PETER’S BUSINESS & FINANCE BRIEFING – Thursday 13 February 2025, 06:00 Hong Kong
● Japan asks for exemption from US steel & aluminium tariffs ● US inflation unexpectedly increases ● Hang Seng Tech Index rebounds 25% from January low
Thursday’s Opening Call
Hang Seng (Hong Kong) Projected Open: 22,036 +178 points +0.8%
Nikkei 225 (Japan) Projected Open: 39,190 +226 points +0.6%
Quick Summary - 4 Things To Know Before Asian Markets Open
Tokyo has asked US President Donald Trump to exclude Japanese companies from his fresh tariffs on steel and aluminium. The request was made on Wednesday Japan time, Trade Minister Yoji Muto told reporters. Meanwhile, Trump’s trade advisor, Peter Navarro, accused Australia of “killing” the US aluminium market, in a potential blow to Prime Minister Anthony Albanese’s efforts to secure an exemption from the tariffs that come into effect next month. Navarro accused Australian exporters of flooding the US market in contravention of that deal between the two nations.
US inflation increased by more than expected last month, providing further incentive for the Federal Reserve to hold the line on interest rates. The consumer price index, a broad measure of costs in goods and services across the US economy, accelerated 0.5% for the month, putting the annual inflation rate at 3%. They were both higher than the respective Dow Jones estimates for 0.3% and 2.9%. Excluding volatile food and energy prices, CPI rose 0.4% on the month, putting the 12-month inflation rate at 3.3%. That compared to respective estimates for 0.3% and 3.1%.
India’s headline inflation dipped year-on-year for a third straight month to 4.3%, providing more room for monetary easing after the country’s central bank cut rates for the first time in nearly five years last week. The January reading was the lowest since August 2024 and came below expectations of 4.6% from economists polled by Reuters. A drop in inflation could clear the way for another rate cut by the Reserve Bank of India, which cut the repo rate to 6.25% from 6.5% on Friday in its bid to boost a slowing economy.
On the geopolitical front, Donald Trump said this morning he had a "lengthy and highly productive" phone call with Russian President Vladimir Putin, which led to the pair agreeing that negotiations to end the war in Ukraine would begin "immediately". Donald Trump has posted on social media about the call he had earlier with Ukraine's president, saying that both Volodymyr Zelensky and Vladimir Putin want peace. Trump said that he has instructed a team, including Secretary of State Marco Rubio, to lead the negotiations. Meanwhile, Middle East negotiators are struggling to hold together a fragile ceasefire in Gaza, after Israel's security cabinet supported President Trump's demand for all remaining hostages to be returned on Saturday. Israeli PM Benjamin Netanyahu says he had ordered troops to amass inside and around Gaza in response to Hamas's announcement that it was postponing freeing more hostages until further notice.
Japan Asks For Exemption From US Steel & Aluminium Tariffs
Tokyo has asked US President Donald Trump to exclude Japanese companies from his fresh tariffs on steel and aluminium. The request was made on Wednesday Japan time, Trade Minister Yoji Muto told reporters, adding that there will be an announcement on the fresh tariff measures being used as grounds for insurance payments if they apply to exports from Japan to the US. The exemption request was made via the embassy in Washington.
The government continues to advise companies about US tariff policies through a consultation service at the Japan External Trade Organization, according to Muto. “We will continue to carefully examine the impact on Japanese companies and take necessary measures,” Muto said.
Australia Is ‘Killing’ US Aluminium Market, Trump Adviser Says
Australia is “killing” the US aluminium market, a senior trade adviser to President Donald Trump said, in a potential blow to Prime Minister Anthony Albanese’s efforts to secure an exemption from tariffs that come into effect next month. The remarks come after Albanese and Trump spoke by telephone on Tuesday, with the prime minister saying the president had agreed to consider an exemption for Australia from US steel and aluminium tariffs. Albanese, who must hold an election by May 17, has been under intense pressure from local lawmakers and executives to secure the exemptions.
