Key Points

• U.S. Stocks Slide as AI and Macro Risks Resurface: Major U.S. indices fell sharply, led by tech and risk assets, as investors wrestle with AI disruption concerns and macro data ahead of key inflation prints.
• Panama Canal Ports Dispute Signals Geopolitical Trade Risk: CK Hutchison warns of legal action over Panama Canal terminals after contract annulment, spotlighting U.S.–China strategic competition.
• U.S.–Taiwan Trade Deal Lowers Tariffs, Spurs Investment: Washington and Taipei finalize a tariff reduction framework and large-scale semiconductor investments, recalibrating Asia-Pacific trade dynamics.
• Chinese EV Momentum: Xiaomi SUV Tops January Sales: In China’s passenger EV market, Xiaomi’s electric SUV outpaced Tesla Model Y by a wide margin, underlining domestic EV competitiveness.

February Economic Calendar

Feb 13 — U.S. CPI (YoY & MoM): The key inflation release of the month. Core and headline readings will heavily influence Federal Reserve rate expectations, Treasury yields, equity valuations, and USD direction. Markets remain highly sensitive to upside inflation surprises.

Feb 13 — 30-Year U.S. Treasury Auction: Long-duration demand will offer insight into investor confidence in long-term inflation and fiscal sustainability. Weak demand could steepen the yield curve and pressure equity multiples.

Feb 13 — Continuing Jobless Claims: Provides additional clarity on labor market durability following strong payroll data. A softening trend may ease wage pressure concerns; resilience supports the “higher-for-longer” narrative.

Feb 13 — Fed Balance Sheet (H.4.1 Release): Weekly update on Federal Reserve asset holdings. Balance sheet contraction pace impacts liquidity conditions and short-term funding markets.

Feb 13 — Reserve Balances with Federal Reserve Banks: A key liquidity gauge reflecting banking system reserves. Movements influence repo markets, short-term rates, and credit conditions.

Feb 14 — U.S. Retail Sales (Monthly): Critical measure of consumer demand, which accounts for roughly two-thirds of U.S. GDP. Strong spending reinforces economic resilience but may complicate the Fed’s disinflation path.

Feb 14 — U.S. Industrial Production: Assesses manufacturing and output momentum. Particularly relevant given ongoing trade policy shifts and supply chain recalibrations.

Dow & Major U.S. Indexes Pull Back on Risk Aversion

U.S. equities registered notable declines Thursday, with the S&P 500 and Nasdaq leading losses as tech and AI-linked sectors sold off. Broader market pressure pulled the Dow below significant thresholds, marking notable downside amid thin seasonal liquidity.

Cisco and other cyclicals weighed on performance after profit margin cautions, while defensive sectors outperformed modestly. Treasury yields softened ahead of Friday’s CPI release, highlighting risk-off positioning.

Panama Canal Ports Dispute Amplifies Geopolitical Risk

Hong Kong’s CK Hutchison warned of potential legal action over Panama Canal ports, stating it may pursue legal remedies against a Danish ports operator tapped to manage strategic terminals after Panama’s Supreme Court voided a long-standing concession.

The dispute underscores escalating U.S.–China commercial and geopolitical rivalry in critical trade infrastructure and maritime routes. Continued uncertainty may pressure logistics stocks and reinforce risk premiums on emerging-market exposure.

U.S.–Taiwan Trade Deal Boosts High-Tech Commerce

In a significant policy shift, the U.S. and Taiwan concluded a tariff and investment agreement that trims bilateral duties, deepens semiconductor and high-tech cooperation, and aims to strengthen supply chains for critical technology sectors.

The accord includes phased tariff reductions and Taiwanese commitments to invest at scale in U.S. advanced manufacturing and AI infrastructure. Analysts see this as a strategic pivot in Asia-Pacific economic policy that could spur equity rotations within tech, industrial, and export-dependent sectors.

Xiaomi EVs Dominate China January Sales

China’s automotive landscape saw a major domestic EV victory as Xiaomi’s electric SUV surged past Tesla’s Model Y in January sales, selling roughly twice as many units.

This reflects intensifying competition within global EV markets and underscores China’s manufacturing scale and pricing strategy advantages in electrified transport. Investors tracking auto supply chains and EV material demand may need to reassess exposure within evolving tech and consumables sectors.

Conclusion

Market sentiment remains fragile as macro data, technological disruption fears, and geopolitical trade tensions converge on investor decision-making. U.S. equities retreated on risk asset selling and AI-linked pressures, while external developments—from Panama Canal legal tensions to the U.S.–Taiwan tariff deal—reshape international trade narratives.

Against this backdrop, cyclical and policy-sensitive sectors warrant cautious, data-driven positioning, as inflation prints and geopolitical policy shifts loom in the near term.

Investment Insights

• Risk Repricing ≠ Reversal: Tech and AI concerns may persist — monitor sector rotation into defensive and cyclical plays.
• Global Trade Risk Premium Rising: Geopolitical port disputes and evolving tariff frameworks warrant close watch in supply chain-linked equities.
• Policy-Led Growth Themes Alive in Asia: The U.S.–Taiwan trade deal and Chinese EV adoption suggest selective regional growth opportunities.
• Macro Data Still King: CPI and labor data in the next 24–48 hours will likely recalibrate rate expectations and equity risk premia.