Market Report.
📉 Nvidia dropped 5% during the day yesterday, and if you saw the report we made of the company on Monday, you know that, once again, we can say, we told you. On Monday, we warned that the company’s investments could be vulnerable to AI fears, while the graphics could be a bearish sign.
📅 Yesterday we had weekly employment data from the US, so it’s not bad to review them.
👀 while the labor market appears to be stabilizing, there are still signs of underlying weakness and consumer anxiety about job availability and security, which could impact the Federal Reserve’s policy decisions
📈 The number of Americans filing new applications for jobless benefits increased slightly last week, rising by 4,000 to 212,000. The unemployment rate appears to have held steady at 4.28% in February, according to a forecast from the Chicago Fed.
💼 The labor market is regaining its footing after a soft patch last year, but the “low hiring rate is still the most concerning aspect.”
🤖 Estimates from the OECD and economists suggest an AI-driven productivity surge could lower debt levels across OECD countries by around 10 percentage points from the roughly 150% of GDP expected in 2036. However, debt would still be sharply higher than current levels.
💰 There is uncertainty around the tax and spending implications of an AI boom. Productivity gains could boost revenues, but if AI reduces employment or competition, profits and capital (which are often taxed less than labor) may see most of the benefits.
👵 Demographics, particularly aging populations, remain the biggest challenge, as they will continue to put pressure on government finances through rising entitlement costs.
🇯🇵 Japan: Annual core inflation in Tokyo slowed in February, falling below the Bank of Japan’s 2% target for the first time in 16 months. The Tokyo core consumer price index, which excludes volatile costs of fresh food, rose 1.8% year-on-year, compared to a forecast of 1.7%.
⛽ The slowdown in core inflation was driven by the impact of fuel subsidies and the abolition of gasoline tax surcharges, as well as a moderation in food price hikes.
🏛️ The easing core inflationary impulse could give dovish Prime Minister Sanae Takaichi a reason to push the BOJ to go slow on its rate hike plans. There are signs of potential friction between the BOJ and the government, as the Mainichi daily reported that Takaichi had expressed reservations about additional interest rate hikes during a meeting with BOJ Governor Kazuo Ueda.
💱 The USDJPY pair is giving upward impulses and generating a graphic configuration that could have potential to rise in the next sessions. Will we go back to 160?
🏦 The former BOJ chief, Haruhiko Kuroda, is advocating for tighter monetary and fiscal policies, in contrast to the current administration’s more expansionary approach, as he believes the Japanese economy has reached a point where further stimulus could be counterproductive.
⚠️ Kuroda believes the Japanese economy is already in “great shape” with solid growth and steady wage gains, so further monetary and fiscal stimulus could be counterproductive. He warned that Prime Minister Sanae Takaichi’s plans for big spending and tax cuts could “backfire by fueling inflationary pressure” and push up bond yields.
📅 Key developments that could influence markets today include U.S. January PPI and February Chicago PMI; France’s January consumer spending and producer prices, February CPI, and Q4 GDP; Germany’s February unemployment, January import prices, and February CPI; remarks from Bank of England Chief Economist Huw Pill; and Canada’s Q4 GDP.
⚡ Remember how we mentioned in recent months that the energy sector was the perfect strategy for diversification because, unlike the US technology sector, it was not as inflated and was necessary for the development of data centres? Well, as we reported recently, Trump has asked technology companies to take responsibility for their energy needs to prevent them from impacting household energy prices.
📺 CNBC has conducted a study of the companies that could benefit from these changes. The details of the agreement are unclear, but it seems the tech companies have agreed to take on more responsibility for providing power capacity for their data centers.
🔌 Several utility and power generation stocks that could benefit from the increased demand for power from data centers, including Constellation Energy, NRG Energy, Talen Energy, and Vistra.
🎬 Corporate news: Netflix ditches deal for Warner Bros. Discovery after Paramount’s offer is deemed superior. Netflix declined to raise its bid for Warner Bros.
🤖 Anthropic shows moral scruples to the requests of the US government. Anthropic CEO Dario Amodei stated that the company “cannot in good conscience” agree to allow the Department of Defense (DoD) to use its AI models in all lawful use cases without limitation.
🛡️ Anthropic has been engaged in tense negotiations with the Pentagon, as the company wants assurance that its models will not be used for fully autonomous weapons or mass domestic surveillance of Americans.
⚖️ The DoD has threatened to label Anthropic a “supply chain risk” or invoke the Defense Production Act to force the company to comply with its demands.
🗣️ However, Amodei said the DoD’s threats “do not change our position” and that Anthropic hopes the agency will reconsider its stance.
⏳ The Pentagon has given Anthropic until Friday evening to agree to its “last and final offer”, which would allow the DoD to use the company’s models for “all lawful purposes”.