Peter Navarro, the president’s senior counsellor for trade and manufacturing, on Tuesday accused Australian exporters of flooding the US market in contravention of that deal between the two nations. “Australia is just killing our aluminium market,” Navarro told CNN. “President Trump says no, no, we’re not, we’re not doing that anymore.”
The volume of US imports of primary aluminium from Australia surged to be about 103% higher in 2024 than the average volume for 2015 through 2017, Australian Broadcasting Corp. reported. “They just flood our markets,” Navarro said of Australia’s aluminium exports. “That’s what we’re dealing with. Our aluminium industry is on its back.” Aluminium is Australia’s top manufactured export but the US accounted for just 2.4% of shipments in 2024, according to government data. The challenge might be greater for the nation’s steel sector where the US accounts for around 30% of Australia’s steel and steel product exports.
Coca-Cola Says It May Use More Plastic Due To Trump Tariffs
Donald Trump’s threat to impose 25% tariffs on steel and aluminium from March 4 is rippling across US industry, with companies ranging from manufacturers to oil and gas drillers facing increasing costs. Many executives are rushing to find ways to mitigate the political tumult and fallout from rising prices. Ford chief Jim Farley said at an automotive conference on Tuesday, “so far what we’re seeing is a lot of cost and a lot of chaos.” Yesterday, he returned to Washington to lobby policymakers for the second time in three weeks. Trade groups and analysts in the power sector warned that Trump’s tariff plans could clash with his goal of boosting domestic energy production, lower prices for consumers and strengthening domestic manufacturing. At Coca-Cola, aluminium and steel used in cans and bottles make up 26% of drinks packaging worldwide. Chief executive James Quincey said new tariffs on aluminium imports could force the company to use more plastic bottles. Nathan Nemeth, an analyst at Wood Mackenzie, warned that tariffs applied beyond Canada and Mexico “could drive renewed cost inflation”.
The US is a net importer of steel and aluminium, meaning the tariffs are expected to push up prices across the country’s market. The extra amount that plants in the Midwest pay for aluminium, compared with those on offer in London, has surged in recent days. Futures tracking the Midwest premium, a vital benchmark for prices paid by US companies, which includes transportation, tax and other costs, for settlement next month have jumped 25% since the end of January, according to LSEG data. Futures tracking the price of hot-rolled coil, a widely traded product often considered a benchmark for steel prices, have risen about US$70 to US$850 a tonne since the end of January in the US, according to FactSet data.
India’s Oil Minister Says ‘We Play By The Rules’
India will cooperate with international sanctions, the country’s oil minister told CNBC on Tuesday, as markets eye future US policy under the new administration of President Donald Trump. “We play by the rules. If there is an international sanction, which is anchored, we would not want to go around it or anything,” India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri told CNBC. “On Russia, yes, there was a price cap, and we adhered strictly to the price cap. Going forward, if there are issues, we will address them.”
India’s refiners have been snapping up discounted Russian oil since Western and G7 energy sanctions barred many consumers from Moscow’s supplies, in an effort to whittle down Russia’s war coffers after its invasion of Ukraine. Countries not subject to the measures have been able to use insurance and shipping providers to facilitate the acquisition and transport of Russian crude procured under a price threshold. New Delhi has repeatedly defended its purchases as a matter of national interest.
He also signalled that the government of Trump’s predecessor, President Joe Biden, had endorsed India’s bolstered intake of Russian oil. “I’ve had a chat with the Americans, the previous administration. They said, please buy as much as you like. Just make sure that you buy it within the price cap. And that’s what we did,” Puri said.
India met about 88% of its oil needs via imports between April and November 2024, little changed from a year earlier, official data showed. As of January, about 40% of those imports came from Russia, data from trade intelligence firm Kpler suggests. In 2021, Russian oil accounted for just 12% of the country’s oil imports by volume. By 2024, that share had surged to over 37%, according to Kpler data.
