Daily Market Roundup

North America News

US Markets Rebound as Tech Stocks Lead Gains

US stocks shook off early losses on Wednesday, reversing initial weakness following Alphabet’s post-earnings decline. Investor sentiment improved throughout the session, helping major indices close higher across the board.

Closing Market Performance:

• S&P 500: +0.3%, climbing back into positive territory.
• Nasdaq Composite: +0.1%, recovering from early session weakness.
• Dow Jones Industrial Average: +0.7%, leading gains among the major indices.
• Russell 2000: +1.0%, as small-cap stocks outperformed.

While the session started with muted risk appetite, the turnaround suggests investors remain optimistic about corporate earnings and broader economic resilience.

Key Earnings Reports

🔹 Digital Turbine (APPS) – Mixed Results, Raised Guidance

• Revenue: $134.6M (+13% QoQ, -6% YoY)
• GAAP Net Loss: $23.1M (EPS: -$0.22)
• Non-GAAP Adjusted Net Income: $13.7M (EPS: $0.13)
• Adjusted EBITDA: $22.0M, up 44% QoQ but down 13% YoY.

CEO Bill Stone highlighted better-than-expected execution and cost-cutting measures, helping the company raise its fiscal 2025 outlook. The company remains focused on advertiser demand and profitability improvements.

🔹 Ford (F) – Strongest Revenue Year in History

• Q4 Revenue: $48.2B, up $2.2B from Q4 2023.
• Full-Year Revenue: $185B (+5% YoY).
• Q4 GAAP Net Income: $1.8B, reversing a loss from the previous year.
• Full-Year Net Income: $5.9B with $10.2B adjusted EBIT.

Ford Model e (EV segment) remained unprofitable, reporting a $5.1B EBIT loss for 2024, but the Ford Pro division (commercial vehicles) delivered $9.0B EBIT, marking a 15% revenue increase YoY.

Management noted higher dividends for 2025 and a strong cash position, reinforcing Ford’s long-term transformation strategy despite headwinds in the EV sector.

🔹 Arm Holdings (ARM) – Record Quarterly Revenue

• Total Revenue: $983M (+19% YoY)
• Royalty Revenue: $580M (+23% YoY)
• GAAP Net Income: $252M, up from $87M YoY.
• Non-GAAP EPS: $0.39 (beat expectations).

Arm outperformed on earnings and revenue, driven by AI chip demand and expanding cloud computing partnerships with Nvidia, AWS, and Microsoft. The company raised full-year guidance, reinforcing its leadership in AI infrastructure.

🔹 Qualcomm (QCOM) – Beats Estimates, Strong Handset Growth

• Revenue: $11.67B, beating expectations of $10.93B.
• Adjusted EPS: $3.41 (vs. $2.96 expected).
• Handset Revenue: $7.57B (vs. $7.01B estimate).

Qualcomm reported strong handset sales, reaffirming its $22B non-handset revenue target by 2029. The company forecasted strong Q2 results, signaling stability in the semiconductor sector.

US January ADP employment +183K vs +150K expected

• US jobs data

• Prior was +122K (revised to +176K)
• Goods producing -6K
• Service providing +190K
• Pay gains for job stayers 4.7% vs 4.6% prior
• Pay growth for job changers 6.8% vs 7.1% prior

“We had a strong start to 2025 but it masked a dichotomy in the labor market,” said Nela Richardson, chief economist, ADP. “Consumer-facing industries drove hiring, while job growth was weaker in business services and production.”

US January ISM services 52.8 vs 54.3 expected

• US January 2025 ISM services

• Prior was 54.1
• Employment 52.3 vs 51.3 prior
• New orders 51.3 vs 54.2 prior
• Prices paid 60.4 vs 64.4 prior
• Business activity 54.5 vs 58.2 prior
• Supplier deliveries 53.0 vs 52.5 prior
• Inventories 47.5 vs 49.4 prior
• Backlog of orders 44.8 vs 44.3 prior
• New export orders 52.0 vs 50.1 prior
• Imports 49.8 vs 50.7 prior
• Inventory sentiment 53.5 vs 53.4 prior

Comments in the report:

• “Expecting considerable new projects to move to execution by second quarter in the energy market within the U.S.” [Construction]
• “Business conditions seem to be stable for us at this time.” [Educational Services]
• “Seeing letters announcing higher pricing from suppliers for 2025. Relying more on analytics to find the lowest impact on cost while keeping the quality high.” [Health Care & Social Assistance]
• “The paper market is starting to tighten up on the groundwood grades. All the North American mills are pushing dates into late February. It’s not causing any shortages yet, but it’s the first time in over a year that dates are moving out.” [Information]
• “Some apprehension exists with stakeholders and suppliers with government changes and potential tariff burdens.” [Management of Companies & Support Services]
• “The threat of tariffs is causing prices to rise. The threat of unstable international markets is resulting in shortages for various materials.” [Professional, Scientific & Technical Services]
• “Concern going forward is the cost of materials and project work, if any tariffs go into effect.” [Real Estate, Rental & Leasing]
• “Holiday sales not as robust as hoped for. Will need to adjust future planning.” [Retail Trade]
• “The employment market is softening as we are seeing less natural turn and getting more and better-qualified applicants. Also, requests for our services have continued to increase.” [Transportation & Warehousing]
• “Business is picking up but still slower than expected for January. We have had a lot of warehouse closures due to weather.” [Wholesale Trade]

