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Indian shares have their worst week for over three months due to US tariff fears
Investors were rattled by renewed worries?over U.S. Tariffs, which led to a fall in Indian equity benchmarks for the fifth straight session. The Nifty 50 dropped 0.75%, to '25,683.3. ', while the Sensex slipped 0.72%, to 83576.24. Each index lost around 2.5% for the week. 15 of 16 major sectors declined during the week. Small-caps fell by 3.1%, while mid-caps dropped 2.6%. According to Republican Senator Lindsey Graham, U.S. president Donald Trump has supported a bipartisan measure targeting countries that do business with Russia. The bill would impose tariffs of up to 500% on imported goods. India is 'the second largest buyer of Russian crude oil after China. Amit Jain, cofounder of Ashika Global Family Office Services said that if such extreme tariffs were enacted the immediate impact would be volatility in sectors related to U.S. Trade, pressure on export competition, and renewed caution among foreign investors. He added that this would increase risk pricing in equities currencies, and commodities. Later in the day, the U.S. Supreme Court will likely rule on whether Trump's tariffs are legal. Reliance Industries, which has not received any Russian crude oil deliveries since October 2024 due to increased tariff uncertainty, saw its stock fall 7.4% this week. India's largest lender by private equity and the heaviest weighted stock HDFC Bank The quarterly business update raised concern over a slower growth in deposits. The?banks Index was down 1.5% this week. Clothing Retailer Jewellers lost 9.9% in the last week due to a continued slowdown in revenue growth in the December quarter. Sales grew by a strong 3.7%. Manappuram finance?fell 7.6% the day after it was reported that the central banks raised objections against Bain Capital?s plan to?buy a majority stake in the gold financier. Investors are focusing on the U.S. employment data that is scheduled to be released later today. This could have an impact on the Federal Reserve’s future rate decisions.
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Stocks surge ahead of US employment report and tariff ruling
Global stocks edged up on Friday, ahead of an important U.S. report. Investors also awaited the Supreme Court's ruling on President Donald Trump’s global tariffs which shocked markets last year. Geopolitical tensions around the world have boosted oil and defence stocks. Traders will continue to be concerned about developments in Venezuela, Iran, and Greenland. The U.S. Supreme Court's possible ruling on tariffs will dominate Friday's news. The reduction of tariffs may impact U.S. revenue, driving Treasury yields up and causing new waves in volatility. Kyle Rodda is a senior financial markets analyst with Capital.com. He said that the Supreme Court's ruling on Friday was the "real wildcard". He said that if the courts overturn U.S. Tariffs, this would boost market sentiment. "A constraint could be that the Trump administration will not 'roll over' even if tariffs are declared illegal. They may look for other ways to maintain levies." For the moment, traders are reluctant to bet on market events. Last week, the Stoxx 600 index in Europe was up around 0.4%. The major regional indices are in positive territory. The French CAC 40 is up around 0.6%. Fast Retailing 9983.T (the operator of Uniqlo) is the company that has boosted the Nikkei.N225 by 1.6% in Asia. S&P 500 (.SPX) ended Thursday flat, but the aerospace and defense index.SXPARO climbed to a record high. European defence stocks also hit a new all-time high. S&P futures EScv1 rose 0.1%, indicating a modest increase at the opening later. US JOBS REPORT DECK The December U.S. Jobs Report will also be a key topic of discussion, following a series of data releases on the labour market earlier in this week. "On the positive side, there's no sign of a recession on this labour market. That's a good thing. There is also no indication of a strong acceleration on the subdued front. Samy Chaar is chief economist at Lombard Odier. He said that this was consistent with an economy growing moderately. There's no sign of overheating or growth above potential. The JOLTS report on hirings and ADP's private sector payrolls released earlier this week showed that employment in the largest economy in the world is slowing down. We