- Market Round Up: European equity markets traded negative yesterday with the EuroStoxx 600 falling -1.2%, with noticeable declines in France (-1.8%) and Germany (-1.3%). President Trump’s threat of a 10% tariff on European nations who are opposing his takeover of Greenland (starting 1st Feb and rising to 25% by June) drove sentiment lower. Weakness was noticed in Technology (-3.3%) and Consumer Discretionary (-2.3%) sectors. The VIX index spiked 18.8% yesterday because of geopolitical uncertainty between the US and Europe. US markets were closed yesterday for Martin Luther King Day. Negative sentiment followed through Asian markets this morning. Japan is down 0.8%, Hong Kong is down 0.2% and China is 0.33% lower. Concerns around the snap Japanese election have resulted in considerable profit taking in Japan
- Day Ahead and Market Drivers: Equities: On the macro side today, the focus will be in Europe. Already this morning, we had the release of the 3-month unemployment rate in the UK, coming in at 5.1% (est. 5.1%) with a change in initial claims of 17.9k. In Germany, we will have the release of the January ZEW Survey for Current Situation (est. -76) and Expectations (est. 50). A positive expectation in January would certainly be supportive of a more optimistic outlook throughout the European market. Later today Netflix will release its Q4 2025 financial results with subscription uptake likely to be a key focus. Moreover, analysts will be looking for an update on the attempted acquisition of Warner Bros. Discovery (for c.$72bn at $27.75 per share) considering Paramount’s hostile takeover efforts. United Airlines will release their Q4 results after the closing bell tonight.
- Stocks in focus: Cairn Homes (Overweight PT €2.46% +18% upside) – Commentary on FY25 Trading Statement. TotalEnergies (Overweight PT €65 15.8% upside) – Update on Q4 2025 guidance. LVMH (Neutral PT €630 +8.2% upside) – Details on sale of DFS business in China.
- Bonds: US Treasuries also joined the global sell off this morning as trading resumed. The-year climbed 6bps to 4.9% whilst Japanese yields also moved higher particularly the long end, in a rejection to the Prime Ministers snap election. From central banks, we are currently in the Fed’s blackout communication phase, however in Europe we have the ECB’s Nagel speaking on a Davos panel this evening.
- Commodities: In the commodities market, it was a very strong day for gold (+1.6%) and silver (+4.0%) as haven assets thrived in the market volatility. Brent oil prices slipped yesterday dropping 0.3% as the turmoil in Iran has eased in recent days. WTI has started 0.2% higher this morning as traders priced in the risks of the US seizing control of Greenland
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