Trump Says Negotiations On Ukraine War To Begin 'Immediately'
Donald Trump said this morning he had a "lengthy and highly productive" phone call with Russian President Vladimir Putin, which led to the pair agreeing that negotiations to end the war in Ukraine would begin "immediately". In a post on his Truth Social platform, the US president said they both agreed that "we want to stop the millions of deaths taking place in the War with Russia/Ukraine". He explained the pair agreed to work together closely, including mutual visits to their respective nations. "We have also agreed to have our respective teams start negotiations immediately, and we will begin by calling President Volodymyr Zelensky, of Ukraine, to inform him of the conversation, something which I will be doing right now," Trump added. He also said that he has instructed a team, including Secretary of State Marco Rubio, to lead the negotiations.
Trump and Putin spoke for almost an hour and a half, a Kremlin spokesperson said according to reporting from the state-owned TASS news agency. The Reuters news agency reported this is the first known direct contact between Putin and a US president since before Russia's invasion of Ukraine in February 2022. The Russian president invited the US president to visit Moscow and expressed his readiness to receive American officials in Russia in those areas of mutual interest, including, of course, the topic of the Ukrainian settlement," Reuters reported spokesperson Dmitry Peskov as saying. "Putin and Trump also agreed to continue personal contacts, including arranging a face-to-face meeting."
Volodymyr Zelensky has concluded an hour-long call with US President Donald Trump, according to a statement from the Ukrainian president's office. Zelensky says the pair discussed preparation of a new document on security, economic cooperation and resource partnership. According to the Ukrainian leader, the pair talked about opportunities to achieve peace and discussed their readiness to work together at the team level. "No one wants peace more than Ukraine," Zelensky added in a post on X.
Donald Trump has posted on social media about the call he had earlier with Ukraine's president, saying that both Volodymyr Zelensky and Vladimir Putin want peace. The US president added a meeting with Zelensky is being set up on Friday in Munich, Germany, which will be led by the Vice President JD Vance and Secretary of State Marco Rubio. "I am hopeful that the results of that meeting will be positive. It is time to stop this ridiculous War, where there has been massive, and totally unnecessary, DEATH and DESTRUCTION. God bless the people of Russia and Ukraine!"
Gaza Ceasefire Concerns Grow
There are fears about a possible resumption of the war in Gaza, after Israel's security cabinet supported President Trump's demand for all remaining hostages to be returned on Saturday. Israeli PM Benjamin Netanyahu says he had ordered troops to amass inside and around Gaza in response to Hamas's announcement that it was postponing freeing more hostages until further notice. Netanyahu did not specify whether he was demanding the release of all 76 remaining hostages, or just the three due to be freed this Saturday. Hamas responded by saying it remained committed to the ceasefire deal and that Israel was "responsible for any complications or delays." It is understood that Arab countries are exerting pressure on Hamas to try to get the deal back on track. Egypt has said it plans to present a "comprehensive vision" for the reconstruction of Gaza that does not involve displacing the population, unlike a proposal put forward by Trump. Meanwhile in a meeting in which Trump doubled down on a Gaza takeover, Jordan's King Abdullah reiterated his opposition to the US president's plan to displace Palestinians.
US Inflation Unexpectedly Increases
US inflation increased by more than expected last month, providing further incentive for the Federal Reserve to hold the line on interest rates. The consumer price index (CPI), a broad measure of costs in goods and services across the US economy, accelerated 0.5% for the month, putting the annual inflation rate at 3%. They were both higher than the respective Dow Jones estimates for 0.3% and 2.9%. They were also higher than the previous month’s figures of 0.4% and 2.9%. Excluding volatile food and energy prices, CPI rose 0.4% on the month, putting the 12-month inflation rate at 3.3%. That compared to respective estimates for 0.3% and 3.1%. In December, core CPI rose 0.2% monthly and 3.2% annually.
Grocery prices climbed 0.5% over the month, compared with 0.3% in December, as egg prices surged more than 15% amid shortages caused by outbreak of avian flu. That marked the biggest monthly increase in nearly a decade, the Labor Department said. Prices for clothing, by contrast, declined, while rents and other housing related costs increased 4.4% over the last year, marking the smallest 12-month increase since January 2022.