want to see the JOLTs, the ADP and the claims we received yesterday confirmed today. "We don't want an upward surprise in the unemployment rate, or job creation," Chaar stated. Currently, the markets expect two rate reductions from the Federal Reserve in this year. This expectation could be reduced if the monthly employment report is strong. A survey by economists estimates that nonfarm payrolls increased by 60,000 jobs in December after recovering by 64,000 jobs in November. In October, the economy lost 105,000 positions, which is the biggest drop in almost five years. Most of these jobs were taken by federal employees who deferred their buyouts. The yield on the benchmark 10-year U.S. notes US10YT=RR remained at 4,189%, after increasing 4.5 basis points in the previous day. The dollar index, which measures six currencies against the U.S., was hovering around a month-high. U.S. Treasury Secretary Scott Bessent stated on Thursday that he expects Trump to make a quick decision on who will replace Jerome Powell when the Fed Chair's term ends in May. Markets are expecting Trump to appoint someone dovish. The oil prices rose on Friday to their highest weekly level since late October. Investors were concerned about the situation in Venezuela, and also worried about supplies coming from Iraq, Iran and Russia. In a Friday social media post, Trump announced that he had cancelled the previously anticipated second wave of attacks against Venezuela due to its cooperation. Two sources said that foreign embassies are preparing for a visit next week by representatives of American and European oil companies. Brent futures LCOc1 fell 0.23% to $61.85 per barrel but are still on track for a gain of nearly 2% a week. U.S. West Texas Intermediate crude (WTI) CLc1 fell 0.16% to $57.68 per barrel. (Reporting from Sophie Kiderlin, London. Ankur Banerjee contributed additional reporting from Singapore. Editing was done by Shri Navaratnam and Amanda Cooper.
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China restricts rare earth exports after dual-use ban to Japanese companies, WSJ reports
The Wall Street Journal reported Thursday that China has restricted exports to Japanese firms of powerful magnets containing rare earths, and other products containing them, after Beijing banned the?exports to Japan of dual-use items. Journal: China's restrictions on rare earths are applicable to all Japanese industries, not just the defence industry. China's Commerce Ministry said Thursday that the export ban to Japan on dual-use products will only apply to military firms. He Yadong told reporters that "civilians will not be affected." China announced Tuesday that it would ban the export of dual-use products with possible military applications to Japan. The Chinese Foreign Ministry defended the prohibition as reasonable, legitimate and legal. The ministry responded to a question about the commitment of China to maintaining stability and security in global supply chains and industrial networks. The ministry responded to a request for comment. The Wall Street Journal reported on Tuesday that China has begun?restricting the exports of "heavy"rare earths as well as powerful magnets that contain them to Japanese companies?. Two exporters from China were cited. The Journal quoted another unnamed source familiar with Chinese government decision-making as saying that the review of export licence applications across Japanese industry had been halted, and did not target only Japanese defence companies. Dual-use items include?goods or software that can be used for both civil and military purposes. Some rare earth magnets are used to power motors found in car parts, such as speakers, side mirrors and oil pumps. Could not confirm immediately the Wall Street Journal's report. China's Commerce Ministry did not respond immediately to requests for comments on the Journal article. Beijing has criticized Sanae Takaichi, the Japanese prime minister for saying in November that an attack by China on Taiwan could threaten Japan's existence and trigger a military reaction. Beijing called this comment "provocative". China has a list of about 1,100 dual-use products and technologies for which manufacturers need a license to export overseas, regardless of the final user. (Reporting from Mihika Sharma, Bengaluru; Additional reporting from Liz Lee, Beijing; Editing done by Susan Fenton and Jane Merriman.)
