The beginning of the end of the war between Russia and Ukraine in the center of markets, company news and geopolitics

Stock market news

• News of approaching peace in Ukraine had a positive effect on the US stock market due to lower oil prices.
Trump needs lower oil prices to trigger the following chain of events: Lower oil prices - Lower inflation - Lower Fed interest rates - Stimulate the US economy - US economic growth - Satisfied electorate.
Therefore, yesterday's unpleasantly high inflation data for January had a negative effect on stocks only at the beginning of trading.
But for US government bonds, there are few promises yet. In principle, high inflation is also a benefit for stocks, since it indicates a strong economy and potentially good financial statements in the near future. The American consumer has money and a desire to spend it.

• Investors have weathered the shock of U.S. inflation very well, given the already limited scope for interest rate cuts. Benchmark Treasury yields rose 10 basis points overnight, but stock futures actually gained ground. Even the U.S. dollar is struggling to maintain the upward momentum that typically accompanies higher yields, likely due to hopes for a peace deal between Ukraine and Russia after President Donald Trump held phone calls with the leaders of both countries to discuss ending their decades-long war. China has also been pushing for peace efforts to end the war, The Wall Street Journal reported.

• The prospect of sanctions on Russian oil being lifted has sent oil prices down more than 3% since Wednesday. Nasdaq futures rose 0.4% and S&P 500 futures added 0.2%. EUROSTOXX 50 futures rose 1%, taking their gains to nearly 11% this year. Stocks have already hit record highs in Europe, which has not yet found itself in the firing line of Trump's global trade war.

• The euro rose 0.5% to $1.0431, bouncing off a low of $1.0317 overnight, even as Treasury yields jumped. It still faces strong resistance at a January high of $1.0535. The European Central Bank has more room to cut interest rates as inflation is doing better than in the U.S. Markets are pricing in three-quarters of a percentage point to a final rate of 2%, while the Federal Reserve is expected to cut rates only once this year to a low of 4%. Just a few months ago, investors were expecting a bottom around 3%.

• In Asia, it's worth noting the 10% gain this year in Hong Kong, the region's best-performing big market, supported by an AI-fueled rally in global stocks that has finally reached China, fueled by the buzz around AI startup DeepSeek and benefiting mostly tech giants like Alibaba.

• Next, investors will be watching closely how Europe reacts to the war in Ukraine. Analysts say it will be a difficult process because countries including aid donors Britain, France and Germany have said they would have to be involved in any talks on Ukraine's fate. And then there is Ukraine itself. Saying that territory should be given to an invader before talks even begin is not a good start.

• US President Donald Trump is creating chaos in the US auto industry with his tariffs, Ford Motor CEO Jim Farley said at a Wolfe Research conference, NBC News reported.
Trump's "bombastic" trade policy rhetoric is a mistake that undermines confidence in the US - Citadel CEO Ken Griffin criticized President Donald Trump's trade policy at a UBS Financial Services conference in Key Biscayne.

• France, India and China signed a declaration to create “planet-friendly” artificial intelligence. The US and Britain refused to sign. Both countries opposed excessive regulation that “could kill a growing industry.”

• Glassnode: Altcoin Market Lost $234B in Two Weeks
- One of the Largest Altcoin Devaluations in History
- BTC Continues to Hold Capital, with Traditional Rotation of Funds into Altcoins That Characterized Past Cycles Not Happening
- Many Projects Are Having Difficulty in Mass Adoption and Finding Real-World Use Cases

• VanEck calculated that 20 US states could buy up $23 billion worth of bitcoins. An analysis of bitcoin reserve bills showed that if they are passed, states will begin to invest massively in crypto.

• Taiwanese tech giant Foxconn may partner with Nissan instead of Honda - FT. Foxconn, best known as the maker of the iPhone, is considering buying Renault's stake in Nissan.

• Alibaba (BABA) shares soar 5% on news of AI collaboration with Apple. Apple has filed with Chinese regulators to approve the iPhone's AI features, which it developed with Alibaba.

• Temu, Shein see U.S. sales slump - Bloomberg The online retail giants saw a sustained drop in sales in the week after U.S. President Donald Trump revoked a tariff exemption they had been enjoying.

• OpenAI will make Deep Research free for everyone. This is the same feature in ChatGPT that writes term papers and essays in a few minutes. Without a subscription, two requests will be available per month, and Plus users will be given 10 requests.

• GPT-5 will be completely free and unlimited for all users - Sam Altman.
OpenAI's next major release is GPT-4.5. It will be their last language model that "doesn't think."
After that, the company will start cleaning up ChatGPT. You won't have to choose between five different models anymore, they will all be built into GPT-5.

• Adobe has released a competitor to OpenAI: an AI tool for video generation - Firefly Video Model.

• Airline stocks such as American Airlines (AAL) and Delta Air Lines (DAL) are benefiting from a 7.1% year-over-year increase in airfares. Strong travel demand and pricing have helped boost airline profitability, continuing a seven-month streak of fare increases and supporting sector growth.

• Vertiv Holdings (VRT) shares fell 10% after providing weaker-than-expected guidance. The company forecast earnings of $0.57 to $0.63 per share for the next quarter, missing the consensus estimate of $0.64. Despite rising sales, the outlook curbed investor enthusiasm.

