Preview

DeepSeek’s low-cost AI model is empowering European startups to compete with U.S. tech giants but raising regulatory concerns. The yen shows haven appeal as trade tensions escalate, though Japan faces tariff risks. Meanwhile, China proposes reviving the 2020 “Phase 1” trade deal to ease U.S. tariffs, signaling openness to dialogue. In Hong Kong, Chinese tech stocks rebounded despite weak manufacturing data, with Alibaba leading gains. France faces political turmoil as Prime Minister Bayrou’s budget push risks a no-confidence vote, threatening market stability. Investors should watch for developments in trade, AI, and fiscal reforms.

DeepSeek Offers European Tech a Shot in the Global AI Race

DeepSeek, a Chinese AI model, is disrupting the artificial intelligence landscape by offering services at a fraction of the cost of competitors like OpenAI. With pricing up to 40 times cheaper, it allows European startups to compete more effectively, bridging the gap with U.S. rivals that dominate the AI market. Early adopters, such as Novo AI and NetMind.AI, report seamless integration with DeepSeek’s technology and significant savings. However, concerns linger over regulatory scrutiny, data sources, and potential censorship. Analysts see DeepSeek’s low-cost approach as a catalyst for innovation, but larger companies remain cautious, prioritizing security and transparency.

Investment Insight: DeepSeek’s affordability could spark a pricing war in AI, challenging dominant players like OpenAI. Investors may want to monitor how regulatory hurdles and concerns over data practices evolve, as these could influence adoption and long-term profitability.

Yen Shows Flickers of Haven Strength Amid Dollar Dominance

The yen demonstrated resilience on Monday, weathering the dollar’s strength after President Trump imposed new tariffs. While most major currencies tumbled against the greenback, the yen stood out as the only G-10 currency to advance against the dollar this year. Analysts attribute the yen’s newfound haven appeal to the Bank of Japan’s rate hikes and high U.S. Treasury yields, which dip during risk-off periods. However, the yen’s safe-haven status faces uncertainty, as Japan might become a target for U.S. tariffs. Prime Minister Ishiba’s upcoming meeting with Trump could provide more clarity on this front.

Investment Insight: The yen’s relative strength could bolster its appeal as a defensive asset, particularly amid global trade tensions. However, investors should remain cautious, as potential tariff threats on Japan could undermine its haven status.

China Seeks to Revive 2020 ‘Phase 1’ Trade Deal Amid Tariff Tensions

China is reportedly proposing to restore the 2020 “Phase 1” trade deal with the U.S. as a starting point to resolve escalating trade tensions, according to the Wall Street Journal. The proposal includes pledges to avoid yuan devaluation, increase U.S. investments, and curb fentanyl precursor exports. This comes after President Trump imposed new tariffs on Chinese, Canadian, and Mexican imports over fentanyl and immigration concerns. While China condemned the tariffs, it signaled openness to dialogue, contrasting with Canada’s retaliatory measures. The original 2020 deal, which aimed to boost U.S. exports to China, fell short of targets due to the pandemic.

Investment Insight: The potential revival of the Phase 1 deal could ease trade tensions, creating opportunities for U.S. exporters and stabilizing markets. However, investors should remain wary of heightened geopolitical risks, particularly around China’s broader economic commitments and U.S. tariff strategies.

Preview

Chinese AI lab DeepSeek has unveiled cost-efficient AI models that rival industry giants by automating labor-intensive tasks with reinforcement learning. Its R1 model demonstrates strong reasoning skills while using fewer resources, even running on mobile devices. The breakthrough has shaken semiconductor markets, with SK Hynix shares plunging 11% as the innovation questions demand for costly AI chips. Meanwhile, Apple beat earnings expectations but fell short on iPhone and China sales, highlighting risks tied to its core markets. In Australia, severe storms threaten life and key industries like sugarcane, fueling climate resilience debates. Lastly, Japan is exploring a $44 billion Alaska LNG pipeline to ease U.S. trade tensions, though economic viability remains uncertain.

