📅 Market Report.
📉 The PMIs for France and the UK yesterday fell below expectations. In the case of France, they also fell below 50, indicating contraction. The services PMI for France improved.
🌡️ The PPIs for Europe, precursors of inflation, came out below expectations. This could allay fears of rising inflation again.
🏦 The Bank of England is set to cut interest rates for the third time since the start of the COVID-19 pandemic in 2020 to balance supporting the sluggish economy with inflation pressures. The British economy has barely grown since mid-2024, with concerns over finance minister’s tax increases, global trade war risk, and rising costs. The BoE’s benchmark Bank Rate is currently at 4.75%, the highest among major rich economies. Wage growth unexpectedly sped up in late 2024, complicating policy decisions.
🇺🇸 In the US, Federal Reserve Vice Chair Philip Jefferson has stated that he will maintain the central bank’s current policy rate until the Trump administration’s policies on tariffs, immigration, deregulation, and taxes are understood. Despite 100 basis points of rate cuts in 2024, Jefferson stated that Fed policy remains restrictive and is exerting downward pressure on inflation. He urged patience and waiting for the net effect of any policy changes.
📦 The Trump administration’s decision to eliminate the “de minimis” exemption for imports under $800 has thrown the retail and shipping industries into disarray, as it now requires customs clearance for millions of packages. Citing concerns over fentanyl smuggling, the move is expected to overwhelm postal services, brokers, and customs agents, who must individually process an enormous volume of shipments. With 1.36 billion packages utilizing the exemption in 2024—a 36% increase from the previous year—the change could have significant repercussions for e-commerce and cross-border trade.
🇨🇳 China filed a World Trade Organization complaint against U.S. President Donald Trump’s new 10% tariff on Chinese imports and his cancellation of a duty-free exemption for low-value packages, arguing the actions are “protectionist” and break WTO rules. The WTO complaint is the start of a dispute process that could lead to a ruling that Trump’s duties violated trade rules, though such a victory would be unlikely to bring Beijing relief due to the inoperative WTO Appellate Body.
🎯 China responded to the U.S. tariffs with targeted tariffs on U.S. imports and an anti-monopoly investigation into Alphabet’s Google, in a measured retaliation.
🇵🇦 The Panama Canal Authority denied reports that US ships could cross the Panama Canal without paying tolls, stating that it has not made any changes to charge fees or rights to cross the canal and is willing to establish dialogue with US officials regarding the transit of wartime vessels. This denial likely ratchets up tensions after President Trump threatened to take back control of the canal, accusing Panama of charging excessive rates. The US and Panama signed accords in 1977 that paved the way for the canal’s return to full Panamanian control, which the US handed over in 1999 after a period of joint administration. Trump has repeatedly claimed that Panama has ceded control of the canal to China, which Panama and China deny. Panama minister says US defense chief Hegseth will visit in April.
🇮🇳 As we suggested months ago in a scenario of a return of Trump’s Trade War, countries such as India and Bangladesh would benefit. Well, to offset China’s rising prominence, we’re told that the European Commission is exploring tighter security cooperation with India—and that the EU’s executive arm has an official visit to the nation scheduled for February 28.
⚫ BlackRock is gearing up to launch a bitcoin exchange-traded product (ETP) in Europe within weeks, amid growing demand for exposure to cryptocurrencies. The product will likely be domiciled in Switzerland, and BlackRock has incorporated a Zurich-based company focused on digital assets in recent months. BlackRock’s main bitcoin-linked product, IBIT, has grown rapidly, amassing net assets of $57.5 billion as of February 4th. While the U.S. crypto industry has celebrated Trump’s election and his pledge to support the sector, crypto businesses in Europe are facing new, tougher regulation through the Markets in Crypto-Assets Regulation (MiCA) framework. The launch of a BlackRock bitcoin ETP in Europe could further boost the mainstream adoption and integration of cryptocurrencies in the region’s financial markets. BlackRock’s move to expand its crypto product offerings in Europe comes as institutional and consumer demand for exposure to digital assets continues to grow globally.
📈 Market View:
🐂 US stock market futures are showing renewed bullishness, although caution persists pending Friday’s employment data. The graphic structure maintains decreasing highs in recent weeks, which could anticipate new falls. Currently, the Mini S&P 500 futures are trading above 6,100 points, while the Nasdaq 100 futures are at 21,825 points, approaching 21,900.
💵 The dollar, which yesterday fell below 107.50 on the DXY index, has recovered some ground to around 108 points, although it is still trading below that level, at 107.75. Technically, it is crucial that it rises above 108 points to avoid a possible downward movement. Meanwhile, EUR/USD managed to exceed 1.04, reaching highs of 1.0440, but has fallen back below that level again, currently trading at 1.0390.
🇪🇺 In Europe, DAX futures are advancing towards their recent highs, standing at around 21,800 points.
🛢️ Brent crude continues to be highly volatile, having fallen yesterday from $76.50 to the current $74.85.
🥇 Gold, which reached $2,900 per ounce yesterday afternoon, has fallen back slightly and is now trading at $2,880.
₿ Bitcoin is showing an increasingly weakening trend, with bullish rebounds losing strength. It is currently trading at $98,250, but is approaching the critical zone of $92,000. Its 200- and 55-session averages are beginning to flatten or slope downward, suggesting a possible technical deterioration. It will be key to observe its behaviour in the coming days.
🌍 Geopolitics:
🕊️ President Trump’s top aides defended his proposal to transfer Palestinians out of Gaza and have the U.S. take over the war-ruined enclave, but they also backed away from some elements of his plan.Trump’s proposal drew rebukes from world powers like Russia, China, and Germany, and was rejected outright by Saudi Arabia, a key U.S. ally in the region. Netanyahu supported the idea of Gazans being free to leave and return to Gaza, but provided few details on how this would be implemented. The Palestinian militant group Hamas called Trump’s proposal “ridiculous and absurd,” while Jordan’s King Abdullah rejected any moves to annex land and displace Palestinians.
🇬🇧 The British Foreign Minister made this statement at a discussion with Zelensky. “Our collaboration spans hundreds and thousands of years. This historic relationship demonstrates our dedication to you not just during the conflict, but also in the future. And the United Kingdom is your primary partner.” Kremlin spokeswoman Maria Zakharova told the press that Ukrainians and Britons probably hunted brontosaurs together.