• Occidental Petroleum (OXY) got a boost as Berkshire Hathaway increased its stake to 28.3%. Buffett's firm bought additional shares, bringing its investment in Occidental to more than $12.9 billion. The move underscores Berkshire's long-term confidence in the energy sector.

• CVS Health (CVS) shares rose 15% after beating fourth-quarter revenue and profit estimates.
The health insurance segment, including Aetna, was a major contributor to the company's $97.7 billion in revenue, highlighting its robust growth and strategic positioning under new CEO David Joyner.

• Zillow (Z) shares fell 9.4%. The company reported fourth-quarter adjusted Ebitda that beat Wall Street expectations, but its first-quarter outlook missed the consensus.
Zillow said it expects first-quarter adjusted Ebitda to be in the range of $125 million to $140 million, below analysts’ estimates of $158 million. Revenue is expected to be in the range of $575 million to $590 million, missing expectations of $600 million. The stock was also hurt by rising housing costs in a U.S. inflation report.

• China's purchases of chip-making equipment are expected to fall 6% this year due to overcapacity and U.S. export restrictions. After years of growth, that marks a change in China's semiconductor strategy that could potentially impact global tech supply chains.

• Upstart Holdings (UPST) shares soar 32% as AI-powered lending platform posts windfall profit
Why Tariffs Will Make Auto Insurance Even More Expensive - WSJ More expensive cars or auto parts can increase the cost of claims, which is reflected in auto insurance rates over time.

• EU countries push to cut gas storage as prices rise - Bloomberg A group of countries is pushing the European Commission to allow more flexible requirements for refilling gas storage facilities ahead of next winter as they run out fast.

• U.S. net farm income will be about $163 billion in 2024.
That’s down from $165 billion in 2023 and a record $228 billion in 2022, according to the U.S. Department of Agriculture.
But the USDA projects U.S. farm income will be $194 billion in 2025.
That’s a big hit for Deere (DE) and other farm equipment companies.

Stocks in premarket after earnings.
APP +29%
HOOD +15%
CSCO +7%
RDDT -13%
TTD -27%

• UK fourth-quarter gross domestic product data is due out today, with consensus forecasts for a 0.1% decline in the quarter. Investors are expecting at least two rate cuts from the Bank of England this year.

• The U.S. is set to release weekly unemployment data, as well as the producer price index, which could attract more attention given the unexpected jump in consumer prices. Forecasts are centered on a 0.3% monthly rise in PPI. Both figures will feed into the Fed's preferred measure of inflation, the consumer spending index, which could determine whether the Fed has room to cut rates this year.

Key events that could impact markets on Thursday:
- UK fourth-quarter GDP data
- Eurozone industrial production data for December
- US weekly jobless claims
- US producer price index for January

Fundamental news

• Canadian Prime Minister Justin Trudeau has decided to hold an economic summit with a new priority - expanding the country's trade ties with other countries of the world. The main goal is to find new markets outside the United States.

• China threatens US national interests. Trump administration's priority is containing China in the Indo-Pacific region, says US Defense Secretary.

• House Republicans are proposing a $4 trillion debt limit increase, $4.5 trillion in tax cuts and at least $1.5 trillion in spending cuts, with $2 trillion over 10 years.
The Energy and Commerce Committee, which oversees health care, would cut $880 billion over a decade, the Education and Workforce Committee would cut $330 billion, and the Agriculture Committee would save $230 billion.
The money would be redirected to other Trump priorities, including a $100 billion increase in defense spending over the next decade through the Armed Services Committee and an additional $90 billion for the Department of Homeland Security, which is carrying out Trump’s massive immigrant deportation plan.
But the Senate Budget Committee began work on a narrower budget plan on Wednesday. Its budget does not include an extension of the tax cuts, leaving that for a second bill later this year.
The US Treasury has reduced the budget with a deficit of $128.6 billion in January
. A year earlier, the deficit was $21.9 billion.
/ The Democrats were already spending budget money on a grand scale. But as of February 5, the Treasury accounts were again at $805 billion against the local bottom of $641 billion on January 15. Something strange is happening in the US state treasury.

• Netanyahu: Israeli army will resume fighting in Gaza if Hamas does not return hostages held in the enclave by midday on Saturday.

• Estonia should offer its rare earth metals to the US to attract investment, Foreign Minister Margus Tsakhna said. He said this is “exactly the kind of bold geopolitical decision that Estonia should make” and “that will put us in a very strong position vis-à-vis the Trump administration.”

• The average salary in Poland increased by 12%. The average salary in Poland increased by 12.4% in the last quarter of last year compared to the same period in 2023, according to data from the Polish Central Statistical Office.

• US inflation beat expectations in January
US CPI: +3.0% y/y (expected +2.9%) prior: +2.9%.
US CPI Core: +3.3% y/y (expected +3.1%) prior: +3.2%.
This increase, driven largely by housing costs, suggests that inflation is moving further away from the Fed’s 2% target.
Market expectations for the Fed’s next rate cut shifted from September to December following the US inflation data.

• Trump: Interest rates must be lowered.

• Fed Chairman Powell: Repeats Tuesday testimony to House Financial Services Committee - No rush to cut rates
Asked if the Fed would give Elon Musk's DOGE access to Fed data, he said we have had no contact and nothing to report.
Powell: No change in own commitment not to resign if Trump asks.

• China's property crisis enters dangerous new phase - Bloomberg.