DeepSeek’s AI Breakthrough: Powerful Models Built for Less

Chinese AI lab DeepSeek has unveiled a groundbreaking approach to building AI models at a fraction of the cost of industry leaders like OpenAI and Meta. By leveraging reinforcement learning (RL) to automate labor-intensive tasks and refining existing large language models, DeepSeek’s R1 model showcases strong reasoning capabilities despite using fewer resources. The company’s “aha moment” came when the model began solving problems autonomously, challenging the traditional reliance on human data labeling. Smaller models created through this process can even run on mobile devices, offering a cost-effective solution for developers. However, DeepSeek faces controversy as OpenAI accuses it of using its outputs to train its systems.

Investment Insight

DeepSeek’s innovation highlights the growing trend of smaller, more efficient AI models disrupting the industry. Investors may find opportunities in startups focusing on cost-effective AI solutions, as they pose a competitive threat to billion-dollar AI giants while expanding accessibility to smaller developers.

SK Hynix Shares Slide After DeepSeek AI Disruption

SK Hynix shares plunged over 11% as trading resumed in South Korea, following DeepSeek’s cost-efficient AI breakthrough that rattled global chipmakers. The news, which questions the reliance on expensive chips for AI development, triggered a selloff in semiconductor stocks, with Samsung Electronics also falling 3.7%. Korean internet firms like Kakao and Naver gained over 7% as investors speculated on potential cost-saving benefits. Despite SK Hynix reporting a 20-fold profit surge last quarter, the DeepSeek disruption has cast doubt on the long-term demand for costly AI hardware.

Investment Insight

The semiconductor sector faces heightened volatility as DeepSeek’s innovation reshapes AI development costs. Investors should monitor Korean tech stocks, which may gain from AI’s wider adoption, while remaining cautious about chipmakers exposed to shifting AI hardware demand.

Market price: SK Hynix Inc (KRX: 000660): KRW 199,200

Tesla Earnings: Spotlight on Self-Driving and Robotaxi Updates

Tesla is set to release Q4 earnings today, with investors closely watching for updates on self-driving initiatives, robotaxis, and affordable EV models. Analysts expect adjusted EPS of $0.75 and revenue of $27.21 billion. While Tesla’s stock is down 1.4% year-to-date, some analysts remain bullish, citing potential growth in AI and autonomous driving. Wedbush Securities predicts Tesla could reach a $2 trillion market cap by 2025, while Morningstar warns of delays in robotaxi rollouts and labels the stock overvalued. Morgan Stanley sees Tesla as an “embodied AI ETF,” benefiting from favorable U.S. policies, with RBC anticipating margin growth from wider FSD adoption.

Investment Insight:

Tesla’s long-term growth hinges on its AI-driven autonomy and affordability strategy. Short-term risks include overvaluation and potential production delays, but favorable policies and AI advancements could drive significant upside.

Market Price: Tesla Inc (TSLA): USD 389.10

Roche Beats 2024 Estimates, Expects Growth in 2025

Swiss pharma giant Roche exceeded 2024 expectations, reporting 7% sales growth at constant currencies, driven by its pharmaceuticals and diagnostics divisions. Core earnings per share rose to 18.80 Swiss francs, above analyst expectations of 18.59 francs. However, net profit fell to 9.19 billion francs from 12.36 billion. For 2025, Roche forecasts mid-single-digit sales growth and high-single-digit EPS growth, with plans to increase its dividend from 9.70 francs per share. The company remains optimistic about steady growth in the year ahead.

Investment Insight:

Roche’s strong core earnings and dividend growth signal resilience, but declining net profit warrants caution. Investors should focus on its performance in high-margin divisions and how currency fluctuations may impact future results.

Market Price: Roche Holding AG Genussscheine (ROG): CHF 280.80

Conclusion

Markets remain focused on central bank actions, with the BOJ and BoE setting the tone for currency and equity movements. Corporate updates highlight confidence, as Sanofi’s buyback and Roche’s steady growth outlook signal resilience in healthcare, while Tesla’s earnings could reveal key advancements in AI and autonomy. Investors should stay alert to policy shifts, fiscal pressures, and evolving sector dynamics. With mixed signals across regions and industries, near-term caution is warranted, but opportunities in innovation-driven sectors like AI and pharma remain compelling for long-term growth. Keep an eye on company strategies and macroeconomic developments shaping the investment landscape.

