Markets focus on possible end of war in Ukraine, oil, gas, dollar, company news and geopolitics

Stock market news

• The US stock market rose yesterday. The US economy remains strong. And the decline in oil prices gives hope for a slowdown in inflation and a cut in the Fed rate. The US dollar weakened a little. But Bitcoin has not yet been able to take advantage of either the rise in QQQ or the weakening of the USD. We expect a strong move in Bitcoin. There are reasons for both growth and decline. 

• Amid a fresh rise in global stock indices, the US dollar fell to its lowest level in a year due to a drop in US Treasury yields and another delay in the introduction of tariffs.

• There were several counter-trends in macro markets this week – the reversal effect of two big U.S. inflation reports, Washington’s insistence on peace talks in Ukraine alongside threats of massive tariffs and another busy schedule of corporate earnings and Treasury bond sales. But the net impact on the dollar index as trading began on Friday was a drop to its lowest in nearly two months, driven in part by a favorable January U.S. producer price report and a Ukraine-linked rise in the euro.
Even after U.S. President Donald Trump called his latest tariff plan “big,” it appeared they would not go into effect anytime soon.

Thursday's directive stopped short of imposing tariffs but instead launched an investigation that could take weeks or months into tariffs imposed on U.S. goods by other trading partners and then the development of retaliatory measures.

• The dollar, which has typically surged in recent months on tariff threats, fell to January levels against the euro and yuan, two-month lows against the Canadian dollar and 10-day lows against the Mexican peso. The U.S. dollar was also under threat as Treasury yields stopped rising entirely after Wednesday's consumer price inflation report, largely because yesterday's producer price data painted a different picture.

• As Federal Reserve Chairman Jerome Powell noted yesterday, PPI components are important for calculating the Fed's preferred measure of personal consumption expenditures (PCE) inflation. Several of them, related to health care and air fares, actually fell sharply last month. That led Fed futures to slightly increase bets on a Fed rate cut this year, pushing up the likely date of the next cut from October to September.

The biggest impact has been a decline in long-term Treasury yields, despite weak demand at auctions of 10- and 30-year notes this week.

• Along with a boost from another strong corporate earnings season, the combination sent Wall Street shares higher on Thursday, nearing new records, led by big gains in mega-caps Tesla, Nvidia and Apple. Futures held on to much of that gain overnight as traders await U.S. retail sales and industrial production data later Friday.

• Chinese tech shares resumed gains on Friday, posting their best winning streak in two years as DeepSeek’s artificial intelligence breakthrough continued to excite buyers. The Hang Seng Tech Index jumped 5.6% to a three-year high at the close, taking its weekly gain to 7.3% and its fifth straight week of gains. The rally was boosted by a Reuters report that Chinese President Xi Jinping will chair a symposium that will include Jack Ma and other Chinese business leaders.

Also encouraged by the likelihood of a longer timeline for U.S. tariffs, the broader Hang Seng index jumped 3.7%, while the mainland China index added nearly 1%.

European stock markets also continued another week of rapid growth on Friday.

• Record-high European stocks have outperformed Wall Street by a wide margin this year, thanks to a combination of better valuations, lower European interest rates and now talks to end the war in Ukraine.

• Next week's elections in Germany also raise some hopes for a subsequent easing of the country's strict fiscal rules and a possible increase in government spending in the future.

• Goldman Sachs raised its 12-month price forecast for the broader STOXX 600 index, citing lower risk premiums, lower energy prices, improved consumer confidence and rebounding economic growth as key factors.

The eurozone economy grew slightly faster than initially expected in the final quarter of 2024, data released on Friday showed.

• Ukraine's actions saw crude oil prices briefly fall to their lowest in a year this week, although they had stabilised earlier today. More tellingly for Europe, natural gas prices have fallen sharply from two-year highs. The benchmark Dutch gas contract fell to its lowest in two weeks, helped by news of Ukraine and talks to ease European gas storage targets.

• Corporate earnings season in Europe also lifted spirits. French luxury group Hermes rose 2% on Friday after reporting an 18% rise in fourth-quarter sales, lifting the broader luxury goods sector.

• Reddit (RDD) shares fell 5% after the company reported a slowdown in user growth, blaming it on “fluctuations in search traffic from Google” caused by algorithm changes.