US S&P Global final January services PMI 52.9 vs 52.8 prelim

• The services and composite PMIs on the USA from S&P Global

• Prelim was 52.8
• Prior was 56.8 (best reading since March 2022)
• Composite 52.7 vs 52.4 prelim
• Prior composite was 55.4

US international trade deficit for December $-98.4B vs $-96.6 billion

• Importers are increasing purchases ahead of tariffs

• Prior month $-78.2 billion revised to $-78.9 billion
• US international trade deficit for December $-98.4 billion versus $-96.6 billion estimate. The 2nd largest trade deficit going back to 1992.
• Goods trade balance $-122.01 billion versus $-122.11 billion preliminary. Last month $-103.5 billion
• Exports $266.5 billion, $-7.1 billion or minus -2.6% versus November
• imports $364.9 billion, +$12.4 billion versus November

Details from the BEA

Exports of goods decreased $7.5 billion to $170.2 billion in December.

Exports of goods on a Census basis decreased $6.7 billion.

• Consumer goods decreased $1.8 billion.
  • Pharmaceutical preparations decreased $1.4 billion.
• Industrial supplies and materials decreased $1.8 billion.
  • Crude oil decreased $0.9 billion.
  • Other petroleum products decreased $0.3 billion.
  • Other precious metals decreased $0.3 billion.
  • Fertilizers, pesticides, and insecticides decreased $0.3 billion.
• Capital goods decreased $1.4 billion.
  • Computers decreased $0.9 billion.
  • Civilian aircraft increased $1.4 billion.
• Automotive vehicles, parts, and engines decreased $0.9 billion.
  • Trucks, buses, and special purpose vehicles decreased $0.4 billion.
  • Other automotive parts and accessories decreased $0.3 billion.

Net balance of payments adjustments decreased $0.8 billion.

Exports of services increased $0.4 billion to $96.3 billion in December.

• Travel increased $0.3 billion.
• Financial services increased $0.1 billion.

Imports of goods increased $11.4 billion to $293.1 billion in December.

Imports of goods on a Census basis increased $11.3 billion.

• Industrial supplies and materials increased $10.8 billion.
  • Finished metal shapes increased $9.2 billion.
  • Nonmonetary gold increased $1.0 billion.
• Consumer goods increased $2.2 billion.
  • Toys, games, and sporting goods increased $0.8 billion.
  • Cell phones and other household goods increased $0.8 billion.
• Capital goods increased $1.3 billion.
  • Computers increased $1.2 billion.
  • Computer accessories increased $0.9 billion.
  • Civilian aircraft decreased $1.1 billion.
• Automotive vehicles, parts, and engines decreased $2.2 billion.
  • Passenger cars decreased $1.6 billion.

Net balance of payments adjustments increased $0.1 billion.

Imports of services increased $1.0 billion to $71.8 billion in December.

• Transport increased $0.5 billion.
• Travel increased $0.3 billion.

What were the surpluses/deficits by country:

Surpluses (in billions of dollars):

• Netherlands: $5.0
• South and Central America: $3.5
• United Kingdom: $2.3
• Hong Kong: $0.7
• Brazil: $0.4
• Saudi Arabia: $0.4
• Belgium: $0.3
• Australia: $0.2

Deficits (in billions of dollars):

• China: $25.3
• European Union: $20.4
• Mexico: $15.2
• Switzerland: $13.0
• Vietnam: $11.4
• Canada: $7.9
• Germany: $7.6
• Taiwan: $6.9
• Ireland: $6.2
• South Korea: $5.6
• Japan: $5.5
• India: $4.9
• Italy: $4.1
• Malaysia: $2.5
• France: $1.1
• Israel: $0.8
• Singapore: $0.4

Some highlights:

• The deficit with Switzerland increased $9.1 billion to $13.0 billion in December. Exports decreased $0.7 billion to $1.2 billion and imports increased $8.4 billion to $14.2 billion. That is a big change.
• The deficit with Canada increased $2.9 billion to $7.9 billion in December. Exports decreased $0.4 billion to $29.1 billion and imports increased $2.5 billion to $37.0 billion. That makes sense given all the barkng about Canada.
• The deficit with Ireland decreased $3.1 billion to $6.2 billion in December. Exports decreased $0.1 billion to $1.2 billion and imports decreased $3.2 billion to $7.5 billion

Treasury refunding announcement shows most auction sizes unchanged for several quarters

• Treasury refunding announcement highlights

• Total refunding of $125B to raise $18.8B in new cash and refund $106.2B in securities
• $58 billion in 3s
• $42 billion in 10s
• $25 billion in 30s

US MBA mortgage applications w.e. 31 January +2.2% vs -2.0% prior

• Latest data from the Mortgage Bankers Association for the week ending 31 January 2025

• Prior was -2.0%
• Market index 224.8 vs 220.0 prior
• Purchase index 156.7 vs 162.4 prior
• Refinance index 584.3 vs 520.9 prior
• 30-year mortgage rate 6.97% vs 7.02% prior

Fed’s Goolsbee: Ignoring supply chain impacts, like tariffs, would be a mistake

• Comments from Goolsbee

• In inflation rises or progress stalls, the Fed will need to figure out if it’s from overheating or tariffs
• Distinguishing the cause of any inflation will be critical for deciding when or if the Fed should act
• Inflation has come down, is approaching 2% goal
• Covid pandemic experience shows supply chain impacts can have a material effect on inflation
• Opinions differ widely on how much tariffs would get passed into prices, suppliers may have to eat the cost