Upcoming Dates to Watch

• January 30, 2025: US GDP, Jobless claims; Apple, Deutsche Bank, Shell earnings
• January 31, 2025: Tokyo CPI, Japan jobless claims, US PCE inflation

Preview

Markets rallied as tech stocks rebounded, with the Nasdaq 100 up 1.6%, led by Nvidia’s 8.9% surge. Asian and European equities followed suit, as investors shifted focus to the Federal Reserve’s rate decision and US mega-cap earnings. ASML shares soared 8.7% on strong Q4 bookings, easing near-term growth concerns. Bitcoin climbed to record highs as the Czech central bank considered holding 5% of its reserves in the cryptocurrency, signaling rising institutional adoption. US power stocks recovered after Monday’s AI-driven selloff, though long-term energy demand remains uncertain. Meanwhile, Volkswagen is exploring US production sites for Audi and Porsche to mitigate tariff risks, reflecting the growing importance of localized manufacturing.

Tech Stocks Rebound as Markets Brace for Fed Decision

Asian stocks and European futures climbed, following a tech-led rebound on Wall Street. The Nasdaq 100 gained 1.6%, driven by Nvidia’s 8.9% rally after its historic single-day loss. Investors shrugged off concerns about Chinese AI startup DeepSeek, shifting focus to the Federal Reserve’s rate decision and US mega-cap earnings. Analysts expect the Fed to hold rates steady, with bond traders eyeing signs of potential rate cuts in March. Meanwhile, ASML’s strong order bookings and easing Australian inflation captured markets’ attention. Sony also announced Hiroki Totoki as its new CEO, boosting its stock to record highs.

Investment Insight:

Tech remains a key driver, but discerning stock selection is critical as AI-driven gains become less straightforward. Monitor Fed signals for rate-cut cues and focus on resilient sectors as volatility persists.

Czech Central Bank Eyes Bitcoin Reserves Amid Rate Cut Outlook

Czech National Bank Governor Ales Michl plans to propose holding up to 5% of the bank’s €140 billion reserves in bitcoin, citing its potential for asset diversification. The plan, if approved, could make the Czech central bank one of the first to invest significantly in the cryptocurrency. Michl also indicated a likely 25-basis-point rate cut next week. Bitcoin has surged to record highs recently, fueled by regulatory approval of spot-price ETFs and optimism over crypto-friendly policies under U.S. President Donald Trump.

Investment Insight:

Bitcoin’s growing institutional adoption signals its rising credibility as an alternative asset. However, central bank moves into crypto carry risks—investors should weigh long-term volatility against diversification benefits.

Power Stocks Rebound After DeepSeek AI Model Sparks Industry Uncertainty

US power stocks tied to AI demand rebounded Tuesday after sharp losses triggered by the release of DeepSeek’s cheaper, competitive AI model. Constellation Energy gained 1%, Vistra Corp surged 9%, and GE Vernova rose 7%, recovering from steep declines the day before. The selloff followed concerns over whether AI-driven energy demand growth would sustain its earlier momentum. While analysts see medium-term stability in data center deployments, long-term energy usage forecasts remain speculative as AI technologies evolve and become more efficient.

Investment Insight:

AI-driven energy demand remains a key growth driver for power stocks, but uncertainties about longer-term trends call for cautious optimism. Focus on companies with diversified energy portfolios and infrastructure investments.

Preview

Markets were rattled by Chinese AI startup DeepSeek’s breakthrough, sparking a sell-off in AI-linked stocks like Nvidia (-17%) and Constellation Energy (-21%). Analysts see fears as overblown, with AI infrastructure demand expected to stay strong. Meanwhile, President Trump’s proposed tariffs on copper and aluminum could raise consumer costs and disrupt trade, though they might accelerate U.S. domestic projects long-term. In Japan, MUFG shares hit a record high as rising interest rates boosted bank earnings, with further rate hikes expected. In energy, U.S. LNG exporters are poised to gain market share in Asia, driven by Trump-era trade shifts, though low prices may cap short-term gains. Gold held steady at $2,740.19 per ounce as a stronger dollar weighed on metals, while markets await clarity from the Fed’s upcoming rate decision.

