Market Report.
🌏 Asian shares declined on Tuesday amid concerns over U.S. investment curbs on China.
📜 President Trump signed a memorandum directing the Committee on Foreign Investment in the United States (CFIUS) to restrict Chinese investments in strategic areas, including semiconductors, AI, quantum, biotechnology, and aerospace, citing national security concerns. The order states that China is “exploiting U.S. capital and ingenuity to fund and modernize their military, intelligence, and security operations, posing direct threats to U.S. security.” The order noted that foreign entities and individuals, including China, hold a significant amount of U.S. agricultural land, raising national security concerns.
📊 Tomorrow Nvidia’s results will be presented, which could generate more volatility in the markets, especially considering that the technology sector is in the eye of the hurricane of the US-China trade war.
💻 Chinese companies are significantly increasing orders for Nvidia’s H20 AI chip due to booming demand for DeepSeek’s low-cost AI models. Tencent, Alibaba, and ByteDance have “significantly increased” orders of the H20 chip since DeepSeek’s emergence, according to sources. The surge in orders could help alleviate concerns that DeepSeek might cause a slide in AI chip demand, underscoring Nvidia’s dominance in the market. The U.S. is looking at imposing restrictions on the sale of the H20 chip to China, but the sources cited DeepSeek as the primary reason for the jump in orders.
📉 The German economy shrank by 0.2% in the final quarter of 2024 compared to the previous quarter, confirming a preliminary reading. In Q3 2024, German GDP rose by 0.1% quarter-on-quarter. For the full year of 2024, the latest calculations confirmed a year-on-year decline in economic performance of 0.2%.
🚘 The European industrial crisis continues. New car sales in Europe were down by 2.1% in January, despite a jump in fully electric and hybrid-electric car registrations. In the EU, January sales fell by 2.6%, even as the registrations of battery electric and hybrid electric cars grew, while plug-in hybrids sales were down. Overall sales in France, Italy, Germany and Britain were down from last year, with only Spain recording a year-on-year increase among top selling nations. EU carmakers are struggling to compete with Chinese rivals and are bracing for potential U.S. tariffs, urging the Commission to grant relief from CO2 car emission targets.
💷 Bank of England policymakers do not have a consensus on how fast the central bank should cut interest rates, even though they all agreed to use the word “gradual”. MPC member Swati Dhingra said the term “gradual” has been interpreted in the media as 25 basis points per quarter, but that is not the committee’s definition. Dhingra believes cutting rates by 25 basis points per quarter for the rest of 2025 would still leave monetary policy in an undesirable restrictive position. Dhingra was one of two MPC members to vote for a 50 basis point rate cut in February, while the majority voted for a 25 basis point cut. A key difference among MPC members is how much of the UK’s weak economic growth reflects low demand that could be boosted by rate cuts.
Market View:
📈 U.S. futures are attempting to recover from Friday’s initial drop. Mini S&P 500 futures are striving to conquer the 6,000-point level, but the charts still indicate bearish strength. Nasdaq 100 futures have also undergone a significant correction and are currently trading below 21,400 points.
💵 The dollar index fell below 106.50 points but has recovered over the last few hours, now trading at 106.65. This movement briefly allowed the EUR/USD pair to surpass the 1.05 level, but it has since dropped back and is currently trading at 1.0465.
🇪🇺 In the European artificial market, corrections have been much milder. The DAX 40, despite poor German economic results showing a 0.2% GDP contraction in Q4 2024 and the recent decline in vehicle sales, remains stable around the 22,500-point level.
🛢️ Crude oil has risen in recent hours but remains within the ranges observed since the beginning of February. For instance, Brent crude is trading within a range defined between $74 and $77 per barrel, currently standing at $75.
🪙 Gold continues its bullish advance and is nearing the significant $3,000 per ounce mark, currently trading at $2,952.
💸 Bitcoin has fallen below the critical $92,000 level, a threshold that could trigger a strong bearish movement for the king of cryptocurrencies. At present, it has dropped below $90,000. If the bearish pattern detected weeks ago is activated, it could drive Bitcoin down to $72,000.
Geopolitics:
🗳️ A mere 24 hours after securing his electoral victory in Germany, Friedrich Merz of the CDU appears to backtrack on the pledges made during his campaign. Just days ago, controversy erupted over his hardline proposals on immigration, which many criticised as a blatant imitation of the AfD’s platform, seemingly designed to poach votes from their base. Yet, having secured those votes, Merz now reverses course, claiming that no one ever mentioned closing the borders.
👔 After the Office of Personnel Management appeared to downplay Musk’s threat to federal employees, the dispute between Elon Musk’s Department of Government Efficiency and American government employees persisted. Last Monday, all federal employees received an email from Musk’s DOGE warning that those who did not give a list of their recent successes would be forced to “resign.” Top government HR professionals were later informed by OPM that replying to the email “is voluntary.”
🛑 But Musk doubled down on his threat, saying that federal workers were ‘incompetent and contemptuous’ of how taxpayers’ money is spent, saying that the standard for passing the “test” was very low.
🕊️ The warmongering machine is now concentrated in Europe, mobilising the political class to prevent progress in the peace negotiations. Yesterday, in an attempt to slow down the negotiations with Russia, I travelled to Washington. But the result was not as expected, and Trump withdrew US condemnation of the Russian invasion at the UN and the G7.
🌍 The EU’s foreign policy chief, Kaja Kallas, said the Trump administration is falling for Russia’s narrative in its escalating criticism of Ukraine.