"This is not a good number," said Brian Coulton, chief economist at Fitch Ratings. "It illustrates how the Federal Reserve has not completed the job of getting inflation back down just as new inflation risks, from tariff hikes and a squeeze on labour supply growth, start to emerge."
Trump Resumes Call For Interest Rate Cuts
President Donald Trump again switched positions on the Federal Reserve, indicating in a social media post Wednesday that interest rates need to come down. “Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!! Let’s Rock and Roll, America!!!” the president said in a morning post on Truth Social.
The comments come a day after Fed Chair Jerome Powell said policymakers don’t need to be “in a hurry” to lower rates as they watch progress in inflation, a message he repeated before the House Financial Services Committee on Wednesday. “I would say we’re close, but not there yet on inflation,” Fed chair Jay Powell told lawmakers on Wednesday. “Today’s inflation print says the same thing.” Other officials have said they also are evaluating the potential impacts that tariffs will have on prices, though Powell has avoided commenting directly on the issue.
Trump’s post also reflects a shifting narrative from the White House when it comes to monetary policy. Shortly after taking office, Trump demanded that interest rates be lowered “immediately,” though he has no direct authority over the Fed. Days later, he said the Fed made the correct decision in holding rates steady at its late-January meeting. In subsequent remarks, Treasury Secretary Scott Bessent said the administration was more focused on lowering the 10-year Treasury yield than the short-term fed funds rate. However, the Wednesday comment from Trump indicates a reversion to putting pressure on the central bank to ease policy.
India Inflation Lower Than Expected In January
India’s headline inflation dipped year-on-year for a third straight month to 4.3%, providing more room for monetary easing after the country’s central bank cut rates for the first time in nearly five years last week. The January reading was the lowest since August 2024 and came below expectations of 4.6% from economists polled by Reuters. The drop was primarily due to a deceleration in food prices (6.0% vs 8.4% in December), which makes up around half of the Indian consumer price basket. The annual price growth for vegetables saw the biggest decline from 26.6% in December to 11.4% in January. From the previous month, the Indian CPI fell by 1.0%. A drop in inflation could clear the way for another rate cut by the Reserve Bank of India, which cut the repo rate to 6.25% from 6.5% on Friday in its bid to boost a slowing economy. RBI Governor Sanjay Malhotra said in his statement that the decision to cut rates was owed to a decline in inflation, which is expected to further moderate in 2025 and 2026 toward the bank’s target of 4%.
Vietnam To Raise 2025 Growth Target To 8%
The Vietnamese government is likely to raise the country’s GDP growth target to 8% this year from 6.5% to 7%, estimated earlier, Reuters reported. The stronger growth will be led by an expansion in its manufacturing output and foreign investments, Vietnam’s Minister of planning and investment Nguyen Chi Duong said in parliament on Wednesday. He also foresees a 12% growth in Vietnam’s imports and exports this year, bringing its trade surplus to around US$30 billion. The Southeast Asian country is among the beneficiaries of the “China Plus One” strategy that has nudged companies to diversify their supply chains and operations out of China. Its GDP expanded by 7.09% in 2024, thanks to broad-based growth across its services, industrial and agro-forestry-fishery sectors.
Japan Machine Tool Orders Ease In January
Japan's machine tool orders rose 4.7% year-on-year in January, slowing from an 11.2% gain in December. Still, this marked the fourth consecutive month of rising machine tool orders, as foreign demand grew by 4.7%, while domestic orders increased by 4.5%. On a monthly basis, machine tool orders fell by 18.8% in January, reversing from a 18.4% gain in the previous month.
