Market Report.
🗳️ This time Donald Trump has announced tariff cuts, rather than increases. Something positive.
Let’s see the details.
🤝 President Donald Trump announced that the U.S. and India have reached a trade deal, where the U.S. will immediately lower its “reciprocal tariff” on India from 25% to 18%. In exchange, Prime Minister Narendra Modi agreed to stop buying Russian oil and instead buy more from the U.S. and potentially Venezuela. This is intended to help end the war in Ukraine.
🛢️ Modi also committed to “buy American” at a much higher level, including over $500 billion in U.S. energy, technology, agriculture, coal, and other products. Trump said the two leaders were able to make this deal quickly because they “GET THINGS DONE”, unlike most others.
⚖️ However, legal experts have questioned whether Trump has the authority to unilaterally make binding trade agreements without congressional approval. The details of the deal have not been officially released yet, and it’s unclear if anything has been formally signed between the two countries.
📈 Following the announcement of the agreement, the Nifty 50 rose, the USDINR fell, showing a strengthening of the Indian currency, and yields on Indian 10-year bonds fell, showing a clear improvement.
🏦 The Reserve Bank of Australia (RBA) raised interest rates by 25 basis points to 3.85%, the first hike in two years, as it struggles to bring high inflation under control.
🌏 The RBA joins the Bank of Japan as the only other major developed-world central bank currently tightening monetary policy, in contrast to expected rate cuts or pauses in the U.S., UK, Canada, and Europe.
💱 The Australian dollar rallied 0.9% against the U.S. dollar following the rate hike, while bond yields also jumped as markets bet on further tightening ahead. Investors have ramped up expectations for another 25 basis point hike by the RBA in May.
🔥 Underlying inflation in Australia is running at 3.4% annually, well above the RBA’s target, prompting the central bank to judge that the current inflation trajectory is “not an acceptable outcome.”
🇨🇭 The SNB chairman highlighted the challenges of the current low inflation and interest rate environment, suggesting negative rates may still be an option but are not an easy policy choice at the moment: Swiss National Bank Chairman Martin Schlegel said the current situation of low inflation (0.1%) and interest rates at 0% is “not an easy situation for monetary policy.”
🧰 Schlegel stated the SNB has two policy tools – interest rates and currency market interventions – to steer inflation into the central bank’s target range of 0-2%.
📉 He acknowledged the SNB has said it is prepared to go into negative interest rates again, but the hurdle is higher to lower rates into negative territory.
💵 Regarding foreign currency reserves, Schlegel said there is no alternative to holding U.S. Treasuries, as it remains the largest and most liquid market.
🏭 The Eurozone Manufacturing Purchasing Managers’ Index (PMI) rose to 49.5 in January, up from 48.8 in December, but still indicating a contraction in factory activity for the third straight month. The manufacturing output index returned to growth, climbing back above 50 to 50.5, signaling modest production expansion. However, new orders continued to decline.
⛽ Input costs rose at the fastest rate in three years, primarily due to higher energy prices. The chief economist at Hamburg Commercial Bank described the progress in the manufacturing sector as happening at a “snail’s pace,” indicating the recovery remains fragile.
🚀 Elon Musk is combining his space exploration company SpaceX with his artificial intelligence startup xAI in a deal that values the combined entity at $1.25 trillion. The deal gives SpaceX a valuation of $1 trillion, and xAI a value of $250 billion, according to people familiar with the matter.
🛰️ SpaceX said the acquisition of xAI is to “form the most ambitious, vertically-integrated innovation engine on (and off) Earth,” combining AI, rockets, space-based internet, and communications platforms.
🧠 SpaceX is requesting permission to launch up to 1 million satellites into Earth’s orbit to support this AI computing infrastructure in space. Musk believes the least expensive way to generate AI compute will be in space within 2-3 years, enabling faster AI breakthroughs and technological advancements.
🔗 The deal further entangles Musk’s various business ventures, as xAI was previously merged with his social media platform X (formerly Twitter). SpaceX is a much larger and more established defense contractor compared to xAI
📊 The combined company is expected to hold an IPO later this year that could raise up to $50 billion, which would be the biggest initial public offering to date.
🏗️ Oracle’s stock rose 2% on Monday after the company announced plans to raise $45 billion to $50 billion in 2026 to build additional data center capacity to meet growing cloud customer demand.
💾 The funding will be raised through a combination of debt and equity, as Oracle looks to expand its infrastructure to support major customers like Nvidia, Meta, OpenAI, AMD, TikTok, and xAI. Oracle has made significant bets on the AI infrastructure buildout in recent times, including a $300 billion deal with OpenAI and an $18 billion bond sale in September.