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Gold recovers from index rebalancing losses, but remains steady ahead of US employment data
Investors weighed geopolitical factors against the ongoing rebalancing?commodity?indices. They also focused on the U.S. Non-farm Payrolls Report due later that day. As of 0848 GMT spot gold was down 0.2% to $4,465.96 an ounce, but still on course for a weekly gain of more than 2%. Bullion reached a record-high of $4,549.71 in December. U.S. gold futures for delivery in February rose 0.4% to $4477.70. Tim Waterer, KCM Trade’s chief market analyst, said that gold has recovered from the index rebalancing wobbles. Investors are keen to add more gold to their portfolios in light of recent increased geopolitical risks. After a week-long chase, the U.S. seizes a Venezuelan-linked oil tanker on Thursday. The country has also arrested and prosecuted Nicolas Maduro, now former President of Venezuela. The Russian military announced that it had fired its hypersonic Oreshnik rocket at a Ukrainian target on Friday. HSBC has said that gold prices could reach $5,000 per ounce by the first half 2026 due to rising geopolitical risk and debt. In a low interest rate environment, gold, which is considered to be a safe haven asset, tends also to perform well. Investors will be watching for the non-farm payrolls data, due at 1315 GMT. Economists expect modest job growth (60,000) and a slight decrease in unemployment to 4.5%. Waterer said that if we see a jobs report below 70,000 in the coming year, the Fed will continue to cut rates. This week, India saw a spike in physical gold prices. Meanwhile, dealers in China raised premiums above international rates to rekindle retail interest after the holiday period. Silver spot also rose 0.6%, to $77.37 an ounce. It had reached a record high of $83.62 per ounce on December 29. The white metal was on course to register a weekly increase of more than 6%. The spot platinum price was up by 0.4% to $2,276.15 following a record high of $2,478.50 on Monday. Palladium rose 3.1% to $1,840.26 per ounce. Both metals are expected to gain weekly as well. Ishaan Nandy reported; Sumana Nandy and Ronojoy Mazumdar edited. Harikrishnan Nair was the editor.
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M&A boom unlikely to be disrupted by Japan's increased oversight of foreign investment
Experts say that the Japanese plan to grant authorities the authority to order foreign investors retroactively to divest acquisitions aims to protect major companies and supply chains. However, it is unlikely to curb increased M&A activity, they add. Japan proposed Wednesday amendments to its foreign investment screening laws that would give authorities the option to force foreigners into selling investments they deem to be a risk to national or economic security. The proposals are part of a push by the Japanese government to reduce risks associated with a?an?inflow?of foreign money into Japan's economy and to maintain control over its key supply chains. Currently, foreign investors who wish to purchase stakes in Japanese firms outside sectors critical to national or economic security do not have to notify the government beforehand, allowing officials no opportunity to intervene. Investors who are classified as high-risk are targeted by the new powers, which include those who might work with foreign powers in order to gather intelligence. Since 2017, Chinese companies are required to work with the country's spy agencies. The period in Japan during which transactions may be reviewed retroactively is around five years. Nicholas Benes, founder of Board Director Training Institute of Japan, said that Japan would like to prevent Chinese companies from purchasing top-quality Japanese technology and companies. A government source stated that the proposed changes include stricter requirements on indirect investments made by foreign parents in Japanese companies. This is to bring Japan up to par with its allies, such as the U.S.A, Britain, and Germany, in terms of security oversight. According to documents issued by the Ministry of Finance, these countries can order divestitures of stakes retroactively. Benes, a corporate governance expert, said that "in principle, this doesn't stand out as a sore finger because it is similar to other countries' practices." FIRST MAJOR OVERHAUL EVER SINCE?2019 The first major revision to Japan's foreign investment screening laws since 2019 has been made. This is because the threshold for reviewing stock purchases by foreign entities, which was previously 10%, has now been lowered to just 1%. The Japanese government will have to review roughly 10 times as many pre-transaction documents than any other country, even though the revisions will limit the number of companies that can be reviewed. Yohsuke Higashi, a partner and M&A attorney at Mori Hamada and Matsumoto said that the scope of requirements for prior filing should be significantly narrowed in order to strike a balanced, as post-closing interventions will be permitted and requirements will be introduced for indirect