DeepSeek Sends Shockwaves Through AI-Exposed Stocks

Chinese AI startup DeepSeek’s release of a cost-efficient AI model triggered a widespread sell-off Monday, rattling both tech and power stocks linked to AI infrastructure. Nvidia (-17%) led the Nasdaq’s 3% decline, erasing $589 billion in market cap, while chipmakers like Broadcom (-17%) and Lam Research (-5%) followed suit. AI-exposed power stocks felt the heat too, with Constellation Energy (-21%) and Vistra Corp (-28%) plunging as investors questioned US dominance in AI and the sustainability of spending.

Despite the market panic, analysts argue the fears are overblown. DeepSeek’s advancements, while significant, are seen as unlikely to disrupt the long-term demand for AI infrastructure. More efficient models could even expand AI adoption, supported by concepts like the Jevons Paradox. Microsoft and Meta, both major AI spenders, are expected to provide clarity on future spending in their upcoming earnings reports.

Investment Insight: Volatility can create opportunities. Power stocks remain critical to AI infrastructure, underpinned by rising energy demand forecasts. Meanwhile, efficient technology providers like Nvidia and chipmakers may benefit from long-term AI adoption trends despite short-term headwinds.

Trump’s Copper, Aluminum Tariffs May Raise Consumer Costs

President Donald Trump’s proposed tariffs on U.S. copper and aluminum imports are stirring concerns about higher costs for American consumers. While the tariffs aim to revitalize domestic production of critical metals for military hardware, analysts warn the U.S. lacks sufficient production capacity, and rebuilding infrastructure will take years. Canadian suppliers like Rio Tinto and Alcoa are unlikely to absorb the costs, which may instead be passed downstream to automakers and, ultimately, consumers.

The tariffs could also disrupt global trade flows. India, a key aluminum exporter to the U.S., is lobbying against the measures, while industry leaders suggest tariffs could accelerate domestic projects like Rio Tinto’s Resolution copper mine. However, near-term impacts would likely hurt local manufacturers facing inflated material costs.

Investment Insight: Tariffs may drive short-term inflation in key industries like automotive and manufacturing. Investors should monitor domestic producers poised to benefit from reshoring efforts, although these gains may take years to materialize.

MUFG Shares Hit Record High as BOJ Rate Hike Lifts Japanese Banks

Mitsubishi UFJ Financial Group (MUFG) shares reached a record ¥1,969.5 ($12.7) on Tuesday, their highest since listing in 2001, as investors bet on rising interest rates boosting lending income. The Bank of Japan recently raised its key policy rate to a 17-year high, with further increases likely. Other Japanese lenders, including Sumitomo Mitsui Financial Group (+2.2%) and Mizuho Financial Group (+2.8%), also rallied, pushing the Topix Bank Index up 2.2%.

Higher rates have been a windfall for Japanese banks, which have endured decades of ultra-low borrowing costs. MUFG has announced ¥300 billion in share buybacks, adding to investor optimism. Additionally, profits from overseas operations and unwinding cross-shareholdings are further bolstering earnings ahead of upcoming financial results.

Investment Insight: Rising rates and buybacks make Japanese banks attractive in the near term. MUFG and its peers are well-positioned for continued gains as BOJ policy shifts and global operations support growth.

Preview

Asian stocks rallied Monday as optimism around Chinese AI startup DeepSeek boosted tech shares, though U.S. futures dipped on concerns over its challenge to U.S. tech leadership. Meanwhile, China’s industrial profits fell 3.3% in 2024, marking a third consecutive annual decline, highlighting persistent domestic challenges despite stimulus measures. Bond markets steadied ahead of the Fed’s rate decision, with traders adjusting to inflation data and Trump’s unpredictable tariff threats. The yen outperformed G-10 currencies as haven demand grew, driven by geopolitical uncertainties and the BOJ’s rate hike. In Germany, an export-reliant economy faces mounting risks from slowing Chinese demand, rising energy costs, and protectionist policies, underscoring the need for structural reforms.

Asian Stocks Gain as DeepSeek Fuels China AI Rally

Asian markets climbed on Monday, led by gains in Japan, Hong Kong, and mainland China, as optimism surrounding Chinese AI startup DeepSeek boosted tech shares. The company’s cost-efficient AI models are seen as a potential disruptor to global AI investment dynamics. Meanwhile, U.S. futures slipped amid concerns over DeepSeek’s challenge to U.S. technological leadership. Broader market sentiment remained cautious following Donald Trump’s last-minute decision to reverse tariffs on Colombia, which raised fears of further trade-related unpredictability.