🇰🇷 Korean hardware players currently outperforming their Chinese counterparts focused on the software and applications side.
🏆 The combined market capitalization of South Korean tech giants Samsung Electronics and SK Hynix has surpassed that of Chinese tech giants Alibaba and Tencent for the first time. This shift reflects how the global AI boom has reshaped investment dynamics in Asia, benefiting the Korean chipmakers that are central to the industry’s supply chain.
🧩 Samsung and SK Hynix have thrived on their exposure to advanced high-bandwidth memory chips that power AI accelerators, amid strong demand from hyperscalers.
🐉 In contrast, Alibaba and Tencent’s focus on e-commerce and nascent AI involvement has lagged behind the Korean chipmakers’ AI-driven growth. Korea has positioned itself as a key supplier, while China aims for tech self-sufficiency.
⚠️ However, to be fair, we must admit that South Korea’s overtaking of China has occurred with major Chinese companies undergoing a temporary correction, and could be reversed in a matter of days.
📉 Chinese technology shares have fallen sharply, with the Hang Seng Tech Index briefly dropping 20% from its October high, putting it on the brink of a bear market. The sudden selloff was driven by concerns that the Chinese government may impose higher value-added tax on internet firms, following a recent tax increase on telecommunication companies.
🎁 Tencent’s promotional campaign of handing out cash through digital red packets to drive traffic to its AI app Yuanbao has added to concerns over an already-intense price war among Chinese tech giants.
₿ Bitcoin fell below $80,000 for the first time since April 2025, dropping around 12% in the past week and wiping over $200 billion in value from the Bitcoin market. Over $2 billion worth of Bitcoin long and short positions have been liquidated since Thursday, exacerbating the price decline.
🌍 Factors contributing to the Bitcoin sell-off include rising geopolitical risks, the decline in tech stocks, and a drop in precious metals prices – one of the few remaining safe-haven assets.
Geopolitics.
📰 The New York Times reports that Iran has told the United States it is prepared to suspend its nuclear program, but will continue developing its missile capabilities, signaling a limited willingness to compromise while maintaining its defense posture.
⚛️ However, Iran would prefer a proposal made by the United States last year to create a regional consortium to produce nuclear power, rather than completely shutting down its nuclear program.
🤝 Iran’s Secretary of the National Security Council, Ali Larijani, met with Russian President Vladimir Putin and conveyed a message from Iran’s Supreme Leader, Ayatollah Ali Khamenei, that Iran could agree to ship its enriched uranium to Russia.
📊 Polymarket traders now project that a U.S.–Iran nuclear deal will be signed this year.
🕵️ The controversy with Epstein’s files continues. Mainstream media are promoting claims that Jeffrey Epstein was a Russian asset, despite significantly more evidence to suggest he was aligned with Israeli intelligence. There are also emails where Epstein together with Bill Gates hatched a plan to push Putin out of power.
🗞️ This is reminiscent of the “RussianGate” case, when the media spent two years talking about the Russian-Trump conspiracy, and the FBI ended up closing the case, admitting to Congress that there was no evidence. Trump claimed that the real conspiracy had been orchestrated by Hillary Clinton to destroy his personal image.
Market view.
📈 S&P 500 futures have regained the 7,000‑point level and are currently trading around 7,020 points. Nasdaq 100 futures have also managed to reclaim the 26,000‑point mark.
💵 The US Dollar Index (DXY) appears to be extending its recovery and is now trading close to 97.50 points, triggering a significant correction in EUR/USD, which has fallen more than 2.5% since last Tuesday and is currently trading around 1.18.
🇪🇺 In Europe, DAX 40 futures are also rebounding, reaching approximately 25,050 points, while Euro Stoxx 50 futures have moved above 6,050 points. Both contracts are showing strong vertical price action, pointing to a decisively bullish response.
🥇 Gold futures are rebounding after the recent sharp correction and have approached the $4,950 per ounce level in recent hours.
🛢️ The oil market, which also suffered a steep correction of more than 7% compared with last week, is now stabilising, with spot Brent crude holding above $66 per barrel. This move is being driven by expectations of a potential agreement between the United States and Iran, as well as possible future Venezuelan oil supplies to India, which would increase global supply.
📉 Pressure on Bitcoin continues. The cryptocurrency briefly fell below the $75,000 level in recent hours before rebounding to around $78,650.
