- US stocks were bid throughout the entirety of the US session amid a lack of trade war escalation with all major indices in the green and outperformance in the Russell 2000. Sectors were predominantly higher with outperformance in Tech as NVDA and chip names were buoyed by the strong Google (GOOG) CapEx guidance but the overall downbeat earnings saw Google (GOOGL) slump which weighed on the Communication sector.
- USD softened on the day with the DXY retreating further beneath the 108.00 level amid softer yields, optimism around trade relations and mixed data releases, while there were several Fed comments including from Barkin who expressed a wait-and-see approach, but certainly leans towards further cuts this year.
- Looking ahead, highlights include South Korean Current Account, Australian Trade Data & NAB Quarterly Business Confidence, Comments from Fed’s Jefferson & BoJ’s Tamura, Supply from Japan, New Zealand Holiday.
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LOOKING AHEAD
- Highlights include South Korean Current Account, Australian Trade Data & NAB Quarterly Business Confidence, Comments from Fed’s Jefferson & BoJ’s Tamura, Supply from Japan, New Zealand Holiday.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks were bid throughout the entirety of the US session amid a lack of trade war escalation with all major indices in the green and outperformance in the Russell 2000. Sectors were predominantly higher with outperformance in Tech as NVDA and chip names were buoyed by the strong Google (GOOG) CapEx guidance but the overall downbeat earnings saw Google (GOOGL) slump which weighed on the Communication sector.
- SPX +0.39% at 6,061, NDX +0.42% at 21,658, DJIA +0.71% at 44,873, RUT +1.14% at 2,316.
- Click here for a detailed summary.
TARIFF/TRADE
- China initiated a WTO dispute complaint regarding US tariffs.
- China reportedly weighs a probe into Apple’s (AAPL) app store fees and practices, according to Bloomberg sources.
- USPS was reported to ‘continue accepting’ China and Hong Kong packages on February 5th, according to Bloomberg.
- Temu and Shein are targeted in new EU measures against “dangerous and cheap” e-commerce imports into Europe.
- India sees the potential for raising US imports amid trade tensions, while they will review the tariff surcharge on certain items such as luxury cars.
- Canadian PM Trudeau announced a Canada-US economic summit on February 7th, with an aim to explore ways to grow the domestic economy and make it easier to build and trade within the nation.
NOTABLE HEADLINES
- Fed’s Goolsbee (2025 voter) said if inflation rises or progress stalls, the Fed will need to figure out if it’s from overheating or tariffs, while he added that distinguishing the cause of any inflation will be critical for deciding when or even if the Fed should act.
- Fed’s Barkin (2027 voter) said he does not expect tariffs to lead to a large restoration of US manufacturing any time soon and he expects 12-month inflation figures will come down significantly in Q1. Barkin added that he does not believe that the case for a rate hike is a “base case” right now as there is no indication of an economy overheating.
- US Treasury Secretary Bessent said the Trump administration wants to make the 2017 tax cut permanent, according to a Fox Business interview.
- US House Speaker Johnson and Treasury Secretary Bessent were reported to meet to discuss continuing 2017 tax cuts, according to Punchbowl.
DATA RECAP
- US S&P Global Services PMI Final (Jan) 52.9 (Prev. 52.8)
- US S&P Global Composite Final PMI (Jan) 52.7 (Prev. 52.4)
- US ISM Non-Manufacturing PMI (Jan) 52.8 vs. Exp. 54.3 (Prev. 54.1, Rev. 54.0)
- US ISM N-Mfg Employment Idx (Jan) 52.3 (Prev. 51.4, Rev. 51.3)
- US ISM N-Mfg New Orders Idx (Jan) 51.3 (Prev. 54.2, Rev. 54.4)
- US ISM N-Mfg Price Paid Idx (Jan) 60.4 (Prev. 64.4)
- US International Trade (USD)(Dec) -98.4B vs. Exp. -96.6B (Prev. -78.2B, Rev. -78.9B)
- US ADP National Employment (Jan) 183.0k vs. Exp. 150.0k (Prev. 122.0k)
FX
- USD softened on the day with the DXY retreating further beneath the 108.00 level amid softer yields, optimism around trade relations and mixed data releases, while there were several Fed comments including from Barkin who expressed a wait-and-see approach, but certainly leans towards further cuts this year.
- EUR benefitted from the dollar selling with the single currency back at the 1.0400 handle and with ECB comments somewhat mixed as ECB’s Lane suggested a data-dependent and meeting-by-meeting basis and to not pre-commit to any particular rate path, while Centeno hopes to get to a 2% deposit rate sooner rather than later.
- GBP marginally gained and just about reclaimed the 1.2500 amid outperformance in some of its cyclical peers, while attention turns to the BoE.
