations, shares fall
• Coach parent company Tapestry will sell its Stuart Weitzman shoe brand for $105 million.
• Vanguard suspends corporate meetings due to new ESG guidelines.
• Apple will release a new low-cost iPhone to capture a wider market.
• Bumble shares fall after weak forecasts point to slow growth for dating app
• Fed's concerns grow as tariff threats grow larger and broader.
• Walmart faces some tariff challenges as Wall Street expects record sales.
• Earnings from Mercedes-Benz and Renault will also be in focus as European carmakers try to allay investor concerns over tariffs.
Key events that could impact markets on Thursday:
- Philadelphia Fed manufacturing index
- Initial jobless claims
- EIA crude oil inventory change
- German producer prices for January
- Earnings: Airbus, Lloyds Banking, Mercedes-Benz and Renault
Fundamental news
• U.S. home starts slowed in January,
with builders cutting back on single- and multifamily construction amid growing concerns about mortgage rates and unsold inventory.
• UK inflation rose more than expected.
CPI +3.0% (expected +2.8%, prev.: +2.5%).
Core CPI +3.7% (expected +3.7%, prev.: +3.2%).
• At the end of 2024, China reduced its investment in US government debt to its lowest since 2009 - $759 billion. A year earlier, it was $816 billion.
However, Hong Kong, which is under Beijing's control, increased its US government debt from $238 billion to $255 billion.
• The largest holder of US government debt, Japan, also reduced its investments: from $1,115 billion to $1,060 billion.
Others took their place, and the government debt in the hands of foreigners increased in 2024 from $7,939 billion to $8,513 billion. Moreover, official holders reduced the government debt (from $3,796 billion to $3,783 billion), while private investors significantly increased it.
• The United States tested a Minuteman III intercontinental ballistic missile at a military base in California, noting that the test launch was “part of routine and periodic activities” designed to demonstrate that the CIF nuclear deterrent remains safe, secure and effective.
• Trump has signaled that he is ready to abandon allies and team up with Putin, - The New York Times
This became clear during the first talks between the US and Russia since the war began. Trump has signaled that he is ending his isolation of Putin and is seeking to bring Russia back into the international community as a strategic partner of the US.
Trump's rating has fallen in recent days as Americans worry about the economy and Trump's threats to impose tariffs on many countries, - Reuters/Ipsos poll.
• The US has a new Commerce Secretary who supports cryptocurrencies. The Senate has confirmed Howard Lutnick as the US Secretary of Commerce. He is known for his pro-crypto stance and has investments in the crypto industry.
• Elon Musk has revealed that the US Treasury Department sent money without the TAS identification code, which links a Treasury payment to a budget item. Without the code, it is “virtually impossible” to track about $4.7 trillion in transactions.
• James Fishback, CEO of the hedge fund Azoria and former Greenlight Capital employee, has proposed paying a “DOGE dividend.” Which would be about $5,000 per tax-paying household. Fishback has proposed taking 20% of DOGE’s projected $2 trillion ($400 billion) in savings and paying it out as tax refunds to about 79 million U.S. households.
Elon Musk has promised to discuss the idea with Trump. But it would also require congressional approval. Fishback’s cashback proposal? Sounds nice, but it’s unlikely to pass Congress.
• Defense Secretary Pete Hegseth has directed the military services to identify $50 billion in programs that could be cut in fiscal year 2026, with the goal of redirecting the savings — about 8 percent of the defense budget — to fund President Donald Trump's military priorities, including Iron Dome and border security.
• Polish President Andrzej Duda, after meeting with US President Donald Trump's envoy for Russia and Ukraine, Keith Kellogg, said that the US will not reduce the number of troops in Eastern Europe - CNN.
• Merz: The decision to phase out nuclear power plants in 2011 was wrong. "The ideologically blinded government finally shuts down the last three nuclear power plants during Germany's biggest energy crisis."
• The Pope said he "feels death is approaching." He has been in hospital for five days - Politico.