Morning Wrap (04.02.2025)

Global markets declined after Trump's 10% tariffs on Chinese imports took effect, with China immediately announcing retaliatory measures including 15% tariffs on US coal and LNG, and 10% on crude oil and other goods. S&P 500 futures fell 0.8%, Nasdaq 100 futures dropped 0.9%, and Dow futures declined 0.6%.

China unveiled additional countermeasures including export controls on critical metals (tungsten, tellurium, ruthenium, molybdenum), launched an antitrust probe into Google, and added PVH Corp and Illumina to its unreliable entities list. Chinese markets remained closed for Lunar New Year, while Hong Kong's Hang Seng rose 1.8% on tech gains.

Trump delayed planned 25% tariffs on Canada and Mexico by 30 days after securing agreements on border enforcement and drug trafficking. Both countries committed to enhanced border security measures, with Canada focusing on organized crime and Mexico deploying 10,000 National Guard members.

Oil prices retreated with Brent falling 0.7% to $75.09 and WTI dropping 1.2% to $71.85, pressured by the temporary resolution with Canada (US's largest oil supplier) and OPEC+'s plans to increase production from April.

Trump announced plans to create a US sovereign wealth fund within 90 days, suggesting it could potentially acquire TikTok. Treasury Secretary Bessent indicated the fund would "monetize the asset side of the US balance sheet" though specific funding mechanisms remain unclear.

President Donald Trump suggested that Ukraine should grant access to its rare earth resources in exchange for U.S. defense aid and urged European allies to increase their financial support for Ukraine.

OpenAI CEO Sam Altman announced partnerships with South Korea's Kakao and Japan's SoftBank for AI product development. Altman highlighted Korean companies' potential role in the US Stargate data center project and is scheduled to meet with Samsung and SK Group leaders.

Palantir shares surged 23% after hours as Q4 revenue jumped 36% to $827.5 million, with the company forecasting 2025 revenue of $3.75 billion, above analyst estimates. US government revenue rose 45% to $343 million, while commercial revenue gained 64% to $214 million.

Bank of Japan Governor Ueda reaffirmed the central bank's commitment to achieving sustainable 2% inflation, clarifying their focus on underlying inflation trends while acknowledging challenges in measuring one-off factors.

Saudi Arabia's non-oil PMI rose to 60.5 in January, its highest level since September 2014, driven by strong new orders and business activity. Egypt's non-oil private sector expanded to 50.7, marking its best performance in over four years.

Asian currencies showed modest recovery after Trump's Canada/Mexico tariff delay, though gains were limited by uncertainty over China tariffs. The dollar index steadied after overnight losses, with markets awaiting Friday's US nonfarm payrolls data.