Stock market news and geopolitics, market reaction to new US tariffs, corporate reviews
Stock market news
• No crash. News of a 30-day tariff deferral for Mexico and Canada calmed the markets a bit. Only sharp declines in AAPL, TSLA and semiconductors kept stocks in the red. Optimism is slowly returning. This is a Trump market. In 4 years, you will be as seasoned as old cryptans.
• After four days of guessing games and considerable financial turbulence, the United States and China appear to have resumed their mutual trade war, while Mexico and Canada have been given at least a month to breathe, leaving markets somewhat woozy and wary about the next steps. The result for the currencies hardest hit by the process was that the Mexican peso and Canadian dollar were back higher than they were on Friday, when the latest round of threats, counter-threats and delays began, bouncing off the two- and 22-year lows reached respectively during that time. Despite the passing of a deadline earlier on Tuesday for the U.S. to impose 10% tariffs on Chinese goods, and China’s immediate retaliatory measures, including import duties of up to 15% on a range of U.S. goods starting next week, the yuan strengthened and returned to Friday’s levels. The peculiar reaction suggests there remains some hope that the kind of concerted delays and postponements seen in Canada and Mexico will be replicated in China. U.S. President Donald Trump’s spokesman said Trump would speak with Chinese President Xi Jinping in the next couple of days. More broadly, the dollar index has mimicked all of these moves, with a 1.5% round trip that has taken it to three-week highs and back since Friday. It’s still unclear whether Trump plans to impose tariffs on the European Union.
• The yuan, peso and Canadian dollar account for about 41% of the Federal Reserve's broad trade-weighted dollar index. Add in the euro and the figure is more than 60%. Complicating matters somewhat is the fact that mainland China markets remained closed for the Lunar New Year holiday until tomorrow, although Hong Kong has reopened and shares there rose nearly 3% to three-month highs even after bilateral tariffs were imposed.
• Some analysts said hopes for talks and delays had spurred buying, while others said there was relief that the proposed U.S. tariffs were only 10%, down from the 60% Trump had promised before the election.
• Beijing announced its own tariffs of 15% on U.S. coal and LNG and 10% on crude oil, farm machinery and some cars from Feb. 10. China also launched an antitrust investigation into Alphabet's Google and added PVH (the holding company for brands including Calvin Klein) and biotech firm Illumina to a list of potential sanctions. It came as Alphabet topped the latest mega-cap earnings report on Wall Street, with big pharma companies such as Omnicom and Advanced Micro Devices also dominating the calendar.
• Unlike currency markets, U.S. stock indexes, worried about trade war concerns, have yet to return to Friday's highs. Although delays in Mexico and Canada helped lift stocks from Monday's worst levels, the S&P 500 closed 0.8% lower and futures remained negative into Tuesday's close following the events in China.
• Wall Street's VIX "fear index" of stock volatility rose above 20 again on Monday, after failing to close above that level this year. Beyond the myriad corporate headaches that tit-for-tat trade wars are creating for major exporters and importers, another problem is how borrowing costs have risen due to widespread fears about the inflationary impact of massive tariffs.
• U.S. 10-year Treasury yields remain high this week and expectations for Fed rate cuts this year have eased slightly as both Fed officials and investors grapple with the extent to which tariff measures will worsen a politically toxic price outlook. While there is debate about whether a one-time price increase of this kind will necessarily lead to higher inflation per se, there are legitimate concerns that the endless threats, and even their gradual implementation, are raising inflation expectations. And it’s just part of a series of seeming contradictions in Washington’s policy approach that markets are grappling with.
• If tariffs are imposed, the dollar would likely rise, in direct contradiction to Trump’s repeated claims that it is overvalued, and would also help overseas companies absorb the tariffs and keep prices low for their goods in U.S. stores. Meanwhile, retaliatory tariffs on American goods abroad have only hurt American exporters. Moreover, the assumption of higher inflation, even at the margin, simply keeps interest rates higher and stock markets under a cloud – again contrary to the new administration’s stated preferences. Even its vaunted love of crypto has been called into question, with Bitcoin and other tokens hurt by the dollar’s rise due to the trade spat.
• Back on the domestic economy, attention will soon be focused again on this week's raft of jobs news later today, with December jobs data due ahead of Friday's January payrolls report. Elsewhere in Europe, corporate profits have been strong. UBS's fourth-quarter profit beat expectations, but the lender's shares fell 5% as its share buyback plans, subject to continued Swiss capital rules, failed to impress investors. But Infineon shares jumped 11% after the German chipmaker beat them and slightly raised its full-year revenue forecast.
