Perhaps until the very end the markets did not believe that it would happen. And instead the tariff threats Trump's weekend plans have become reality for Canada, Mexico and China sparking fears of a full-scale trade war which will cause a surge of inflation and will have an impact on global growthStock markets responded with Powerful sales in Asia and look set to suffer sharp declines everywhere, based on the prices of futures for the US index S & P 500 indicate a 2% drop. The outlook for Europe are even worse, with STOXX 50 futures down 2,4%, after Trump said over the weekend that tariffs on the EU “will definitely happen”. Sharp selling also on short-term bonds, as well as on almost all currencies, with the exception of course of the US dollar which achieved a record peak against the yuan Chinese in offshore trading, the highest level against the Canadian currency since 2003 and the strongest against the mexican peso from 2022. Bitcoin also collapses.
The tariffs will affect $1,3 trillion in goods: more than 40% of all US imports
Some investors had expected Trump to eventually ease his demands on tariffs. But that hasn't happened. On Saturday, Trump imposed 25% duties on imports from Mexico and from most imports Canadians and 10% on goods coming from China, due to fentanyl, a deadly opioid, and illegal immigration. US tariffs, which will come into force on Tuesday, will concern $1,3 trillion in goods, or beyond the 40% of all US imports. The White House has repeatedly promised punitive taxes, but in fact Wall Street's losses on Friday were just 0,5% for the S&P 500.
China suggests US reinstate 2020 deal
The first signs of Trump's offensive are starting to arrive countermeasures. The Canada, a long-time ally of the United States, has imposed tariffs of retaliation of 25% on C$155 billion ($105,17 billion) of U.S. assets. Instead, the China try one diplomatic route and its initial response on tariffs will focus on restoring the “Phase 1” trade deal signed in 2020 during Trump's first term, the Wall Street Journal, citing sources: The plan includes a pledge not to devalue the yuan, an offer to invest more in the United States, and a commitment to reduce exports of fentanyl precursors. China has thus left the door open for talks with the United States that could avoid a deepening conflict. The Phase 1 trade deal that Trump signed with Beijing in 2020 ended a nearly two-year tariff war. The deal called for China to increase purchases of U.S. exports by $200 billion over two years, but Beijing failed to meet the targets when the COVID-19 pandemic struck.
The Journal report also added that Beijing intends to negotiate TikTok largely as a “trade matter,” meaning it will allow investors in Chinese owner ByteDance to negotiate a deal with interested bidders in the U.S. Trump has previously said he is in talks with several people to buy TikTok, including Microsoft, and that he would like to see a bidding war for the app.
In Asia, the most affected are the shares of car manufacturers
In Asia, mainland China's markets are still closed for the Lunar New Year holiday, but trading has resumed in Hong Kong which loses 1,1%. Nikkei of Japan fell by 2,9% even though Japan is not among the countries hit or threatened by Washington and the benchmark of theAustralia fell by 1,8%. Weighed down by the drop of over -6% of Taiwan Semiconductor Manufacturing, the bag of Taipei closed the session down -3,5%. The index KOSPI Seoul loses -2,6%. The stock market of India loses 0,6% and the Indian Rupee hits historic lows against the dollar.
Leading the decline in Asian stocks were Japanese and South Korean car manufacturers and their suppliers, penalized by Trump's duties because they have offices in Mexico and have been exporting cars produced there to the United States for a long time. Toyota, the most important car manufacturer in the world, and the smallest Nissan they lost more than 5%. Honda has fallen more than 7%. Nissan has two plants in Mexico, where it produces the Sentra, Versa and Kicks models for the U.S. market. It exports about 300.000 vehicles a year to the U.S., CEO Makoto Uchida said in November. Honda sends 80% of its Mexican production to the U.S. market, and its chief operating officer Shinji Aoyama warned in November that it would have to consider moving production if the U.S. imposed permanent tariffs on imported vehicles. Kia motors South Korea, which has a factory in Mexico, fell nearly 7%. South Korean electric-vehicle battery companies and battery material makers, which had planned to build factories in Canada to supply GM, Ford and others, tumbled.
