MARKET WRAPS

Stocks:

European stocks were mostly higher on Friday after new remarks from Trump sparked some hope that he might take a softer stance on China .

Meanwhile, Europe's economy likely started 2025 less weakly than it ended 2024, according to business surveys, but the threat of higher U.S. tariffs still tempered hopes that lower borrowing costs will help fuel a pickup as the year advances.

Shares in European luxury companies rose across the board after Burberry reported better-than-expected results, fuelling investor optimism about a turning point for the sector.

Stocks to Watch

The relative attractiveness of Anglo American 's operational turnaround has somewhat diminished, Citibank said, downgrading the stock to neutral from buy and setting a target price of 28 pounds, down from 30 pounds.

DBS Group Research said it's shaping up to be a better year for the airline industry after a turbulent 2024. Prospects look brighter for U.S. and European carriers, fueled by a healthy macroeconomic backdrop, rising real wages, stronger consumer confidence and robust travel demand, it said.

United and Delta are DBS's top picks, followed by IAG in Europe and Qantas in APAC. Cathay Pacific and Ryanair round out the list. Air China, China Eastern and China Southern were downgraded to hold.

U.S. Markets:

Stock futures saw small moves and investors will eye some big-name earnings, while remaining on tenterhooks for any further policy announcements from the new Trump administration.

American Express and Verizon are among the companies set to report results later.

Stocks to Watch

CSX said revenue fell last quarter, hit by lower fuel surcharge and coal revenue. Shares dropped 3% before the bell.

Texas Instruments' outlook for this quarter missed expectations, sending its shares down about 5% in premarket trading.

Forex:

The euro rose to a five-week high against the dollar after the flash German purchasing managers' survey for January came in stronger than expected.

"The PMI offers some hope that Germany might dig itself out of the recessionary phase of the past two years," Hamburg Commercial Bank economist Cyrus de la Rubia said in the survey's press release.

The dollar fell to a five-week low after Trump said he'd prefer not to impose tariffs on China.

ING said the dollar momentum could stay soft this session after Trump apparently scaled back on the China tariff threat, for now.

The comments dealt a blow to the greenback, with other currencies in Asia buoyed at its expense.

Trump telling Fox News he'd rather not impose tariffs on China seems to feed into the growing sense that he is underdelivering on protectionism and that ultimately some of the tariff threats made before his inauguration may not materialize as long as some concessions are made on trade, ING said.

However, ING pointed out that it wouldn't be entirely surprising if Trump's next comments on the matter point in the opposite direction.

Bonds:

Yields on eurozone government bonds rose after German and eurozone interim PMI data for January came in stronger than expected, lowering the chances of aggressive interest-rate cuts from the European Central Bank.

France's PMI data still showed economic activity contracting, although manufacturing improved from very low levels.

Energy:

Crude futures headed for weekly declines after Trump outlined plans to boost domestic production and said he will ask Saudi Arabia and OPEC to lower oil prices.

In a speech to executives at the World Economic Forum in Davos, Trump called on OPEC to reduce crude prices, implying a need for the cartel to raise output.

"In his previous term, President Trump was very vocal about OPEC needing to pump more oil," ING said.

"However, with Russia becoming increasingly more aligned with OPEC members through the OPEC+ alliance, as well as higher fiscal breakeven oil prices for key members, it will be no easy task to convince OPEC to increase output."

European natural-gas prices remained well supported, with the benchmark Dutch TTF contract trading just shy of 50 euros a megawatt hour.

"The market and [EU] member countries are becoming increasingly concerned about the task of refilling storage through the injection season and the fact that the forward curve provides no incentive to store gas for next winter," ING said.

"The forward curve is in backwardation between summer 2025 and winter 2025/26."

According to industry group Gas Infrastructure Europe, EU storage is now 57.6% full--down from 74% last year and below the five-year average of 66%.

Meanwhile, Europe is set to become increasingly reliant on LNG, with geopolitical issues such as Russia's role as a supplier expected to dominate markets this year.

Metals:

Gold futures rose to near three-month highs on increased uncertainty amid a new presidential administration in the U.S.

Investors are evaluating the inflationary and monetary-policy effects of Trump's policies, Saxo Bank said.