Oil prices fluctuated as investors adjusted to rapid U.S. trade developments, while gold edged lower but stayed near record highs. As the Lunar New Year holiday approaches, China’s slowing factory and services activity signals a need for stronger fiscal stimulus.

Investment Insight: The rally in Chinese tech stocks reflects growing confidence in AI as a long-term growth driver, but geopolitical risks tied to U.S.-China tensions remain a critical factor. Investors should monitor AI sector valuations and broader trade policy shifts carefully.

China’s Industrial Profits Decline for Third Consecutive Year

China’s industrial profits fell 3.3% in 2024, marking the third straight year of declines. The ongoing contraction highlights the challenges facing the industrial sector, including weak domestic demand and geopolitical risks. Stimulus measures have thus far failed to offset the downward trend, with private enterprises showing more resilience compared to state-owned firms. Analysts caution that the sector may require stronger government intervention to stabilize growth, particularly as external demand softens.

Investment Insight: China’s industrial sector faces sustained headwinds, with geopolitical risks and weak domestic conditions weighing on profitability. Investors should factor in potential stimulus policies and sector-specific resilience, especially in private enterprises, when assessing opportunities.

Bond Traders Shift Focus to Fed as Trump Muddies Tariff Outlook

Bond traders are bracing for the Federal Reserve’s Wednesday decision to pause its rate-cutting cycle, as speculation over inflation and economic resilience under Donald Trump’s presidency influences the market. Treasury yields, which surged late last year, have eased amid slower-than-expected inflation data and Trump’s restrained tariff actions during his first week in office. However, market uncertainty remains as Trump’s unpredictable policies—such as a now-resolved emergency tariff on Colombian goods—continue to stir inflationary and trade risks.

Investment Insight: Bond markets face a volatile 2025, tied closely to Trump’s economic policies and inflation trends. Investors should monitor yield curve shifts and Fed signals, balancing duration exposure amid heightened uncertainty.

Preview

Global markets rallied for a ninth straight day as President Trump signaled flexibility on China tariffs, boosting emerging-market currencies and equities. Meanwhile, Trump’s executive order banning central bank digital currencies and establishing crypto regulations was welcomed by industry leaders, though near-term volatility is expected. Boeing warned of a $3.5 billion Q4 cash flow loss due to labor strikes and layoffs, further pressuring its financials. Oil prices are poised for their first weekly drop of 2025 as Trump urged OPEC to lower prices, adding volatility to energy markets. In Japan, the BOJ raised rates to 0.5%, its highest in 17 years, strengthening the yen and signaling confidence in sustained inflation growth. Markets remain cautious as geopolitical uncertainties and policy shifts continue to unfold.

Global Stocks Surge as Trump Signals Tariff Flexibility

Global markets rallied for a ninth consecutive day, with the MSCI All-Country Index approaching a record high. US President Donald Trump hinted at a softer stance on China tariffs during a Fox News interview, fueling gains in Chinese equities and emerging-market currencies. The Australian dollar climbed 0.7%, while the yen strengthened after the Bank of Japan raised rates for the first time since July. Despite optimism, analysts remain cautious, citing Trump’s unpredictable nature and ongoing trade challenges. Meanwhile, US futures held steady, and Europe’s markets advanced.

Investment Insight: Markets are buoyed by optimism over US-China trade, but volatility remains likely as negotiations unfold. Investors should tread carefully, balancing short-term gains against uncertainty in policy shifts and geopolitical risks.

Trump Signs Executive Order Supporting Crypto Industry

President Donald Trump signed an executive order fulfilling two campaign promises to the cryptocurrency world: banning central bank digital currencies (CBDCs) and creating a presidential working group to establish clear regulations for digital assets. While the order stops short of creating a “strategic national bitcoin stockpile,” it instructs the group to evaluate the feasibility of a broader national crypto reserve, potentially including assets seized by law enforcement. Trump also revoked a 2022 Biden-era directive that sought to reduce risks from digital assets. Bitcoin briefly rose on the news before stabilizing, with industry leaders lauding the president’s pro-crypto stance as a pivotal step for regulatory clarity.