Malaysia Retail Sales Growth At 11-Month Low
Retail sales in Malaysia rose 5.4% year-on-year in December, easing from a 5.8% increase in the previous month. This marked the slowest growth since January, as sales grew at a softer pace across most sub-sectors, particularly food, beverages, and tobacco (6% vs 6.5% in November) and information and communication equipment (3.1% vs 4.2%). Motor vehicle sales surged 6.9%, up from 1.4% previously. On a monthly basis, retail sales jumped 1.5%, rebounding from a 0.1% decline in November. Quarterly, retail sales grew 4.2% year-on-year.
Indonesia Retail Sales Rise The Most In 3 Months
Retail sales in Indonesia increased by 1.8% year-on-year in December, accelerating from November’s 11-month low of 0.9% and marking the fastest pace since September. The latest reading also marked the eighth consecutive month of expansion in retail trade, boosted by a surge in sales of automotive parts and accessories (13.0% vs 7.2% in November). On a monthly basis, retail sales grew by 5.9% in December, the most in nine months, rebounding from a 0.4% drop in November.
China Mulls US$6.8 Billion Funding To Help Vanke Repay Debt
Chinese authorities are working on a proposal to help China Vanke plug a funding gap of about 50 billion yuan (US$6.8bn) this year, according to Bloomberg News, highlighting the government support for the distressed developer. Under the plan, regulators would allocate 20 billion yuan of special local government bond quota for the purchase of unsold properties and vacant land from Vanke. The money would enable the Shenzhen-based developer to pay public and private debt due this year, the Bloomberg report added. Vanke and its affiliates would also be allowed to tap other financing sources including new bond sales and bank loans for debt payments. It couldn’t be determined if Vanke has started any work on specific bond issuance.
The proposed financial backing is a further sign that Beijing is drawing a line in the sand for Vanke so that the state-backed developer doesn’t suffer the same fate as China Evergrande Group and other private firms that defaulted on their debt in recent years. Vanke is facing a funding gap this year as the cash-strapped developer has $4.9 billion of bonds maturing or facing redemptions at a time of slumping home sales and limited access to fresh liquidity. Other than publicly issued debt, Vanke also had 91 billion yuan of short-term bank loans and borrowings from financial institutions outstanding by the end of September, according to its financial report. The local government of Shenzhen last month stepped in to take management control of Vanke, which warned of a record US$6.2 billion loss for 2024, and vowed to “proactively support” its operations. Vanke received a 2.8 billion yuan loan this week from its largest state-owned shareholder, Shenzhen Metro Group Co.
Eric Schmidt Warns West To Focus On Open-Source AI
Former Google chief Eric Schmidt has warned that western countries need to focus on building open-source artificial intelligence models or risk losing out to China in the global race to develop the cutting-edge technology. The warning comes after Chinese start-up DeepSeek shocked the world last month with the launch of R1, its powerful reasoning open large language model, which was built in a more efficient way than its US rivals such as OpenAI. Schmidt, who has become a significant tech investor and philanthropist, said the majority of the top US LLMs are closed, meaning not freely accessible to all, which includes Google’s Gemini, Anthropic’s Claude and OpenAI’s GPT-4, with the exception being Meta’s Llama. “If we don’t do something about that, China will ultimately become the open-source leader and the rest of the world will become closed-source,” Schmidt told the Financial Times.
The billionaire said a failure to invest in open-source technologies would prevent scientific discovery from happening in western universities, which might not be able to afford costly closed models. Schmidt was speaking at the AI Action Summit in Paris this week, which also saw US vice-president JD Vance vow that the US would remain the dominant force in the technology.
Foxconn Confirms Interest In Buying Nissan Stake From Renault
Foxconn will consider acquiring Renault’s stake in Nissan if it is a condition for working with either carmaker on electric vehicles, the Taiwanese contract electronics manufacturer said on Wednesday. “We did have talks about acquiring a stake in Nissan,” Foxconn chair Young Liu told reporters on Wednesday in the company’s first confirmation of the talks. “If taking a stake is necessary for cooperation, we will consider it, but buying shares is not our main goal. Our main goal is co-operation.” Liu’s comments clarify Foxconn’s rationale for negotiating an investment in Nissan after the breakdown of takeover talks between Honda and Nissan revived the possibility of a deal with the Taiwanese group. Liu said he expected to announce such a co-operation deal within one or two months, and Renault, Nissan and Honda were among carmakers in talks with Foxconn about contract orders.