Futures are near the all-time high of $2,826.30, set in late October, with the latest rally triggered by Trump's threat to impose tariffs on some of the biggest U.S. trading partners, including Canada, Mexico, Europe and China, Saxo said.

As well as safe-haven demand in an uncertain geopolitical landscape, central bank buying looks set to continue, and spot gold could peak as high as $2,900 this year, it added.

Base metal prices rose. Metals have enjoyed a rally in January so far, with gains driven largely by renewed optimism over Mainland Chinese demand and support pledges from the country's officials, BMI said.


EMEA HEADLINES

Italy's Banca Monte dei Paschi Launches $13.9 Billion Bid for Mediobanca

Italy's Banca Monte dei Paschi di Siena launched a $13.86 billion all-share offer to buy peer Mediobanca Banca di Credito Finanziario, the latest sign of dealmaking appetite among European banks.

The move, valued at 13.3 billion euros, would create Italy's third-largest lender in terms of assets and deposits, behind Intesa Sanpaolo and UniCredit.


Rolls-Royce Gets $11.1 Billion Contract to Supply Nuclear Reactors for U.K. Submarines

Rolls-Royce will manufacture nuclear reactors to power new U.K. submarines under a contract valued approximately at 9 billion pounds ($11.12 billion).

As part of the eight-year deal, the biggest ever struck by Rolls-Royce with the U.K.'s Ministry of Defence, the British company will design, manufacture and provide support services to nuclear reactors powering the Royal Navy's submarines, the ministry said Friday.


Givaudan Reports Earnings Rise, Expects to Exceed Five-Year Sales Target

Givaudan reported a rise in full-year earnings on adjusted sales that saw a double-figure percentage growth.

The Swiss flavor-and-fragrance company said Friday that full-year net profit for 2024 rose 22.1% to 1.09 billion Swiss francs ($1.20 billion) compared with 893 million Swiss francs a year prior. Analysts had expected net profit of 1.11 billion francs according to a company-compiled consensus.


Ericsson Sees Further Signs of Market Stabilization as North America Sales Rise

STOCKHOLM-Ericsson sees further signs that the overall network market is stabilizing, as customer spending continues to accelerate in North America.

The Swedish telecommunications-equipment company said Friday that its key networks unit saw a 70% jump in North America sales in the fourth quarter thanks to some contract wins and increased network investments by some large customers.


GLOBAL NEWS

Trump Gives His Biggest Tariffs Hint Yet. What It Means for Markets.

President Trump is keeping the world guessing when it comes to his tariffs plan but he may have given markets their biggest clue yet.

The president said he "would rather not" impose levies on China and suggested that a deal could be reached between the U.S. and the world's second-largest economy, in the second part of an interview with Fox News late Thursday.


Bank of Japan Resumes Hiking Rates as Economy Strengthens

TOKYO-The Bank of Japan raised interest rates on Friday to the highest level since October 2008, as the economy makes steady progress toward the bank's goal of stable 2% inflation and wage-backed growth.

The Japanese central bank lifted its target for the overnight call rate to 0.5% from 0.25%, making its third rate hike since ending its long-running negative interest-rate policy in March. The bank previously raised the policy rate to 0.25% in July and had kept it at that level since.


Trump promised to lower housing costs. Mortgage rates stand in the way.

Mortgage rates inched down in the first week of President Trump's second term, as the financial markets assess the economic impact of his policies.

A perception that Trump may be softer than expected on tariffs pushed the average 30-year mortgage rate down to 6.96% on Jan. 23, the first decline in six weeks, according to data released by Freddie Mac on Thursday.


Russia Brushes Off Trump's Threats on Ukraine

President Trump's initial attempts to lure Russian President Vladimir Putin to the negotiating table on Ukraine have been met with what essentially amounts to a shrug.

"We don't see anything new here," Kremlin spokesman Dmitry Peskov said Thursday, a day after Trump took to Truth Social to warn he would be willing to increase the economic pressure on Moscow after a raft of sanctions were applied following its invasion of Ukraine nearly three years ago.


Blaze-Stricken Los Angeles Contends With Fresh Fires, Resurgent Winds

LOS ANGELES-Thousands of firefighters worked to contain new blazes Thursday, including one near the affluent Bel-Air neighborhood, while persistent winds left weary Angelenos on edge following weeks of historic fires.

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