investment. He said that Japan should also?invest more resources in enforcing conditions for risk mitigation attached to approvals, and catching risky transaction through post-closing intervention. The review team was overloaded. I understand the need to prioritize more important cases. Another lawyer who worked on inbound investments declined to be named as they weren't allowed to speak publicly. Foreign investment rules were changed in response to corporate governance reforms that the Japanese government implemented. These reforms sparked an increased interest from overseas investors and helped the stock market reach record highs. According to LSEG, inbound M&A activity jumped 45% compared to a year ago to $33 billion. Experts say that the proposed changes will not have a significant impact on foreign investment. Higashi stated that the changes will not discourage M&A aimed at Japanese companies or other direct investments in Japan. Yuki Kanemoto is a senior researcher with the Daiwa Institute of Research. She also predicts little impact. He said that the relatively low number of cases that were formally rejected could lead some to believe Japan was more permissive at the moment than Europe or the United States. "But I suspect that there are a number of cases where an effective rejection was made behind the scenes." Japan has only rejected one deal in 2008 under its Foreign Investment Screening Law - the attempt to purchase Electric Power Development by London's Children's Investment Fund. (Reporting and editing by Sam Nussey, Thomas Derpinghaus, Anton Bridge)
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Sources say that China has imposed import quotas on crude oil to ex-Sinochem refining plants
Two trading sources familiar with the matter confirmed on Friday that China has granted crude oil import quotas to three'refineries' in Shandong Province, which were sold last year to independent operators by'state-run Sinochem Group. One source said that the quotas were given to Zhenghe Group, Huaxing Petrochemical and Shandong Changyi Petrochemical. The total annual volume was around 12 million metric tons (240 000 barrels per day). The quotas were not clear whether they covered the "full" annual amount or only a portion of it. Changyi, Zhenghe and Huaxing are now controlled by Shandong Qicheng Petrochemical. The new quotas require that the three independent operators purchase crude oil on their own, instead of purchasing through Sinochem. The Chinese Ministry of Commerce - responsible for the issuance of quotas - did not respond immediately to a request for comment. China issued a new batch of crude oil import quotas for 2026 to the majority of its independent refiners at the end of 2025. Volumes?traders estimate to be 70% of their annual allowances, including the first smaller issue. (Reporting and editing by Michael Perry; Additional reporting by Sam Li)
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Copper and Nickel poised to finish the week higher despite a sell-off
Nickel and copper are expected to finish the week higher, due to supply concerns, despite recent selling by investors who booked profits following a rally. The Shanghai Futures Exchange's most active copper contract closed?daytime trades down 0.45% to 101,410 Yuan ($14.526.16) per metric tonne, finishing the week with a gain of 1.60%. The benchmark copper for three months on the London Metal Exchange rebounded however by 1.20%, reaching $12,873 per ton. This represents a 3.24% gain in a week. This week, Shanghai copper reached a new record of 105,500 Yuan per ton. London copper topped out at $13,386.50. Profit-taking is largely responsible for the copper's decline since Wednesday. Prices were supported by mine disruptions, and tight availability of refined copper?outside of the U.S. amid uncertainty over tariffs. Global miners also explored ways to increase their exposure to copper, a metal that?is expected to benefit from the global energy transition and electricification. Glencore and Rio Tinto have reopened merger talks that could create the largest mining company in the world. The announcement follows the nearly completed merger between Anglo American Resources and Teck Resources to create a major copper producer. Shanghai's nickel, the most traded in Shanghai, closed at 139,090 Yuan per ton. The week ended with a gain of 2.36%. This week, it reached its highest level since June 2024 of 149.600 yuan per ton. The London benchmark nickel rose 1.87%, to $17 475 per ton. It is expected to gain 3.86% a week after reaching its highest level since June 2024, at $18,800 per ton. The loss was reduced from the 'Thursday selloff' after Indonesia's Mining Ministry did not give any further details about its plan to reduce nickel mining quotas in 2026. In a Thursday press conference, the mining minister reiterated that quotas will be adjusted in order to meet local smelter demand. Other SHFE base metals saw a rise of 1.42% in aluminum, a drop of 0.31% in zinc, a decline of 0.94% for lead, and tin fell by 0.08%. Aluminium, zinc, lead, and tin all rose in price on the LME.