Softbank Posts Surprise Loss In Third Quarter
SoftBank Group posted a surprise quarterly loss Wednesday and the Japanese company’s revenue also missed analysts’ estimates. Revenue came in at ¥1.83 trillion (US$11.9bn) versus ¥1.84 trillion expected by LSEG SmartEstimate, which is weighted toward forecasts from analysts who have been more consistently accurate. Softbank reported a net loss of ¥369.17 billion (US$2.4bn) versus expectations of a profit of ¥298.53 billion. The company’s Vision Fund investments clocked a loss of ¥352.75 billion for the quarter ended December 31.
In recent years, SoftBank has made a number of controversial high-value investments in companies that have struggled or marked down their valuations. It is now repositioning itself to take advantage of the artificial intelligence boom, where players such as Nvidia have benefited from meteoric demand for chips and data centre GPUs. SoftBank is close to finalizing a US$40 billion primary investment in OpenAI at a US$260 billion pre-money valuation, sources told CNBC.
India’s Online Brokers Face Profits Hit After Regulatory Clampdown
Indian online brokerages face a hefty hit to their revenues, say industry executives, after the regulator intervened to curb retail investors’ frenzied trading of risky derivatives markets, the Financial Times reported Wednesday. The Securities and Exchange Board of India (Sebi) became concerned last year about millions of young Indians gambling in the derivatives markets to try to quickly profit from the country’s soaring stock market. With nine out of 10 losing money, it unveiled plans to raise barriers to trading and temporarily ban some prominent “finfluencers” that young people looked up to for financial advice.
Daily volumes of index options plunged 70% between November and January, according to Jefferies, even though the rules are yet to be completely rolled out, and that is starting to hit brokerage groups that had profited handsomely from the trading boom. “People who had no business being in the stock market were gambling, because you could trade as low as a dollar,” said Siddhartha Bhaiya, managing director of Aequitas Investment Consultancy in Mumbai.
India is the world’s largest equity options market, last year accounting for 89% of volumes globally, according to data from industry body the FIA. Bhaiya estimates that Indian retail investors lost US$20bn in the three years to March 2024, and the same again in the nine months since, as global high-frequency traders profited.
Chinese Tech Stocks Extend Rebound
Chinese stocks extended their tech-fuelled rally Wednesday. Mainland China’s CSI 300 index was up 0.9% at 3,920. The benchmark index is up 5.3% in the past month.
In Hong Kong, the Hang Seng jumped 563 points, or 2.6% Wednesday to a four-month high of 21,858. The city’s benchmark index is up almost 16% over the past month. Data from the Stock Connect programme indicates heightened interest among Chinese investors, with average daily turnover in February up two-thirds from January and three times higher than February 2024. Chinese investors have poured almost HK$150 billion (US$19.3bn) into Hong Kong shares this year, more than seven times the amount they added during the same period in 2024. E-commerce platforms JD.com and Meituan have advanced 21% and 13%, respectively, over the past month, boosted by relatively strong consumption data from the lunar new year holiday and growing expectations of large-scale fiscal stimulus from Beijing this year.
Investors continued to pile into China’s internet companies following DeepSeek’s artificial intelligence breakthrough. The Hang Seng Tech index, which tracks the 30 largest tech groups listed in Hong Kong, is up 25% from its 2025 low on January 12. It rose 2.7% Wednesday. It has outpaced the Nasdaq 100’s 4.4% increase and a rise of less than 0.5% for the “Magnificent Seven” US tech stocks on an equal-weighted basis in the past month. Cloud computing and tech hardware companies that stand to benefit from AI innovations have led the recent rally.