Fed’s Barkin: There is a wide range of outcomes from tariffs

• Richmond Fed President Barkin speaking

• It’s difficult to know the impact of tariffs.
• Looking forward it’s hard to know what specific tariffs are coming.
• Uncertainty goes beyond tariffs to immigration, regulation and other issues.
• Many Trump policies adding to uncertainty in economy.
• I see strong consumer spending and lower investment in 2025.
• I expect 12 month inflation numbers to come down nicely.
• I still lean towards cuts this year.
• Would never take any policy move off the table, but hikes would require an economy overheating.
• I see no sign of the US economy overheating.
• The bias is to see what happens and then react to it.
• Still think policy rate is modestly restrictive.
• We have recalibrated to a place that is more sensible to where the economy is now.
• 3 levels of uncertainty with tariffs
• First is what level on what countries
• Next is the response from countries and companies
• Third is how it all lands with the consumer
• Does worry that de-globalization could be a headwind for US growth
• Globalization has been deflationary

Fed’s Jefferson says there is no need to hurry further rate cuts

• Federal Reserve Vice Chair Philip Jefferson

• No need to hurry further rate cuts, strong economy makes caution appropriate
• Interest rates likely to fall over medium term
• Expect disinflation to continue, though progress may be slow
• Fed faces uncertainty around government policy
• Expect growth and labor market conditions to remain solid

Canada S&P Global January services PMI 49.0 vs 48.2 prior

• Canada service sector survey
• Prior was 48.2
• Panellists primarily linked ongoing weakness in activity volumes to a reduction in new business, which also fell for a second successive month in January
• Inflation softest in three months

Paul Smith, Economics Director at S&P Global Market Intelligence, said:

“Canada’s services economy experienced concurrent falls in both business activity and new work during January to signal another month of subdued sector performance. Panellists continued to note soft underlying market demand, with uncertainty weighing on business decisions. This may reflect ongoing unease over the impact of possible tariffs being applied on Canadian goods and services exported to the United States, and indeed this was cited as a real concern by service providers themselves. Whilst firms are looking to lower interest rates to help stimulate growth, tariff worries ensured that confidence amongst panellists remained well below trend.

“This uncertainty, plus general challenges in replacing expired contracts, helped to explain why service providers reported a marginal reduction in employment during January. Nonetheless, staffing expenses remained a source of broader input cost inflation for firms, which remained high in January.”

Canada December trade balance +0.71B vs +0.75B expected

• Canada trade balance data
• Prior was -0.32B (revised to -0.99B)
• Exports 69.46B vs 66.20B prior
• Imports 68.76B vs 67.18B prior

Commodities News

Silver Gives Up Gains Following Strong US Jobs Data

Silver prices erased most of their intraday gains on Wednesday, retreating toward $32.00 after the release of better-than-expected US private employment data for January. The strong labor market has fueled speculation that the Federal Reserve may delay rate cuts, exerting pressure on precious metals like silver.

US Private Employment Data Surpasses Estimates

According to the latest ADP Employment Change report, 183,000 new private-sector jobs were added in January, significantly exceeding market expectations of 150,000 and the previous revised figure of 176,000.

The data underscores persistent labor market strength, reinforcing the Federal Reserve’s cautious stance on rate adjustments. Last week, Fed Chair Jerome Powell emphasized that any monetary policy shifts would only occur once there’s tangible progress on inflation or a clear weakening of the labor market.

Strong Dollar Pressures Silver Prices

Following the employment report, the US Dollar Index (DXY) attempted a rebound from 107.40, trimming its earlier losses. A stronger US dollar generally dampens silver’s appeal, making it more expensive for foreign investors.

Trade War Fears Ease, Silver Sentiment Weakens

Investor sentiment toward silver has also been affected by diminishing concerns over a global trade war. While tensions between the US and China persist, the market interprets Trump’s tariff policies as more of a negotiation strategy rather than a full-scale economic conflict.

• The 10% tariffs on China took effect in February, prompting retaliatory measures from Beijing.
• However, Trump’s suspension of 25% tariffs on Canada and Mexico signals a more restrained trade approach.

Silver’s Outlook: What’s Next?

With interest rates expected to stay higher for longer, silver may continue to face headwinds in the short term. Investors are closely watching the Fed’s next moves, as monetary policy shifts will play a critical role in determining precious metal trends in the coming months.

US crude oil futures settled at $71.03

• Price is down $1.67 or -2.3%

US crude oil futures are settling at $71.03. That is down $1.67 or -2.3%.

Oil: Trump signing a directive to increase economic pressure on Iran – ING

There were two key factors influencing oil prices yesterday, firstly downward pressure came from China announcing retaliatory tariffs against the US, which included targeting US energy flows. However, countering this later in the session was President Trump signing a directive to increase economic pressure on Iran by enforcing sanctions more strictly and so putting a large share of Iranian oil exports at risk, ING’s commodity expert Warren Patterson notes.

US stance on Iran makes the market claw back the losses

“On China’s retaliatory tariffs, US crude oil and LNG were included, with a 10% and 15% tariff, respectively. However, with these tariffs only coming into force on 10 February, there is still room for a deal, although there are reports that President Trump is in no rush to talk to President Xi. The tariffs on oil and LNG affect a relatively small share of Chinese imports. In 2024, of the 11.11m b/d of crude oil imported, only 1.7% came from the US. For LNG, of the 105bcm imported last year, 5.6% came from the US.”