And premiums on 10-year French government debt compared with Germany fell to 70 basis points for the first time in four months after French Prime Minister Francois Bayrou finally pushed his 2025 budget bill through parliament, betting he has enough votes to survive a likely no-confidence vote.
• OpenAI has released a new feature in ChatGPT - Deep Research. This is an AI agent that can conduct entire studies on its own. You can ask it to analyze absolutely any field of activity, it will study a huge number of sources from all over the Internet, create a detailed research paper with detailed reports, quotes, substantiated conclusions and links to sources. / But for now it only works for Pro users for $ 200 / month.
• Analysts reveal DeepSeek's real expenses on AI training - SemiAnalysis/ It is noted that more than $1 billion was spent instead of the stated $6 million.
• Arabica coffee continues to set records, global stocks fall rapidly - Bloomberg.
• Trump-backed World Liberty Financial's portfolio fell more than 21% due to its $242.77 million cryptocurrency investment made between Jan. 19 and Jan. 31 - CoinChain
• Grayscale files for XRP ETF, but LTC will likely come first - Bloomberg analyst
• New US tariffs send European auto giants into freefall. European auto companies have suffered heavy losses as the United States imposes new tariffs on goods from Mexico and Canada. Shares in giants such as Volkswagen and Stellantis have fallen sharply, marking the biggest decline in the European auto sector since April.
• Tariffs lifted soar. On the Polymarket platform, traders are holding bets on whether Trump will change his mind in the trade war with Canada and Mexico.
The odds are:
57% chance that tariffs will be lifted for Canada by May.
47% for Mexico.
Investors expect tariffs to be just an excuse to get what they want from trading partners quickly.
• MicroStrategy (MSTR) did not acquire any new bitcoin during the week ending February 2, which coincides with the pricing of its preferred shares. MSTR shares ended the day up 4% yesterday, reflecting the rise in bitcoin prices.
• The consumer sector faces significant challenges from new tariffs between the U.S. and its trading partners, including Mexico, Canada and China.
Retailers and auto companies are seeing share prices fall. But Bank of America sees potential gains for Molson Coors (TAP) and Altria (MO), with the latter benefiting from a crackdown on illicit products. Analysts note ongoing problems in the U.S. nicotine industry but highlight potential election-related tailwinds for Altria.
• Tonix Pharmaceuticals (TNXP) is conducting a 1-for-100 reverse stock split to comply with Nasdaq's minimum bid price rule.
This strategic move is intended to increase the stock's stock price while ensuring compliance with exchange rules.
• ASML Holding (ASML) announced a quarterly dividend of $1.9193 per share on May 6. The announcement follows positive assessments of the company's financial health and growth prospects, with analysts highlighting ASML's strong fundamentals and potential for further market growth.
Stratasys (SSYS) shares rose 21% after the company reported preliminary fourth-quarter earnings that beat expectations.
Stratasys plans to report full fourth-quarter results on March 5, 2025.
• Industrial metals and related stocks, including Teck Resources (TECK) and Alcoa (AA), fell as Trump's tariffs threatened global economic growth. Iron ore, aluminum, copper and zinc futures fell, exacerbated by a stronger U.S. dollar that raises costs for buyers.
• Tyson Foods (TSN) turned a profit after beating first-quarter earnings expectations, with revenue up 2.3% year over year. The company reported strong performance in its beef and chicken segments, contributing to its best quarterly results in two years.
• Gold rises to new all-time high amid rush to safe-haven assets.
• Tesla (TSLA) is losing market share in Sweden and Norway, vehicle registration data showed Monday, as Musk's political activism weighs on consumers.
• Palantir (PLTR) shares soar 22% to $102 after the report. The software company forecasts full-year revenue of $3.741 billion to $3.757 billion, above the $3.503 billion analysts were modeling.
Palantir executives have been saying for some time that the company’s software is more valuable in the ecosystem than big language models, because companies need the tools that make those models work.
• The crypto market saw its largest liquidation in history yesterday.
The total volume of liquidations on the crypto market over the past 24 hours could have been $8-10 billion, although data aggregators show around $2 billion, Bybit exchange CEO Ben Zhou wrote in X.
ETH fell 50% from its peak in less than 2 months.
But in the morning, Bitcoin was already above $101,000. They write that individuals sold the crypto and institutions bought it.
Key events that should provide more guidance for U.S. markets later Tuesday:
- U.S. industrial orders data for December, JOLTS jobs data for December.
- Federal Reserve Vice Chair Philip Jefferson, San Francisco Fed President Mary Daly and Atlanta Fed President Raphael Bostic talk.