Alibaba surged 8.9% on Wednesday to a four-month high in the biggest jump since September after Chinese media reported it was working with Apple on rolling out the iPhone maker’s AI features in China. Alibaba is up 43% in the past month. Consumer electronics group Xiaomi has risen 31.5% over the same period, while search engine developer Baidu is up over 14%. Baidu plans to release the next generation of its artificial intelligence model in the second half of this year. Baidu was the first major Chinese tech company to roll out a ChatGPT-like chatbot called Ernie in March 2023. But despite initial momentum, the product has since been eclipsed by other Chinese AI chatbots from large tech companies such as Alibaba and ByteDance as well as startups.
“Only Chinese internet companies are globally competitive and comparable to the US Magnificent Seven,” said Bush Chu, investment manager for Chinese equities at Abrdn. “That improvement in sentiment has driven some flows back to China. We are starting to see some outperformance and a rally in China in recent weeks because of that.”
Asian Markets Mostly Higher
Asia-Pacific markets traded mixed Wednesday as investors digested US President Donald Trump’s tariff impact on regional economies. Japan’s Nikkei 225 rose 0.4% to 38,964 after resuming trading following a holiday
Nissan’s shares fell 5.9% in Tokyo on the news that Taiwanese contract manufacturer Foxconn would consider a deal with the automaker only as part of cooperation on electric vehicles. Nissan’s shares are down over 13% so far this year as the company has come under fierce pressure due to competition from China and after failing to capture the hybrid boom in the US. As part of a turnaround plan, it intends to cut 9,000 jobs and a fifth of its production capacity.
Farallon Capital Management has taken a significant stake in one of Japan’s biggest pharmaceutical companies as activist shareholders, emboldened by a corporate governance reform drive, take aim at the country’s household names. The San Francisco-based fund with US$39bn in assets has built a more than 3% position in Astellas, making Farallon a top-three shareholder, based on LSEG data. The move is part of a wave of shareholder activism in Japan as governance reforms by the Tokyo exchange push companies to take investor demands more seriously. Astellas shares, which were down 2% in early afternoon trading on Wednesday, gained sharply on the news to trade up 4.0%, before giving up their gains in volatile trading.
Elsewhere in the region, South Korea’s Kospi added 0.4%. Australia’s S&P/ASX 200 ended the day up 0.6%.
India’s BSE Sensex fell 0.2%, to 76,171, retreating for the sixth straight session. The MSCI India Index notched a fifth day of declines pushing it to an eight-month low. Indian shares have tumbled this year as overseas investors have slashed their holdings amid lacklustre corporate earnings and expensive valuations. Overseas investors have sold nearly US$10 billion of local shares this year, according to data compiled by Bloomberg. Small-cap stocks have led losses, with the Nifty gauge of such equities sliding more than 20% from its December peak.
European Stocks Higher
European stocks were marginally higher Wednesday as global markets reacted to the latest inflation reading out of the US. The pan-European Stoxx 600 was up 0.1%, with all major bourses and almost all sectors in the green. Food and beverage stocks on the Stoxx index led gains, while oil and gas stocks fell. London’s FTSE 100 rose 0.3%.
Heineken shares jumped 14.4%, leading gains in the Stoxx, and trading was briefly halted after the Dutch brewer posted a forecast-beating a rise in operating profits and launched a €1.5 billion (US$1.55bn) share buyback program. The positive results led other drinks makers higher, with Belgium’s AB InBev adding 2.9% and Denmark’s Carlsberg gaining 3.2%.
French luxury goods firm Kering was up by 7% after the company on Tuesday reported better-than-expected fourth-quarter sales. The high-end fashion group, whose brands include Gucci, Bottega Veneta and Balenciaga, posted a 12% decline in fourth-quarter revenue to €4.39 billion, up from the €4.29 billion predicted by LSEG analysts.
Shares of Barratt Redrow rose 5.3% after the British homebuilder said it would initiate a £100 million (US$124.5mn) annual share buyback, starting with a £50 million buyback in the second half of the financial year. The company said business growth had generated significant medium-term free cash flow, as it reported half-year results showing 23.2% increase in year-on-year revenue and a 6.4% rise in adjusted pre-tax profit.