Investment Insight: Trump’s crypto-friendly policies signal long-term opportunities for the industry, but near-term volatility remains as markets digest regulatory developments. Investors should monitor the working group’s outcomes and shifts in federal crypto oversight.

Boeing Warns of $3.5 Billion Cash Flow Loss Amid Labor Strikes and Layoffs

Boeing (BA) expects a $3.5 billion operating cash flow loss in Q4 due to an eight-week IAM labor strike, layoffs, and challenges in its defense business. Preliminary results project $15.2 billion in revenue, falling short of $16.76 billion consensus estimates, with a GAAP loss per share of $5.46 versus a projected $1.32 loss. Pre-tax charges of $1.7 billion in the defense and space segment and higher labor costs from a new four-year IAM contract are adding to financial pressures. Boeing delivered 348 commercial jets in 2024, a third fewer than the prior year, but executives remain focused on stabilizing operations and rebuilding production.

Investment Insight: Boeing faces near-term headwinds from labor disruptions and cost overruns, pressuring profitability. Long-term investors should assess recovery potential as production normalizes and cash reserves improve through capital raises.

Market price: Boeing Co (NYSE: BA): USD 178.50

Oil on Track for First Weekly Drop in 2025 as Trump Pressures Prices

Oil prices are set for their first weekly decline this year, with Brent near $78 per barrel and WTI below $75, down around 3%. Market unease follows President Donald Trump’s calls for Saudi Arabia and OPEC to lower oil prices and his tariff threats on Canada, Mexico, and China. While a weaker dollar pared some crude losses, futures are still headed for their largest weekly drop since November. US crude stockpiles fell for a ninth consecutive week, but lower inventories and strong sanctions on Russian oil continue to disrupt global flows and pressure prices.

Investment Insight: Trump’s push to lower oil prices may heighten volatility in energy markets. Investors should monitor OPEC’s response and global supply dynamics as sanctions and production adjustments create opportunities and risks.

Preview

President Trump’s $300 billion freeze on green infrastructure funding threatens U.S. renewable energy projects, while his tariff threats loom over China despite market-boosting measures by Beijing. In Japan, a surge in foreign stock investments via the expanded NISA system is weakening the yen, adding pressure to import-heavy industries. Meanwhile, Russia’s economy faces rising inflation and high interest rates, with Putin signaling concerns as Trump considers more sanctions. On Wall Street, the S&P 500 nears record highs, fueled by strong earnings and optimism around a $500 billion AI initiative. Investors should watch for policy risks, geopolitical tensions, and valuation challenges.

Donald Trump Freezes $300bn in Green Infrastructure Funding

President Donald Trump has paused over $300 billion in federal green infrastructure funding, targeting key components of Joe Biden’s climate agenda. The executive order halts disbursements tied to Biden’s Inflation Reduction Act (IRA) and infrastructure law, including $50 billion in Department of Energy loans already approved and $280 billion in pending requests. This move has sent shockwaves through the clean energy sector, raising fears of stranded capital, stalled renewable projects, and reduced federal support for electric vehicle (EV) and battery manufacturing. Key renewable projects, such as offshore wind farms, are now at risk, with some investors already scaling back U.S. plans.

Investment Insight: The freeze signals heightened regulatory risk for renewable energy and EV sectors in the U.S., with potential long-term impacts on investment stability. Investors should monitor policy shifts closely and consider diversifying geographically to mitigate exposure.

Asian Stocks Rise on China’s Market-Boosting Measures

Asian stocks climbed as Chinese regulators pledged government-wide support to boost share prices, with the CSI 300 Index advancing up to 1.8%. The MSCI Asia Pacific Index extended its rally, marking its longest winning streak in nearly a month. During a high-profile briefing, officials urged insurers and mutual funds to increase equity holdings, signaling Beijing’s commitment to stabilizing markets. However, analysts warn that while this move is positive, it won’t resolve deeper economic challenges. Meanwhile, U.S.-China trade tensions remain a looming concern for global investors, following tariff threats from President Trump earlier this week.

Investment Insight: China’s efforts to stabilize its stock market may offer short-term opportunities, but investors should remain cautious given lingering economic headwinds and geopolitical risks. Focus on selective, value-driven investments rather than speculative plays.

