📆 Monday, January 27
► European markets fell in sympathy with sharp losses in the US as concerns over China’s AI progress and Trump’s tariff strategy weighed on sentiment. The Stoxx 600 (-0.5%) declined but recovered from sharp losses, led by a 4.0% drop in tech stocks after Chinese startup DeepSeek’s AI assistant raised fears over a potential low-cost challenge to US tech giants like Nvidia and Microsoft. ASML (-8.7%) and Siemens Energy (-17.5%) were hit hard as investors questioned AI infrastructure demand outside of China. Meanwhile, Ryanair (+2.1%) jumped after strong quarterly earnings, and British American Tobacco (+4.0%) gained after the Trump administration dropped plans to ban menthol cigarettes. Traders are also gearing up for key central bank meetings this week, with the Federal Reserve and ECB policy decisions in focus.
► US stock futures fell sharply, with the Nasdaq 100 futures (-4%) leading declines as fears of China’s AI advancements threatened US tech leadership. S&P 500 futures (-1.2%) also dropped. Investors are closely watching the Federal Reserve’s rate decision on Wednesday, where policymakers are expected to hold rates steady amid stubborn inflation and Trump’s economic policies. The (short) Colombia trade dispute also raised concerns about Trump’s willingness to use tariffs as a political tool, adding fresh uncertainty to global trade. Meanwhile, four of the “Magnificent Seven” – Tesla, Meta, Microsoft, and Apple – are set to report earnings this week, which will provide key insights into the tech sector’s resilience.
► Asian markets were mixed, as traders reacted to disappointing Chinese economic data and Japan’s strengthening yen. The Nikkei 225 (-0.83%) slipped after the JPY strengthened to 155.6/USD, extending its rally on hawkish signals from the Bank of Japan. Meanwhile, China’s factory activity contracted for the first time since September, with the Manufacturing PMI falling to 49.1 and Services PMI dropping to 50.2, raising concerns about slowing growth ahead of the Lunar New Year holiday. However, the Shanghai Composite (+0.06%) managed to gain as the government announced new measures to support the stock market, including incentives for equity and bond ETFs. Hong Kong’s Hang Seng (+0.66%) rallied to a two-week high, driven by optimism over state-backed investments and Chinese AI innovations. The offshore CNY weakened to 7.26/USD, reflecting concerns over China’s slowing economy and ongoing trade uncertainties.
Subscribe to see more