“On the more bullish side for crude and as reflected in the price action during the latter part of yesterday’s trading session, was President Trump’s directive to increase economic pressure on Iran. This move shouldn’t come as too much of a surprise given that President Trump was hawkish towards Iran during his first term and reimposed oil sanctions against Iran back then. These sanctions were never lifted by Biden, but they were not enforced strictly.”

“Overnight, API numbers showed that US crude oil inventories increased by 5m barrels over the last week, above the roughly 2m barrels build the market was expecting. In addition, gasoline inventories increased by 5.4m barrels, while distillate stocks fell by 7m barrels. The more widely followed EIA inventory report will be released later today.”

EIA weekly crude oil inventories +8664K vs +1962K expected

• EIA weekly crude oil inventories for the week ending January 31

• Prior was 3464K
• Gasoline +2233K vs +525K expected
• Distillates -5471K vs -1483K expected
• Production 13.478 mbpd

Europe News

Eurozone January final services PMI 51.3 vs 51.4 prelim

• Latest data released by HCOB – 5 February 2025

• Final Services PMI 51.3 vs. 51.4 expected and 51.6 prior.
• Final Composite PMI 50.2 vs. 50.2 expected and 49.6 prior.

Key findings:

• HCOB Eurozone Composite PMI Output Index at 50.2 (Dec: 49.6). 5-month high.
• HCOB Eurozone Services PMI Business Activity Index at 51.3 (Dec: 51.6). 2-month low.
• Economy returns to growth, but sustained fall in new business suggests fragile recovery

Comment:

Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“The slow pace of growth in the services sector, which was evident almost all of last year, continued at the start of 2025. Putting it more positively, growth at service companies played a crucial role in keeping the eurozone economy in expansion over the past year. Sluggish, but slightly accelerating growth in new orders and employment gives hope that this sector will gain a bit more momentum in the first quarter of this year.

“Costs in the services sector rose at a faster rate in January. The above-average wage increases of recent months are obviously playing a role here. In Germany, CO2 taxes were also raised at the turn of the year. This isn’t great news for the ECB, which is monitoring inflation in the service sector very closely, as it’s proving to be very stubborn. In this respect, the ECB did well to lower interest rates by only 25 basis points at the end of January instead of taking a more aggressive approach.

“The services outlook is modest. The index for business expectations fell slightly and has been below the historical average since mid-2024. Given the many political uncertainties, particularly the new elections in Germany and the fragile government in France, this isn’t surprising. No major growth leaps are expected in this sector for now.

“When comparing the Composite PMIs among the four largest eurozone countries, Germany ranks second. Last year, Germany and France repeatedly took the back seat, while Italy found itself in the unusual position of being more dynamic than its two major economic partners. In January, however, Italy showed no progress, while Germany crossed the 50-point mark for the first time in seven months. However, this will most likely not mark the beginning of sustainable growth, as Germany also needs robust growth in the eurozone as a whole. The situation is currently weak, though, as economic output in the currency union stagnated in the final quarter of last year, according to Eurostat.”

Eurozone December PPI 0.4% vs 0.5% m/m expected

• Latest data released by Eurostat – 5 February 2025

• Eurozone PPI M/M 0.4% vs 0.5% expected and 1.6% prior (revised to 1.7%)
• Eurozone PPI Y/Y 0.0% vs -0.1% expected and -1.2% prior

The highest monthly increases in industrial producer prices were recorded in Bulgaria (+5.1%), Croatia (+2.4%) and Slovakia (+1.5%). The largest decreases were observed in Ireland (-1.5%), Romania (-1.3%) and the Netherlands (-0.4%).

Germany January final services PMI 52.5 vs 52.5 prelim

• Final data released by HCOB – 5 February 2025

• Final Services PMI 52.5 vs. 52.5 expected and 51.2 prior.
• Final Composite PMI 50.5 vs. 50.1 expected and 48.0 prior.

Key findings:

• HCOB Germany Services PMI Business Activity Index at 52.5 (Dec: 51.2). 6-month high.
• HCOB Germany Composite PMI Output Index at 50.5 (Dec: 48.0). 8-month high.
• Inflationary pressures increase amid steep and accelerated rise in costs

Comment:

Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“This is an encouraging start to the year. Growth seems to have a chance again, as the composite PMI has climbed above the 50-point mark for the first time in seven months. This is thanks to the service sector, which expanded its business activity at a modest but faster pace than the previous month. The manufacturing sector isn’t dragging the overall economy down as much anymore. Overall, the situation looks relatively good given the many uncertainties.

“The service sector is not very familiar with the word recession. Services companies have expanded their business activities for most of the past year. Given the deep and prolonged recession in the manufacturing sector, this is surprising and good news. Sectoral figures from Destatis suggest that growth in the education and health sectors was above average in 2024, boosted by higher government spending. Some observers see this as a shift of resources from high value-added industry to lower value-added services. But the highly productive information and communication services sector also grew strongly in 2024. Deindustrialization is not necessarily bad if new jobs are created in other competitive service sectors, and this seems to be happening now.

“After a long dry spell, jobs are being created in the service sector again. This is encouraging, but one swallow does not make a summer, so this monthly figure shouldn’t be overstated. The accelerated declines in order backlogs and new business from abroad suggest that employment growth won’t continue unchecked.