- JPY strengthened with USD/JPY retreating beneath the 153.00 level amid softer US yields and following the recent surge in Japanese wage data.
FIXED INCOME
- T-notes bull flattened with a focus on the QRA, Fed speak and US data ahead of the NFP report on Friday.
- Quarterly Refunding: US Treasury is offering USD 125bln of securities to refund USD 106.2bln, raising cash of USD 18.8bln (prev. USD 8.6bln Q/Q), while it is to sell USD 58bln in 3yr notes, USD 42bln of 10yr notes and USD 25bln of 30yr bonds next week, as expected.
COMMODITIES
- Oil prices declined after soft data, bearish inventories, and geopolitics.
- US EIA Weekly Crude Stocks w/e 8.664M vs. Exp. 2.6M (Prev. 3.463M).
- Saudi Aramco set March Arab light crude oil OSP to Asia at USD 3.90/bbl vs Oman/Dubai average.
- Egypt reportedly signed a deal to drill 40 oil and gas wells within the Mediterranean, according to Bloomberg.
GEOPOLITICAL
MIDDLE EAST
- White House said US President Trump has not committed to putting US troops in Gaza.
- US President Trump stated on Truth that he wants Iran to be a great and successful country, but it cannot have a nuclear weapon. Trump also noted that reports the US, working in conjunction with Israel, is going to blow Iran into smithereens, are greatly exaggerated, while he would much prefer a verified nuclear peace agreement which would let Iran peacefully grow and prosper.
- US President Trump said “It’s a campaign of pressure on Iran to see if we can get something done. If we could solve this problem without a warfare…it would be a tremendous thing”, according to Jerusalem Post’s Stein.
- Iran’s President, in response to US President Trump’s maximum pressure policy, said resource-rich Iran has the option to navigate US sanctions.
- US Defense Department is reportedly developing plans to withdraw all US troops from Syria with Pentagon officials to begin drawing up plans for a full withdrawal in 30, 60 or 90 days, according to NBC.
RUSSIA-UKRAINE
- US allies expect US President Trump’s administration to present a long-awaited plan to end Russia’s war on Ukraine at the Munich security conference in Germany next week, according to Bloomberg citing sources.
ASIA-PAC
NOTABLE HEADLINES
- Chinese Premier Li said China should increase counter-cyclical adjustments and focus on outstanding problems, according to state media.
- TikTok owner ByteDance is reportedly slow-rolling negotiations for a sale while waiting for a green light from the Chinese government, according to The Washington Post.
- Japanese PM Ishiba and US President Trump will issue a joint statement after their summit on Friday laying out shared views on the economy, security and China, according to Nikkei.
EU/UK
NOTABLE HEADLINES
- French PM Bayrou survived the first no-confidence vote in Parliament.
- ECB’s de Guindos said he is not sure where ECB interest rates will end up and sees inflation approaching the ECB target.
- ECB’s Lane said “it is prudent to maintain agility in adjusting the stance as appropriate on a data-dependent and meeting-by-meeting basis and to not pre-commit to any particular rate path”. Furthermore, Lane said tariffs are a downside risk to activity but the inflation impact is uncertain.
- ECB’s Centeno said undershooting 2% inflation is a risk if investment does not pick up and he hopes they will get to a 2% deposit rate sooner rather than later, while they may need to go below the neutral rate to sustain inflation at 2% and he sees the neutral rate below 2%. Furthermore, he stated it is pretty clear the ECB need to keep a downward trajectory for rates and he is ok with gradual cuts of 25bps. Centeno also said that any further bank consolidation moves in Portugal should be approached with caution.
- ECB Wage Tracker 2025 Estimate is at 3.256% (prev. estimate 3.2%), while Q4-2025 Estimate is at 1.456%.
DATA RECAP
- UK S&P Global Service PMI (Jan) 50.8 vs. Exp. 51.2 (Prev. 51.2)
- UK S&P Global Composite PMI (Jan) 50.6 vs. Exp. 50.9 (Prev. 50.9)
- German HCOB Services PMI (Jan) 52.5 vs. Exp. 52.5 (Prev. 52.5)
- German HCOB Composite Final PMI (Jan) 50.5 vs. Exp. 50.1 (Prev. 50.1)
- EU HCOB Services Final PMI (Jan) 51.3 vs. Exp. 51.4 (Prev. 51.4)
- EU HCOB Composite Final PMI (Jan) 50.2 vs. Exp. 50.2 (Prev. 50.2)
- EU Producer Prices MM (Dec) 0.4% vs. Exp. 0.5% (Prev. 1.6%, Rev. 1.7%)
- EU Producer Prices YY (Dec) 0.0% vs. Exp. -0.1% (Prev. -1.2%)
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