OpenAi Announces Deep Research in Response to DeepSeek
From Tokyo the US technology giant OpenAi announces the arrival of a ChatGpt tool called 'Deep research' (or 'complete research'), in view of the high-level meetings that Sam Altman, one of the founders on the development of artificial intelligence will have in the Japanese capital in response to the interest generated by the Chinese competitor DeepSeek in the last week. “Deep research is the next OpenAi agent that can work independently for you: give it a request and ChatGpt will find, analyze, and synthesize hundreds of online sources to create a comprehensive research report,” OpenAi said in a statement.
Dollar Catches All. Euro Hits Late 2022 Low. Bitcoin Falls
The US dollar is rising against almost all world currencies. Against the yuan rose as much as 0,8% to reach an all-time high of 7,3765 yuan in the offshore market. Onshore trading remains closed for a holiday. The U.S. currency rose as much as 2,8% to 21,2547 mexican pesos, the highest level since March 2022, and rose as much as 1,4% to 1,4755 Canadian Dollars, a level not seen since 2003.
The euro fell as much as 2,3% to $1,0125, its lowest level since November 2022. Trump said over the weekend that tariffs on Europe “will definitely come.”
I US Treasury yields at two years rose as much as 3,6 basis points to 4,274%, the highest of the week, on concerns that tariffs could fuel U.S. inflation and delay the Federal Reserve's interest rate cuts. By analogy, Japanese two-year government bond yields rose to their highest levels since October 2008.
The main cryptocurrency, the bitcoin, has collapsed to a low of $91.439,89, the lowest in the last three weeks. oil prices have risen, with U.S. Texas Intermediate crude up 1,9% at $73,89 a barrel and Brent crude futures up 1% at $76,39 a barrel. Gold prices fell nearly 1% after hitting a record high in the previous session, as the U.S. dollar strengthened. Spot gold prices fell 0,6% to $2.784,30 an ounce, after hitting a record high of $2.817,23 on Friday. U.S. gold futures lost 0,7% to $2.815,20.
European stocks seen in sharp decline
European stock markets are also seen open in sharp decline: the Eurostoxx50 future loses 2,46% and the US ones 1,51% (Dow Jones) and -1,94% (S&P500).
Unicredit holds a 4,1% shareholding in Generali, acquired over time on the market. The bank also holds a further 0,6%, which is however managed on behalf of clients and therefore does not provide for voting rights that can be exercised by the institution. The bank announced this in a statement released on Sunday.
Mediobanca. Moody's has confirmed the rating, but changed the outlook on issuer and senior unsecured debt to negative. According to the rating agency Fitch, the offer of the Sienese bank for Mediobanca, if it were to be successful, presents execution risks and could damage the Piazzetta Cuccia institution.
Ps. Moody's affirmed the rating, but changed the outlook on deposits and senior unsecured debt to positive.
Italgas. The agreement with 2i Rete Gas should close at the end of the first quarter or at the beginning of the second, as explained by the CEO, Paolo Gallo, confirming the amount of the necessary capital increase at around 1 billion. The Antitrust requests will probably force asset sales in areas where Italgas and 2i Rete Gas are the two competitors.
STMicroelectronics is considering cutting up to 6% of its workforce, or up to 3.000 workers at its plants in France and Italy as part of a restructuring program, it reported Bloomberg News, citing anonymous sources. Hsbc cut its target price on the stock from 30 to 28 euros (buy rating).
Ferragamo. Barclays raised its target price from 5,6 to 5,7 euros (underweight rating).
Stellantis announced an internal review to simplify its structure and speed up processes, continuing a reorganization initiated after the departure of former CEO Carlos Tavares in December. The group has essentially integrated its software and engineering activities and given its regional heads more powers in product planning and development, industrial and commercial activities. Stellantis, which is searching for a new CEO and is currently led by Chairman John Elkann, also announced changes to its management structure, including the appointment of Alain Favey as the new head of the Peugeot brand.
Dovalue, through doValue Greece Loan and Credit Claim Management Company, has entered into a bilateral agreement with certain investment funds managed by Bracebridge Capital to secure servicing mandates amounting to €2,3 billion in gross book value, including the latest tranche of Alphabet and certain other smaller mandates.