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ASIA GOLD-Higher prices in India are affecting retail demand; China's gold premiums are widening
This week, India's gold prices increased further. In China, dealers raised premiums over international rates to rekindle retail interest after the holidays. Indian dealers have charged a premium this week Up to $6 per ounce above official domestic prices, inclusive of 6% import duties and 3% sales taxes. This is below the last week's up to $15 premium. On?the day the domestic gold price was trading at around 138,000 rupees for 10 grams, which is not far off from the record high of 140,465 rupees. The rising prices are affecting the jewellery market. "Retail buyers are delaying purchases," Ashok Jain, owner of Mumbai-based wholesaler Chenaji Narsinghji said. A Mumbai-based dealer of bullion with a private banking company said that jewellers reported?very low footfall' and "only marginal demand" for coins and bars. Bullion traded in top consumer China at a premium of up to $21 per ounce over the global benchmark spot price This week. This compares to the $3 per ounce premium charged last week. Bernard Sin, Regional Director, Greater China at MKS PAMP, said: "Physical Gold demand in Asia is showing renewed strength, especially in China and Hong Kong. This is due to tighter supply and retail interest after the holiday season." The Chinese central bank’s "accumulation" continues to support the market and reinforce the perception that Chinese demand is both cyclical and structural. In Singapore Gold was sold for a premium of between $1.20 and $2.50 per ounce. In Hong Kong, gold Bullion is traded in Japan at a premium of $2 to $3. Discounts of up to $6 or a premium of $1 are available. The benchmark spot gold price for international markets fell on the day but was headed to a weekly increase of over 3%. "We estimate jewelry?demand dropped by double-digits in 2025, and we suspect that there?will only be a tepid recover at best in the years 2026 and 2027," HSBC's James Steel stated. He added that "with prices over $4,000/oz the demand has further eroded." Even a significant retracement of prices may not be enough to stimulate significantly more demand, as the trend towards lighter items and substitution to platinum jewellery is likely to continue. $1 = 90,1250 Indian Rupees (Reporting from Ishaan Jadhav and Rajendra Jadhav respectively in Bengaluru and Mumbai; Additional reporting provided by Swati verma; Editing done by Sumana Niandy).
US CPC predicts La Nina transition in early 2026 with 75% probability
The U.S. Climate Prediction Center (CPC), which is based in the United States, said that La Nina persists, and there's a 75% probability of a shift to ENSO neutral conditions between January-March.
"Atmospheric anomalies remained consistent with La Nina across the tropical Pacific Ocean." The U.S. forecaster said that for most of the month easterly winds anomalies remained over the central equatorial Pacific and upper-level westerly winds continued across the equatorial Pacific.
Why it's important
La Nina is a part of El Nino and the Southern Oscillation, which affects the water temperatures in central and eastern Pacific Ocean.
La Nina causes cooler water temperatures which can increase the risk of flooding and droughts, which could impact crops. When ENSO neutral, water temperature stays around average, leading to more consistent weather and possibly better crop yields.
KEY QUOTES
The current La Nina has weakened and ENSO is expected to return neutral in either February or March. El Nino conditions could develop later in the summer in the Northern Hemisphere, according to AccuWeather's lead international forecaster, Jason Nicholls.
Donald Keeney is an agricultural meteorologist at Vaisala Weather. He said that "the return to neutral will most likely result in wetter conditions for winter wheat in Argentina." Keeney said that it would also lead to wetter conditions on the southern and central Plains of the U.S. in the later summer. This would improve the outlook for the late growth in hard red winter wheat, corn, and soybeans. Matthew Biggin is a senior analyst with BMI, an Fitch Solutions company. "While there are isolated individual market challenges, our expectation of a weak La Nina will limit the impacts,"? he said.
CONTEXT Indonesian climate official Ardhasena. Sopaheluwakan stated that a La Nina weather pattern which is known to bring more rain, would be weaker by 2026. It should end at the end of first quarter. Two major grain exchanges in Argentina said that heavy rainfall is forecast for Argentina's agricultural belt, which will increase moisture levels over the next few days. This will benefit soy and corn at critical stages of development.
The Australian Bureau of Meteorology reported on Tuesday that atmospheric indicators such as trade winds, pressure, and cloud patterns in the central equatorial Pacific have consistently shown La Nina, albeit in a relatively weak form, since mid-to late September.
The Bureau forecasts that temperatures in the tropical Pacific Ocean will likely remain at La Nina level until late summer, before returning to neutral. Reporting by Pablo Sinha from Bengaluru
(source: Reuters)