“Price developments in the services sector are striking. Despite the overall weak economic situation, cost inflation has accelerated, and selling prices have risen at the strongest rate since February 2024. According to some companies, higher costs are related to rising wages and the increase in the CO2 tax, which impacts the hotel industry, for example. The fact that services companies were able to pass on some of these higher costs shows a certain robustness in this sector.”

France January final services PMI 48.2 vs 48.9 prelim

• Latest data released by HCOB – 5 February 2025

• Final Services PMI 48.2 vs. 48.9 expected and 49.3 prior.
• Final Composite PMI 47.6 vs. 48.3 expected and 47.5 prior.

Key findings:

• Activity levels fall at slightly faster rate as demand weakness persists
• Prices charged lowered for first time since April 2021
• Employment falls as business confidence sinks to 56-month low

Comment:

Commenting on the PMI data, Dr Tariq Kamal Chaudhry, Economist at Hamburg at Hamburg Commercial Bank, said:

“France’s service sector downturn continued in January. The HCOB PMI for services suggested that 2025 will be a challenging year. Political uncertainty dampened activity, according to some panel members, while others attributed the slowdown to weaker customer demand and reduced confidence in the economic outlook. Given the political situation, it is understandable that companies are feeling uncertain. France’s Prime Minister François Bayrou is fighting for his political survival while striving to pass a 2025 budget that meets the fiscal sustainability expectations of the EU Commission and financial markets.

“The ECB is unlikely to be reassured by price developments. France, as one of the key economies in the Eurozone, is exacerbating the ECB’s concerns about a resurgence of services inflation with its input prices. It is not so much the index value, which is below the historical average, but rather the fact that cost inflation is accelerating despite weak demand. Surveyed companies cited wage pressures, higher supplier prices, and increased fuel and energy costs. The issue for firms is the weakness in demand for services, which led to falling prices for end customers in January.

“The outlook remains extremely cautious. French service companies are reporting shrinking orders from both domestic and international markets. While international order intakes have jumped significantly towards stabilisation, future activity expectations have fallen sharply. It is therefore unsurprising that service providers made more layoffs. The only consolation is that those leaving did so voluntarily or due to their contracts expiring, according to survey respondents. The French government will need to act swiftly to create political stability and prevent deeper disruptions in the labour market.”

Italy January services PMI 50.4 vs 50.5 expected

• The latest data from HCOB – 5 February 2025

• Services PMI 50.4 vs. 50.5 expected and 50.7 prior.
• Composite PMI 49.7 vs. 49.7 prior.

Key findings:

• Fractional rise in business activity amid marginal drop in new business
• Renewed decrease in employment levels
• Rate of both cost and charge inflation rise to nine-month highs

Comment:

Commenting on the final PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:

“Another GDP standstill in the final quarter, following stagnation in the third quarter, highlights Italy’s sluggish economic development in the second half of 2024. This trend aligns with the HCOB composite Output PMI, which averaged 49.9 from July to December 2024. With 50 marking the threshold between growth and decline, the PMI data accurately reflects the GDP figures. The latest HCOB PMI release for Italy’s private sector economy signals that sluggishness is here to stay. The Composite Output Index posted minimally in contraction territory, continuing the recent trend of decline.

“Activity in the Italian service sector remains within the growth area, but only marginally. Underlying demand remains weak and has worsened again, as new orders declined both at the total level and from foreign clients. Panellists report that uncertainty and weak economic conditions abroad are limiting demand. This weakened demand is translating into further decreases in of outstanding business. This bleak picture leaves future expectations of service providers below the long-term average, as indicated by the HCOB PMI data.

“Service input price inflation could become a more significant concern. Input price inflation is accelerating and has reached an elevated level, raising alarm bells. Companies are passing on these raised input costs, with wages still playing a key role, to customers by increasing their sales prices, as reflected in the data. In the latest ECB meeting, Lagarde stated confidence that wage increases across the service sector are on their way down. However, she won’t be pleased with the latest PMI price data.”

Spain January services PMI 54.9 vs 56.7 expected

• Latest data released by HCOB – 5 February 2025

• Services PMI 54.9 vs 56.7 expected and 57.3 prior
• Composite PMI 54.0 vs 56.8 prior

Key findings:

• Jobs added in response to rising workloads and capacity pressures
• New business growth fastest since April 2023
• Input cost inflation sharpest in nearly a year

Comment:

Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:

“Last year’s fourth quarter GDP figures once again surprised to the upside, driven by a robust labor market that bolstered private consumption. Investments also picked up pace, likely spurred by the effects of the ECB’s monetary policy easing. However, the latest HCOB composite Output PMI for Spain’s private sector economy suggests that growth has softened somewhat at the beginning of the year, as the upturn in both manufacturing and services moderated.

“Business activity in the service sector softened at the beginning of the year, but activity remains comfortable after the high seen in December. Domestic orders even accelerated, aligning with strong national demand, whereas demand from abroad notably softened, likely reflecting weakness in the European core countries.

“The labour market situation in Spain’s service sector is particularly pleasing. Hard figures point to strong employment growth across the entire Spanish economy. Our corresponding HCOB Employment Index steepened sharply in January, underscoring companies’ needs to increase staff levels to match orders. In line with this, companies expressed greater additional future confidence towards the future, building on an already high level.