🏢 Anthropic’s rivals like OpenAI, Google and xAI have already agreed to allow the DoD to use their models for all lawful purposes within the military’s unclassified systems.
Geopolitics.
🤝 President Trump has put his son-in-law Jared Kushner and longtime friend Steve Witkoff in charge of resolving major geopolitical conflicts, including the war in Ukraine and the standoff with Iran.
🇮🇷 Kushner and Witkoff met with Iranian officials in Geneva to try to seal a deal over Tehran’s nuclear program, and then met with Ukrainian, Russian and Ukrainian officials to discuss the Russian invasion of Ukraine.
🏛️ This highlights Trump’s preference for relying on trusted associates rather than the vast apparatus of the U.S. government for his most urgent foreign policy priorities.
📰 According to the WSJ, in Geneva this week Iran rejected core U.S. conditions for a nuclear deal, including handing over existing enriched uranium stockpiles, stopping enrichment (insisting it continue inside Iran), dismantling major facilities at Fordow/Natanz/Isfahan, and accepting indefinite (“no sunset”) restrictions on its nuclear program.
🇮🇱 Iran argues that, Israel is not subject to the same restrictions as they impose on them.
🏛️ Congressional Democrats have announced they will force a vote next week on a war powers resolution relating to Iran. This resolution is intended to limit President Trump’s ability to engage in military action against Iran without congressional approval.
🎙️ Former Minnesota Governor Jesse Ventura voiced anger over the prospect of the U.S. preparing for war with Iran over Israel, and is calling for a dramatic reform to war powers.
👨👩👧 Ventura argues that if Congress votes to go to war, a family member of each member of Congress should be required to enter immediate military service, saying it would ensure lawmakers personally share in the consequences of the decisions they make.
📢 Tucker Carlson says this is Israel’s absolute last chance to drag the US into a war because future generations of Americans are moving away from Israel.
🇭🇺 Hungarian Prime Minister Viktor Orban has accused Ukraine of plotting to sabotage Hungary’s energy infrastructure, following a recent Ukrainian drone attack on a key Russian oil pumping station.
🚔 In response, Orban has ordered the deployment of troops to protect critical energy facilities in Hungary, including power plants, distribution stations and control centers. Orban has also imposed a flight ban in a border county with Ukraine, and has bolstered police patrols around these key energy sites. Slovakia suspended emergency electricity supplies to Ukraine.
🔥 Ukraine has openly boasted about the recent attack on the Russian oil pumping station, which disrupted supplies through the Druzhba pipeline to Hungary and Slovakia. Hungary and Slovakia have accused Ukraine of deliberately not repairing the pipeline in order to cut off their access to Russian oil, leading to a political firestorm.
⚡ This situation increase the current divisions between Hungary, Ukraine and the broader EU over the ongoing Ukraine conflict.
💥 New conflict: Pakistan carried out air and ground strikes overnight against Taliban government targets in major Afghan cities, including Kabul, Kandahar, and Paktia. This represents a major escalation in the conflict between the two countries.
🪖 The Pakistani Defense Minister called it an “open war” between Pakistan and Afghanistan, as tensions have been high over Pakistan’s accusations that Afghanistan harbors militants carrying out attacks across the border.
⚔️ Both sides reported heavy losses, with Pakistan claiming to have killed 133 Afghan Taliban fighters and destroyed 27 posts, while the Taliban said 55 Pakistani soldiers were killed and 19 posts seized.
🗳️ The current UK government’s Labour Party was crushed in elections to one of its strongholds. The victory was for the Green Party, with Reform UK as the second political force, the British MAGA.
📉 This embarrassing defeat for Labour leader Keir Starmer increases pressure on him to prove he should remain as Prime Minister, following weeks of political turmoil.
Market view.
📉 US equities are pulling back once again, potentially weighed down by Nvidia, which fell 5% during yesterday’s session.
📍 The S&P 500 has returned to the 6,900‑point region, while Nasdaq 100 futures have also retreated, currently trading around 25,085 points.
💵 The US Dollar Index (DXY) remains relatively firm despite minor pullbacks. A bullish pattern may be forming, which could propel the index above 98.50 in the coming sessions. Meanwhile, EUR/USD has moved back above 1.18, currently trading near 1.1817.
🇪🇺 In Europe, DAX futures are showing resilience, managing to hold above 25,335 points.
📈 Euro Stoxx 50 futures have eased slightly from the fresh highs of 6,200 points reached in the previous session and are now trading around 6,175 points.
🛢️ The oil market remains tense amid ongoing negotiations between the United States and Iran, with spot Brent crude trading at approximately $71.40 per barrel.
🥇 Gold futures continue to display bullish technical patterns, holding around the $5,200 per ounce level.
₿ Finally, Bitcoin remains capped by resistance in the $68,000 region, currently trading near $67,895.