Japan’s Foreign Stock Appetite Adds Pressure on the Yen

Japanese retail investors are pouring record amounts into overseas equities, with ¥10.4 trillion ($66 billion) invested last year via the expanded Nippon Individual Savings Account (NISA) system. This surge, driven by tax-free incentives and higher returns abroad, is further weakening the yen, which already faces pressure from the U.S.-Japan interest rate gap and trade uncertainties under Donald Trump. With NISA accounts growing by 60% since 2020, analysts expect continued yen-selling pressure in the near term, though increased yields or stronger domestic stock performance could shift flows back to Japan.

Investment Insight: The yen’s prolonged weakness benefits Japanese exporters but poses risks for import-heavy industries. Investors should monitor NISA-driven outflows and consider currency hedging for exposure to Japanese equities.

Putin Eyes Economy as Trump Signals More Sanctions

Vladimir Putin is increasingly concerned about Russia’s strained wartime economy, which faces inflation near double digits, high interest rates at 21%, and labor shortages driven by record defense spending. While Russia’s economy showed resilience during the war, growth is now slowing, with forecasts below 1.5% in 2025. These pressures have led some in the Kremlin to favor a negotiated end to the Ukraine conflict. Meanwhile, newly inaugurated U.S. President Donald Trump has threatened more sanctions and tariffs unless progress is made, heightening economic risks for Russia.

Investment Insight: Russia’s economic fragility and potential sanctions create a challenging environment for global investors. Focus on sectors resilient to geopolitical pressures, such as energy, while avoiding areas vulnerable to sanctions and high domestic interest rates.

Preview

Tech innovation and policy shifts dominate the headlines this week. OpenAI, Oracle, and SoftBank unveiled Stargate, a $500 billion U.S. AI infrastructure initiative, solidifying AI’s role in future innovation. Meanwhile, President Trump signaled openness to Elon Musk or Larry Ellison acquiring TikTok, adding complexity to U.S.-China tech relations. Netflix surged 14% after record Q4 subscriber growth and price hikes, driven by live events and a $15 billion buyback. In Asia, AI optimism lifted markets, but SK Hynix’s 26% rally faces profit-taking as investors rotate into domestic stocks benefiting from Trump’s policies. Tech remains the focal point for global markets.

Tech Titans Commit $500 Billion to U.S. AI Development

OpenAI, Oracle, and SoftBank have announced plans to invest up to $500 billion in U.S. artificial intelligence infrastructure through a new venture called Stargate. The initiative, unveiled at the White House with President Trump, highlights AI’s growing importance to the American economy. Stargate’s first data center, already under construction in Texas, will be operated by Oracle and used by OpenAI. Additional investors and debt financing are expected to support the ambitious project. Microsoft, Nvidia, and Arm Holdings have signed on as technology partners, solidifying AI as a cornerstone of future innovation.

Investment Insight

The Stargate initiative underscores AI’s pivotal role in reshaping industries. Investors should monitor the capital-intensive nature of AI infrastructure, as it could drive demand for semiconductor stocks, cloud providers, and data center operators.

Preview

Markets are bracing for volatility as President Trump’s tariff plans on Canada and Mexico rattle currencies and metals markets, while China remains a potential trade target. Apple’s iPhone sales in China plunged 18% last quarter, losing ground to Huawei’s locally-driven dominance. Trump’s repeal of Biden’s AI executive order may boost innovation but raises safety concerns. Meanwhile, an extreme winter storm is disrupting Texas energy production and pushing electricity demand to near-record highs, with prices surging. Investors should monitor trade developments, AI advancements, and energy market volatility as key drivers in the coming weeks.

Trump’s Trade Signals Jolt Markets, Stirring Volatility Concerns

Markets reacted unevenly to President Trump’s first day of his second term, with no immediate tariffs on China offering relief, while threats of 25% levies on Canadian and Mexican imports caused their currencies to tumble. The MSCI Asia Pacific Index edged up 0.2%, but US equity futures were flat as investors braced for continued trade uncertainty. The dollar rose 0.7%, while Treasury yields fell on easing inflation fears. Analysts warn of heightened volatility as Trump’s “America First” agenda unfolds, with China possibly next on the tariff radar.

Investment Insight

Prepare for market swings driven by tariff developments. Safe-haven assets like Treasuries may offer temporary refuge, but currency markets, particularly the yuan, remain vulnerable to trade policy shifts.