“Concerns remain when analysing services price developments. Panellists reported accelerated input cost inflation. There are two issues following this recent trend. First, from the beginning of 2024 to autumn 2024, service input cost inflation remained high, but the pace lost momentum. Over the last two months, input price inflation accelerated again. Second, although the level of this acceleration is far from the levels seen in 2022 in the aftermath of the pandemic, January’s Input Price Index is higher than in the period from 2009 to 2020. This should be worrying. Prices charged inflation also remain elevated in the context of the survey history.”

UK January final services PMI 50.8 vs 51.2 prelim

• Final data released by S&P Global – 5 February 2025

• Final Services PMI 50.8 vs 51.2 expected and 51.1 prior.
• Final Composite PMI 50.6 vs 50.9 expected and 50.4 prior.

Key Findings:

• Renewed downturn in order books
• Marginal output growth in January
• Fastest reduction in employment for four years

Comment:

Tim Moore, Economics Director at S&P Global Market Intelligence, said:

“January data highlighted a challenging business environment for UK service providers as stagflation conditions appeared to take a firmer hold at the start of the year. Output levels increased only marginally, while input cost inflation accelerated for the fifth month in a row to its highest since April 2024. Businesses widely noted sharply rising salary payments and many also felt the impact of suppliers passing on forthcoming increases in employers’ national insurance contributions.

“A renewed downturn in new business volumes added to signs that the near-term UK economic outlook remains tilted to the downside. Service providers typically cited risk aversion among clients and subsequent cutbacks to investment plans, albeit with resilient spending continuing in areas such as technology services.

“Business activity expectations for the year ahead weakened in response to subdued demand in January, with optimism now the lowest since December 2022. A range of growth headwinds at home and abroad were cited by survey respondents, including elevated interest rates, geopolitical uncertainty and a post-Budget slide in domestic business confidence.

“The twin perils of shrinking workloads and rising payroll costs meant that many service providers put the brakes on recruitment in January. As a result, total employment numbers across the service economy decreased to the greatest extent for four years. Job cuts were seen in most sub-sectors, with leisure and hospitality businesses indicating a particularly sharp rate of decline.”

ECB’s Centeno: Undershooting 2% inflation is a risk if investment doesn’t improve

• Comments from Centeno

• I hope we will get to 2% deposit rate sooner rather than later
• We may need to go below neutral rate to sustain inflation at 2%
• Sees neutral rate below 2%
• Pretty clear we need to keep downward trajectory of interest rates
• I’m ok with gradual cuts of 25 bps
• Europe must be united in the face of potential tariffs

ECB’s Lane: Disinflation process remains well on track

• Comments from the ECB’s Lane

• Incoming survey indicators suggest that the eurozone economy is set to remain subdued in the near term
• A middle path is appropriate for policy
• Calibration of mon pol cannot be summarized by neutral rate
• Tariffs are a downside risk to activity but inflation impact is uncertain

ECB’s de Guindos: I see inflation approaching the ECB’s target

• Remarks by ECB vice president, Luis de Guindos

• I see inflation approaching the ECB’s target.
• I’m not sure where ECB interest rates will end up.
• Neutral rate is not very useful in policy setting.
• May see inflation tick up in the next months on energy.
• The vicious circle of trade tariffs should be avoided.

EU prepares to hit Big Tech in retaliation for Donald Trump’s tariffs – FT

• The Financial Times with the report citing two officials with knowledge of the plans

The Financial Times reports that the EU is preparing to hit Silicon Valley in a potential retaliation if Donald Trump carries out his threats to impose tariffs on the bloc, marking the first activation of a Brussels “bazooka” that could bring services into a trade conflict.

The European Commission intends to employ its “anti-coercion instrument” in a potential clash with Washington which would enable the EU to target US service sectors like Big Tech.

Click here for the full article

Asia-Pacific & World News

Goldman Sachs – China trade war retaliation measures to have a limited energy price impact

• Goldman Sachs are wary of larger tariff impacts

On China – “large tariffs pose downside risk to our S&P 500 earnings estimates and return expectations.”

• firms absorbing higher input costs resulting from tariffs would squeeze margins and hit profits
• if firms pass the higher costs on to their customers sales might suffer
• every 5% increase in the US tariff rate would lessen the S&P 500 earnings per share by about 1% to 2%
• if planned tariffs become reality GS will reduce its S&P 500 earnings-per-share forecasts by roughly 2% to 3% … “not taking into account any additional impact from major financial conditions tightening or a larger-than-expected effect of policy uncertainty on corporate or consumer behavior”
• “China retaliatory measures to have only limited impact on energy prices”

More on this:

• “We believe near term implications to commodity markets will be limited given that neither global supply nor demand of these commodities are changed by China’s tariffs,”
• impacted U.S. volumes likely to find alternative buying markets easily
• China to replace impacted import volumes with alternative suppliers
• for coal, GS expects US volumes to be redirected to Japan and Korea, which will likely release local Pacific basin supplies to go to China instead
• China crude oil imports from the US are small

China January Caixin Services PMI 51.0 (vs. 52.2 in December)

• Activity in China’s services sector

China January Caixin Services PMI drops to 51.0

• vs. 52.2 in December
• 25th consecutive month in expansion

Composite: 51.1

• prior 51.4

From the report commentary, in brief:

• Supply & Demand:
  • Growth in business activity and new orders continued but at the slowest pace in four months.
  • External demand rebounded after a brief decline in December, with new export orders expanding in 16 of the past 17 months.
• Employment Trends:
  • Employment declined for the second straight month.
  • Firms focused on reducing headcount for greater efficiency, bringing employment to its lowest level since April 2024.
  • Backlogs of work fell for the first time since July 2024, due to weaker demand and improved efficiency.
• Price Pressures:
  • Input costs and output prices rose modestly, driven by higher wages and raw material costs.
  • Firms passed some of these costs to customers through slight increases in selling prices.
• Business Sentiment:
  • Market optimism improved, with the business expectations index rising over 2 points from December.
  • Despite gains, sentiment remains below the historical average, with firms concerned about intense competition and global trade uncertainties.