• Tether May Have to Sell Its BTC to Comply with Proposed U.S. Stablecoin Regulations
Only 66-83% of Tether’s reserves comply with proposed U.S. regulations, potentially requiring an asset restructuring. If the regulations are passed, Tether may have to shed BTC and other assets backing its stablecoins that don’t comply in favor of U.S. Treasuries and liquid reserves. - JPMorgan An interesting way to find buyers for U.S. Treasuries. The more demand there is for dollar-pegged stablecoins around the world, the more demand there will be for U.S. Treasuries.

• Robinhood (HOOD) remains a major supporter of Dogecoin (DOGE). Forbes magazine published an article about the platform actively promoting DOGE, attracting a younger audience.
Yesterday, after the report, HOOD shares rose by 14%.
Key statements from Robinhood CEO
- Predictive markets are the future of trading.
- Cryptocurrencies will be a tailwind for business.
- Stablecoins help conduct financial transactions outside of business hours.
- Cryptocurrency technologies must be linked to real assets.

• Social network X will pay Trump $10 million in compensation for blocking his account. To settle a lawsuit filed by the Republican after his accounts were blocked in 2021.
Last month, Mark Zuckerberg's Meta agreed to pay the US president $25 million as part of a similar agreement.

• iPhone SE 4 likely to be unveiled on February 19. Tim Cook has announced the date of Apple's next (AAPL) event. "Get ready to meet a new member of the family." This will be the latest of Apple's cheap smartphones, expected to cost $499.

• Cisco Systems (CSCO) reported strong second-quarter results that beat expectations and signaled a potential resurgence. The company’s shares rose 2%, driven by a successful data center refresh and AI initiatives. Analysts attributed the performance to Cisco’s strategic moves, including integrating the Splunk acquisition and launching new products.

• JPMorgan Chase (JPM) CEO Jamie Dimon has rejected a petition from employees calling for the bank to end its five-day return-to-the-office policy. The petition, which has about 950 signatures, was criticized by Dimon, who emphasized the importance of working in the office for efficiency. He has mandated a 10% efficiency increase across all departments, rejecting any notion of flexible work arrangements.

• Datadog (DDOG) shares fell 8% after its fourth-quarter results beat estimates but missed the consensus.
The company forecast first-quarter revenue just below consensus and its full-year guidance missed expectations.

• Deere (DE) reported a big drop in profit, with shares down 2%. The farm equipment maker cited weak demand due to falling grain prices and announced job cuts to manage costs. Deere's first-quarter results reflected a challenging market environment, with sales down 30% year over year.

• CyberArk Software (CYBR) shares rose 9% after strong fourth-quarter results. The personal data security firm reported revenue growth of 41%, slightly beating analysts’ expectations. CyberArk’s subscription revenue grew significantly, supported by organic ARR reaching $1 billion.

• BTI (-7%) provided a mixed outlook, with revenue down slightly but gross margin improving. The company expects challenges from regulatory changes and higher excise taxes in certain markets, but remains optimistic about innovating to drive future growth.

• Zoetis (ZTS, -5%) beat revenue expectations, rising 5% in the fourth quarter. The company provided a cautious full-year revenue outlook, reflecting concerns about competition and potential price increases.

• Annaly Capital Management Preferred Shares (NLY.PR.F) declared a quarterly dividend, keeping the forward yield at 9.24%. The company continues to explore growth opportunities in agency MBS and expansion into home lending.

• Elon Musk to halt $97.4B OpenAI bid if board halts commercialization

• China's real estate sector sells dollar bonds for first time in two years - Bloomberg.
Greentown China Holdings Ltd. priced $350 million in bonds to refinance offshore debt, the first dollar bond sold by a major Chinese real estate firm since 2023.

• Europe to see record data center capacity additions in 2025, CBRE says Europe could see record levels of new data center additions this year as companies ramp up their artificial intelligence and cloud computing technologies, according to research released Wednesday by CBRE Group.

• Hertz (HTZ, -8%) falls with worse-than-expected loss on electric-vehicle plan. Hertz said it has finished selling off 30,000 electric vehicles, many of them Tesla models. The rental giant is moving away from an ill-advised bet on plug-in vehicles that customers were reluctant to buy and were expensive to maintain.

• Treasuries rose as a report on producer prices showed Wednesday's sell-off, triggered by hot consumer inflation data, was overdone.