European Central Bank voting member Robert Holzmann told CNBC Wednesday that the global tariffs being threatened and enacted by US President Donald Trump had increased inflationary risks in the eurozone. Concerns that have previously led the Austrian central bank governor to skew more hawkish “have not dissipated. On the contrary, with the arrival of this threat of tariffs, they re-emerged,” Holzmann said. “Before they were somewhat dissipated, because we looked like we were moving slowly towards lower rates. What we have now is the threat of higher inflation rates. And for this reason, we have to be careful.”
US Stocks Fall After CPI inflation Rises To Highest Since June 2024.
US stocks fell on Wednesday after consumer price inflation in the US rose to its highest level since June 2024. Traders were also on guard after Federal Reserve Chair Jerome Powell told the Senate Banking Committee that policymakers were in no hurry to make more interest rate cuts.
The S&P 500 dropped as much as 1.1% shortly after Wall Street’s opening bell but ultimately closed 0.3% lower at 6,052. The Dow fell 225 points, or 0.3%, to 44,369. The tech-heavy Nasdaq Composite closed unchanged.
Meta shares were 0.8% higher on Wednesday. The social media giant’s stock extended its record-setting winning streak to 18 sessions, putting its market value at US$1.83 trillion. Tesla shares were up 2.4%, after five consecutive sessions of losses. The electric-vehicle maker’s market value is now close to dropping back below the US$1 trillion mark as a post-election rally in Tesla’s shares rapidly unwinds.
Inflation Shock Saps Traders’ Outlook For Multiple Rate Cuts
US Treasury yields rose on Wednesday as investors reacted to the hotter-than-expected January consumer inflation report. The 10-year Treasury yield was up 9 bps at 4.63%. The 10-year note yield is now up 25 bps from its low seen one week ago. The 2-year Treasury yield rose 7 bps to 4.36%.
Markets are now pricing in just one rate cut in 2025, pushing out the date to December, and then another Fed pause until December 2026. Swap contracts linked to future Fed decisions, had previously anticipated a rate cut by September, but have repriced following the latest inflation data.
US Dollar Flat
A gauge of the dollar against six other currencies was unchanged, recovering from a loss of 0.3% before the hot inflation report.
In Asia, the Indian rupee rose for the third consecutive session on Wednesday, hovering around 86.7 and reaching a nearly two-week high amid central bank intervention. It was the top currency gainer in the region Wednesday. The Australian dollar strengthened 0.3% past $0.63 on Wednesday, approaching its highest level in eight weeks. The top currency loser was the yen which fell 1.2% to ¥154.43, in its longest losing streak in more than a month. The offshore yuan ticked 0.1% lower to around Rmb 7.31 per dollar as investors remained cautious amid growing concerns over an escalating trade war.
In Europe, the euro was 0.3% higher at $1.0393. Sterling was unchanged at $1.2446. The Russian rouble jumped almost 3% against the US dollar over growing hopes of end to the Ukraine war.
Gold Approaches Record High
Gold rebounded 0.2% to $2,902 per ounce on Wednesday. Earlier in the week it hit a record high of $2,942. Silver erased its earlier pullback to trade 1.1% higher above the $32 per ounce mark, near a three-month high.
Oil Snaps 3-Day Advance
Brent crude oil futures fell on Wednesday, snapping a three-day gain after an industry report showed a sharp rise in US crude inventories. Brent settled 2.4% lower at $75.01 a barrel.
Bitcoin Rises
Bitcoin is up 1.5% over the past 24 hours at $97,570.
Peter Lewis’ Money Talk Podcast
On Thursday’s “Peter Lewis’ Money Talk” podcast, I’ll be joined by Andrew Freris, the CEO of Ecognosis Advisory, and Frederick Chu, an independent ETF consultant. With a view from Taiwan is Ross Feingold, Director of Research, Caerus Consulting, Taipei.
The podcast is also available on Apple Podcasts, YouTube Studio and Spotify.
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