US Postal Service suspends packages from China and Hong Kong until further notice

• Meanwhile, Chinese equities are weak

Postal Service will temporarily suspend only international package acceptance of inbound parcels from China and Hong Kong Posts until further notice.

The flow of letters and flats from China and Hong Kong will not be impacted. This is part of Trump’s tariff trade war on China.

The People’s Bank of China has set the CNY at its strongest since November 8 last year

• China is holding the prospect of devaluing the yen in reserve as part of its trade negotiation strategy
• 7.1693 is the lowest for USD/CNY (ie strongest for CNY) since November 8 last year

The additional US tariffs of 10% will apply to Hong Kong as well as mainland China

• US Customs and Border Protection notice

The additional US tariffs of 10% will apply to Hong Kong as well as mainland China – US Customs and Border Protection notice says

Australian (final) January Services PMI 51.2 (prior 50.8)

• The preliminary reading was 50.4

Australian (final) January Services PMI 51.2

• preliminary was 50.4
• prior 50.8

Final Composite is 51.1

• preliminary was 50.3
• prior 50.2

The report from S&P Global notes that Australia’s service sector is steadily gaining momentum, achieving a full year of monthly growth in business activity by January.

• Both activity and new orders increased at a quicker pace, and business confidence continued to improve. This supported a return to employment growth, though some companies remain hesitant to hire, partly due to cost concerns.
• At the same time, inflationary pressures kept rising in January. Businesses are likely hoping these cost pressures will ease before they begin to negatively impact demand.

New Zealand Q4 unemployment rate 5.1% (vs. 5.1% expected and 4.8% in Q3

• Jobs fell 0.1% q/q (vs. -0.2% expected)

New Zealand Q4 jobs data

More on this:

• employment in the quarter fell 0.1%, its biggest drop since 2009
• wage growth unchanged q/q

Analyst responses (info via Reuters):

ASB:

• softening labour market
• should prompt continued frontloading of monetary policy easing
• “The RBNZ will be wary of the wider economic, social, and labour market costs from keeping overly restrictive official cash rate settings for longer than is necessary,”

Westpac:

• some details were marginally stronger than the RBNZ had assumed
• not likely to change its thinking
• “The RBNZ has already stated that the base case for its policy review later this month will be a 50 basis point official cash rate cut, unless there was conclusive evidence otherwise”

New Zealand data – ANZ World Commodity Price Index +1.8% m/m in January (prior +0.1%)

• New Zealand data – the ANZ World Commodity Price Index

New Zealand data – the ANZ World Commodity Price Index for January 2025:

+1.8% m/m

• +0.1% prior

+14.6% y/y

• +15% prior

In NZD terms (the New Zealand dollar fell in January, pushing up the index in NZD terms)

+3.2% m/m

• prior +3.6%

+25.1% y/y

• prior +24.7%

As part of the report is ANZ’s look at shipping costs:

• Global shipping prices were mixed.
• The well-publicised but volatile Baltic Dry Index fell a whopping 31% during the month to its lowest level since early 2023.
• The China Containerized Index, which measures the cost of shipping into and out of China, was flat, as was the Harper Peterson Index.

Japan headline wages +4.8% y/y in December, real wages rise also

• Inflation adjusted wages rising

Japan Overall Labour Cash Earnings for December 2024 have recorded a solid +4.8% y/y

• expected was +3.6%, prior +3.0%

Year overtime Pay +1.3%y/y

• prior +1.4%

Wages adjusted for inflation are higher, +0.6% y/y, on bonus payments

• prior +0.5% (revised from -0.3%)
• rose for the second consecutive month

Japan January services PMI 53.0 (prior 50.9)

• Composite strongest growth since September

Japan January services PMI 53.0

• prior 50.9
• flash was 52.7
• grew for the third consecutive month

Composite PMI 51.1 in January

• flash 51.1
• strongest growth since September
• prior 50.5
• includes both manufacturing and services

Japan’s service sector grew, driven by strong Asian demand for exports, according to the Jibun Bank Service PMI.

BoJ likely to raise ratees higher than most expects says former official Hideo Hayakawa

• A former executive director at the Bank of Japan

Bloomberg is gated, but in brief:

• Hayakawa predicts the BoJ will raise interest rates beyond market expectations
• two more hikes possible in 2025
• sees the terminal rate around 1.5%, higher than most analysts but aligned with the IMF’s projection
• next increase could happen around July, with another possible by year-end
• rates likely won’t stop at 1%, as the BOJ’s neutral rate estimate ranges from 1% to 2.5%
• hikes depend on the yen’s performance, global monetary policy, and uncertainties from U.S. policies under Trump