• Oil falls as potential Ukraine talks reduce risks to Russian flows.

• Every time we have spare money, we buy more Bitcoin - Michael Saylor.
His company Strategy has already accumulated almost 500,000 BTC worth $46.48 billion.

• Gamestop (GME) shares are up 7% in premarket trading as the company considers investing in Bitcoin and other cryptocurrencies.

• Crocs (CROX) shares rose 24% yesterday after the shoe maker's 2025 adjusted profit forecast beat the Wall Street consensus.

• Shares of Applovin (APP) rose 24% yesterday. The AI-powered ad tech business reported better-than-expected fourth-quarter results and gave a strong first-quarter outlook after the stock market closed Wednesday.
The U.S. ad market is growing well.

Stocks in premarket after reports
ABNB +14%
ROKU +11%
DKNG +6%
SONY +2%
COIN -1% (during the trading session it was +8% after the excellent market reaction to the HOOD report)
PANW -5%
AMAT -5%
TWLO -7%

Key events that should provide more guidance to U.S. markets later Friday:
- U.S. retail sales for January, industrial production, import and export prices, and December manufacturing/retail inventories.
- Dallas Fed President Lori Logan to speak.
- U.S. corporate earnings: Moderna.
- Munich Security Conference begins.

Fundamental news

• The US economy is calm.
Producer Price Index (PPI): actual 3.5% y/y (expectation 3.2%), previous 3.3%.
Core PPI: actual 3.6% y/y (expectation 3.3%), previous 3.5%.
US wholesale inflation exceeded forecasts for food and energy prices.
Initial Jobless Claims: actual 213K (expectation 217K). Previous 220K.
The average 30-year mortgage rate in the US fell to 6.87%, for the fourth week in a row - Freddie Mac
A year ago, it averaged 6.12%. Mortgage rates are influenced by several factors, including the bond market's reaction to the Fed's interest rate decision.

• Trump: EU cuts tariffs to 2.5%. That's a big win.
The US president expects some countries to reduce or eliminate tariffs.
Trump: Chips, pharmaceuticals also to be hit; cars to be hit soon.
Trump tariffs to be delayed, could start April 1: CNBC
CNBC Washington correspondent: I'm told the new tariffs President Trump announced today will not go into effect today. There will be a delay of several months, possibly until April 1. That's still relevant. It will be a presidential memorandum today, not an executive order, and USTR will be tasked with devising next steps.
Trump signs Foreign Service order that could fire career diplomats for disagreeing with president's foreign policy - White House

• Trump said he expects to meet with Xi Jinping and Putin when "things calm down," -AFP. According to the agency, the US president said he is interested in meeting with the leaders of China and Russia. The topics of the talks should include, in particular, denuclearization and cutting defense spending "in half."

• Hungarian Prime Minister Viktor Orban has criticized Europe's demand to participate in talks on the Russia-Ukraine war. "This statement is a sad testimony to Brussels' poor leadership. While President Trump and President Putin negotiate peace, EU officials make useless statements."

• The US Senate voted to nominate Tulsi Gabbard as Director of National Intelligence. A former Democrat, she defected to the Republican ranks and supported Trump's reelection.
The Senate confirmed Robert F. Kennedy Jr. as Health and Human Services Secretary.
Former Republican leader Mitch McConnell was the only Republican to vote against.

• Israel plans to strike Iran's nuclear facilities in 2025, WSJ reported, citing anonymous sources.
According to these sources, Israel plans to enlist the support of the United States, and Trump in particular, to carry out such attacks.

• Scholz called on the Bundestag to declare a state of emergency in connection with the events of the last 24 hours and the US statements on Ukraine. A state of emergency allows the state to take on more debt than the debt limit allows.
A little later we will hear about stimulating the German economy, large investments by American businesses in this country and Germany buying US government bonds?

• Indian Prime Minister Modi meets Elon Musk in Washington. Modi is accompanied by a group of advisers, and Musk is accompanied by his young children.
A senior Trump administration official: Tariffs on China give India an opportunity to strengthen supply chains and expand relations with the US.
“I hope to have a bilateral trade agreement with India in 2025.”
The Trump administration is seeking to prioritize India as a key importer of America’s natural resources.
/ That is, if they buy resources (instead of Russian oil) and US government bonds. It may also include military products.

• Trump: Taiwan took away our chip manufacturing and we want to get that business back.