- U.S. corporate earnings: Alphabet, Advanced Micro Devices, Texas Instruments, Omnicom, Pfizer, Amgen, Merck, Regeneron, Juniper, Amcor, Prudential Financial, Apollo, KKR, Fox, Estee Lauder, Pepsico, Pentair, Chipotle, Mondelez, Veralto, Match, FMC, more.
Fundamental news
• U.S. construction spending rose more than expected in December,
driven by single-family homebuilding, but high mortgage rates could limit further gains in new housing starts.
The Commerce Department's Census Bureau reported Monday that construction rose 0.5% after an upwardly revised 0.2% gain in November.
• U.S. industrial production rose for the first time in more than two years in January,
supported by strong orders, but a measure of the prices factories pay for raw materials rose sharply and further gains are likely after President Donald Trump imposed tariffs on goods from Canada and Mexico over the weekend.
• The Institute for Supply Management (ISM) said on Monday that its manufacturing purchasing managers' index rose to 50.9 last month, the highest since September 2022, up from 49.2 in December.
France to double its defence budget - Macron.
Canada and Mexico to enter recession
if 25% tariffs remain in place - JP Morgan
Turkey inflation fell less than expected
From 44.38% to 42.12% (expected 41.1%)
Eurozone inflation above expectations
Eurozone CPI (YoY): +2.5% (expected +2.4%, prev. +2.4%)
Eurozone CPI Core (YoY): +2.7% (expected +2.6%, prev. +2.7%)
• Panama has abandoned China's One Belt, One Road project after the US Secretary of State's visit. Panamanian President Jose Raul Mulino said the country's government would not extend China's strategic project for another three-year term.
• Trump on the EU: The bloc does not buy American cars and agricultural products, but at the same time supplies its own cars "by the millions." Tariffs on the European Union will definitely be introduced.
Trump admitted that because of the new tariffs on goods, Americans will "feel pain," but "there is nothing dramatic about it."
Trump also said that all those who oppose the new tariffs "work for China." Trump
: Canada will be able to avoid trade tariffs and receive military protection from the United States if it joins them as the 51st state.
• Canadian PM Trudeau: Tariffs will be suspended for at least 30 days.
Mexican President Sheinbaum: Tariffs delayed for a month.
Canada and Mexico will each send 10,000 troops to the U.S. border to combat fentanyl trafficking and illegal immigration.
• Trump and Xi Jinping may have telephone conversations in the next 24 hours. Will Trump tell Xi - first, start buying our government bonds?
• China Wants to Negotiate with Trump - WSJ
China's initial proposal on the tariffs imposed by Trump would focus on restoring the Phase 1 trade deal signed in 2020.
That deal then required China to increase purchases of U.S. exports by $200 billion over two years. But Beijing hasn't met that target. Other parts of China's plan include an offer to invest more in the U.S. and a pledge not to devalue the yuan to gain a competitive advantage.
/ One of the demands would be for China to buy U.S. Treasuries. China has been steadily reducing its position in U.S. Treasuries since 2013.
• European countries are ready to impose tariffs on the US if Trump imposes tariffs on EU goods. This was stated by the Vice Chancellor of Germany and the Minister of Economy from the Greens, Habeck.
• Saudi Arabia is Trump's best bet for lower oil prices - WSJ Saudi officials say they do NOT plan to drill any more for now - WSJ Trump, Saudi Arabia face off over oil prices - WSJ
Trump's team is aiming to cut oil prices to $45 a barrel. But such a drop could be "catastrophic" for U.S. shale producers and Saudi Arabia - "Trump's two most powerful allies in the global oil market," the WSJ notes.
• USAID funded the Cuban rebellion for three years under the pretext of fighting HIV - WAPO.
From 2009 to 2012, the US Agency for International Development allocated American taxpayer money to find revolutionaries for the Cuban rebellion.
Elon Musk said that he spoke with Trump about the US Agency for International Development (USAID) and that he allegedly agreed that it should be closed.
As a result, Elon Musk announced the beginning of the liquidation of USAID.
• Economic nationalism continues in Canada - FT Trump's tariffs anger Canadians. A wave of economic nationalism has swept across Canada. The patriotic "Buy Canadian" campaign is gaining popularity.
"Made in Canada" signs are appearing in stores. Lists of Canadian alternatives to American products are being distributed.
• Trump got angry at The Wall Street Journal and called everyone who does not support his customs policy enemies of the United States.
The US President responded to the publication's article, which pointed out the negative economic and geopolitical consequences of introducing additional duties against China, Canada and Mexico. Trump published several angry posts on the Truth Social social network and again promised his voters a "golden age of America."