BOJ official: BOJ sees underlying inflation gradually heading towards 2%

• Bank of Japan Policy Head Kazuhiro Masaki speaking in parliament

• BOJ sees underlying inflation gradually heading toward 2%
• Price rises post-pandemic have been driven mostly by cost-push factors, such as rising import costs from weak yen
• Expect cost-push inflation pressure to gradually dissipate ahead
• Services prices rising moderately
• BOJ will keep raising interest rates if underlying inflation accelerates towards 2% target as projected
• Underlying inflation is accelerating towards 2% but is still below that level now
• BOJ must support economic activity with accommodative monetary conditions

Japan’s Akazawa says ambitious goal to boost minimum wage, eradicate deflationary mindset

• Japan economy minister Akazawa

• Govt’s focus is to eradicate Japan’s deflationary mindset
• With ambitious goal to boost minimum wages, govt is trying to eradicate deflationary mindset

Crypto Market Pulse

Bitcoin Hovers at $97,000 as David Sacks Considers a US Bitcoin Reserve

Bitcoin’s price continues to fluctuate, hovering around $97,000 on Wednesday, after suffering a 3.5% drop the previous day. Despite ongoing market volatility, President Trump’s crypto czar, David Sacks, revealed that the administration is actively evaluating the feasibility of a Bitcoin Reserve, a move that could significantly impact the crypto landscape.

Bitcoin’s Struggle to Hold $100,000

Bitcoin faced a sharp pullback during the Asian trading session, briefly touching a low of $91,231 before bouncing back to close above $101,300 on Monday. However, the flagship cryptocurrency failed to sustain its position above the six-figure threshold, declining 3.52% on Tuesday.

While Trump’s administration is showing increasing support for digital assets, regulatory clarity and macro market conditions continue to weigh on Bitcoin’s momentum.

K33 Report Warns Against Leverage

A recent K33 report highlights a cautious stance among Bitcoin CME traders, advising investors to steer clear of leverage in February due to the market’s heightened volatility. Analysts suggest that defensive positioning will dominate trading strategies in the short term.

US Bitcoin Reserve: A Game-Changer?

At the digital asset press conference, David Sacks outlined multiple initiatives related to crypto regulation and stablecoins, with the potential establishment of a Bitcoin Reserve being a key highlight. While details remain scarce, such a move could signal a new era of institutional and governmental adoption for Bitcoin.

What’s Next for BTC?

As of now, Bitcoin trades at $97,000, struggling to reclaim its $100,000 milestone. With institutional sentiment mixed, investors are closely watching for further regulatory developments and Federal Reserve actions that could influence BTC’s next big move.

Will Dogecoin Outshine XRP? Canadian Firm Makes a Bold Move

As Bitcoin hovers just under the $100,000 milestone, two major altcoins—Dogecoin (DOGE) and XRP—find themselves in a downward trend, with DOGE slipping 2.43% and XRP shedding nearly 5% of its value. However, institutional interest in Dogecoin is heating up, positioning the meme coin as a potential frontrunner in the next altcoin season.

Dogecoin Gains Institutional Backing

In a significant move, Neptune Digital Assets, a publicly traded Canadian blockchain firm, has acquired 1 million DOGE tokens, worth nearly $270,000, as part of a strategic derivative purchase on December 27, 2024. This acquisition marks Neptune as the second publicly traded company to add Dogecoin to its holdings, following Spirit Blockchain.

In addition to its DOGE purchase, Neptune boosted its Bitcoin reserves by acquiring 20 BTC between January 26 and February 3, bringing its total holdings to 376 BTC (valued at over $37 million). The firm emphasized that Bitcoin remains its primary focus, but its entry into Dogecoin highlights growing institutional recognition of the meme coin’s potential.

The DOGE ETF Catalyst: A Game-Changer?

A major development on the horizon is the potential launch of a Spot Dogecoin ETF in the United States. Following the success of Bitcoin Spot ETFs, Bitwise, Osprey Funds, and Rex Shares have submitted applications for a Dogecoin ETF, a move that could legitimize DOGE as a serious investment asset and trigger a major price rally.

XRP Struggles Amid Bearish Sentiment

While DOGE sees institutional support, XRP faces technical weaknesses, with bearish indicators suggesting further decline. Analysts warn that XRP may continue to underperform, especially as altcoin season approaches, historically favoring more speculative assets like Dogecoin.

What’s Next?

At the time of writing, DOGE trades at $0.25618 with a market cap of $38.63 billion. With institutional adoption increasing and a Spot DOGE ETF in the works, Dogecoin could be gearing up for its next breakout—potentially leaving XRP in the dust.

The Day’s Takeaway

The Day’s Takeaway: What You Need to Know

Today’s market movements were defined by a recovery in equities, weakness in crypto, and strength in gold.

Stock Market: Major indices rebounded, with tech stocks driving gains despite early Alphabet-related weakness.
Crypto: Bitcoin struggles below $100K, but US Bitcoin Reserve talks signal long-term institutional interest. DOGE gains momentum, while XRP remains weak.
Gold: Hit a record high of $2,845 as investors sought safety amid trade tensions.
Silver: Struggled after strong US jobs data, reinforcing expectations of delayed Fed rate cuts.

Looking Ahead:

• Bitcoin remains volatile, but institutional adoption narratives continue growing.
• Dogecoin’s ETF push could be a turning point for meme coin legitimacy.
• Gold remains a key asset to watch amid trade and rate cut uncertainty.
• The Fed’s next move on inflation and employment data will dictate market direction.

Markets remain in a delicate balance, with macro risks and earnings trends shaping investor sentiment. Stay tuned for further economic updates and policy shifts that could impact stocks, crypto, and commodities alike.