- Market Round Up: Global equity markets fell yesterday, after Trump threatened tariffs on several European countries ahead of Davos meetings, amid rising tensions over his Greenland ambitions. Bitcoin sank, while gold surged to record highs. The VIX Index climbed to its highest level since November. US long-term yields hit a four-month high amid a Japanese bond selloff and plans by a Danish pension fund to exit Treasuries, while the dollar slid broadly. The S&P 500 sank 2.1%, its steepest fall since October, while the Nasdaq dropped 2.4% and the Euro Stoxx 600 fell 0.7%. The Russell 2000 slipped 1.2% but outperformed the S&P 500 for a 12th straight session, while the ‘Magnificent Seven’ Index lost 3.1%. Netflix Inc. agreed to an amended all-cash deal to purchase Warner Bros. studio and streaming operations, escalating its rivalry with Paramount in the battle for one of Hollywood’s most iconic media groups. En route to the World Economic Forum today, Trump has ramped up friction with Europe, rebuking the UK over the planned handover of the Diego Garcia islands, threatening tariffs on eight European nations resisting his Greenland ambitions, and pressing France to align with his Board of Peace project in the Middle East. Trump is set to speak in Davos this afternoon. The US Supreme Court is dimming hopes of a swift reversal of Trump’s tariffs. The justices are set to enter a four-week recess next week without having ruled on legal challenges to most of the duties imposed over the past year. Markets were mixed in Asian markets this morning, with Japan down 1.0%, while Hong Kong and China both up 0.1%.
- Day Ahead and Market Drivers: Equities: This morning, UK inflation surprised to the upside, hitting 3.4% (3.3% est), despite yesterday’s weak labour market data. Later today in the US, we have MBA Mortgage Applications, Construction Spending, Pending Home Sales. In the US, we await earnings releases from Johnson & Johnson (Q4 2025 Earnings), Charles Schwab (Q4 2025 Earnings), and in the UK, Prologis (Q4 2025 Earnings), TE Connectivity (Q1 2026 Earnings).
- Stocks in focus: Rio Tinto (Neutral PT 6120p –6% downside) – Update post Q4 production results. PTSB (Overweight PT €3.47 +16.8% upside) – Update after approval of IRB Mortgage Model. Novo Nordisk (Overweight PT DKK 451 +19% upside) – Expanded partnership with Aspect Biosystems. GSK (Neutral PT 1660p –7% downside) – Acquisition of RAPT Therapeutics.
- Bonds: Yesterday, the 10-year US Treasury yield climbed seven basis points to 4.29%, while Germany’s and Britain’s 10-year yields rose to 2.86% and 4.46%, respectively. The 2-year Treasury yield was steady at 3.59%, and the 30-year yield rose eight basis points to 4.92%. From central banks, ECB President Christine Lagarde, joined by Governing Council members Villeroy and Nagel, will address panels at the WEF today.
- Commodities: Oil advanced 1.5% yesterday, as traders weighed possible supply disruptions in the Black Sea region, even as broader markets remained volatile following Trump’s renewed push to take control of Greenland. Gold climbed to $4763 an ounce to a record high, while silver also reached an all-time peak.
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