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Asia stocks decline; dollar and gold firm as tariff threat lingers
Asian shares were impacted by the return from holiday of South Korean tech stocks, but the relatively high earnings of U.S. technology giants maintained risk sentiment, while tariff fears pushed up the dollar and gold. Investors also considered central bank actions in this week. The Federal Reserve kept rates unchanged on Wednesday in line with expectations. Fed Chair Jerome Powell said that there was no rush to reduce them again. On the other hand, the European Central Bank cut interest rates on Friday. South Korea's return to the Asian spotlight was a big deal, as markets in China, Hong Kong, and Taiwan were still closed due to the Lunar New Year. The benchmark KOSPI fell 1% after China's DeepSeek announced earlier this week that it had developed cheap AI models, which triggered a global stock market crash. Samsung Electronics shares fell 3% after the company announced a limited growth in first-quarter earnings on Friday. SK Hynix shares, a major supplier to Nvidia also dropped 8%. The MSCI broadest Asia-Pacific share index outside Japan was down by 0.3%, but is still on track to gain 1% this month and end its three-month losing streak. Nasdaq Futures rose 0.6% during Asian hours, after Apple executives predicted relatively strong growth in sales. This is a sign that the company will recover as it introduces artificial intelligence to its iPhones. Investors weighed in the implications of the low-cost Chinese AI models, and shares of high profile tech names like Nvidia Broadcom, Oracle, and Broadcom were all hammered. Microsoft and Meta CEOs defended massive spending by saying that it was essential to stay competitive in this new field. Vasu Menon is the managing director for investment strategy at OCBC. He said that the DeepSeek project may cause some uncertainty in the short-term and pressure the valuations of AI companies, but will not change the outlook on the medium- to long-term. "The need for an increased AI infrastructure is likely to continue, and any additional computing capacity will be absorbed by the increased AI demand that could grow substantially in the coming year." THREAT OF TARIFF The data released on Thursday indicated that the U.S. economy slowed down in the fourth-quarter, but was still robust enough to allow investors to expect that the Fed will only lower rates gradually this year. LSEG data shows that traders are comfortable with the idea of two rates cuts this year. The focus of investors will now shift to the U.S. Personal Consumption Expenditures (PCE) Price Index Report, the Fed's preferred gauge of inflation. This report is due later that day. The Fed's outlook is still at risk from President Donald Trump's policies. New tariffs are likely to be imposed on Canada, Mexico, and perhaps China this Saturday. The Mexican peso remained cautious ahead of Trump's deadline on Saturday to impose 25% tariffs for imports from Mexico or Canada. The yen in Japan was last slightly stronger at 154.19 to the dollar. It has already gained more than 1% this week. It is expected to rise by 1.9% in January, marking its best performance since 2007. The BOJ is expected to increase rates this year. Ryozo Himino, the deputy governor of the central bank, said on Thursday that they will do so if prices and the economy continue to move in the direction predicted by the bank. Gold rose to record levels of $2,799.71 per ounce in commodities. It was also on track for a 6.5% increase in January. This would be its best monthly performance since March. Early Asian trading on Friday saw oil prices rise as investors assessed the possibility of U.S. Tariffs on Canadian crude imports and Mexican crude exports, which could come into effect this weekend. Brent crude futures were 0.4% higher, at $77.21 per barrel. U.S. crude oil futures increased 0.5% to $73.13 per barrel.
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Oil prices continue to fall despite US tariff threats
The oil prices increased on Friday, as the markets weighed the threat of tariffs that U.S. president Donald Trump could impose on Mexico and Canada - the two biggest crude exporters into the U.S. - this weekend. Brent crude futures, which expire on Friday, rose 38 cents to $77.25 per barrel at 0110 GMT. The April contract, which is more active, was up 34 cents at $76.23 per barrel. U.S. West Texas Intermediate crude oil (WTI), which is also known as WTI, gained 49 cents and reached $73.22. Brent will fall by 1.6% this week while WTI is down 2%. Brent will gain 3.6% in January, the best month since June. WTI is expected to rise 2%. Trump has threatened to impose 25% tariffs on Canadian and Mexican exports if they do not stop shipments of fentanyl through U.S. border. Uncertainty exists as to whether the tariffs will include crude oil. Trump announced on Thursday that he will decide soon whether or not to exclude Canadian oil and Mexican oil imports. Daniel Hynes, an analyst at ANZ Bank, said that crude oil prices fluctuated due to investors' concern about the possibility of US tariffs and a flurry executive orders and announcements. According to the Energy Information Administration (the statistical arm of Department of Energy), in 2023, Canada exported 3.9 millions barrels of crude per day to the U.S. out of 6.5million bpd of imports. Mexico exported 733,000 barrels per daily. Hynes stated that the increased risk of disruptions in supply due to the foreign policy of the Trump administration have kept prices high. Hynes said that sanctions on Russia and the stopping of purchases of Venezuelan crude oil, as well as maximum pressure against Iran would increase the geopolitical premium on oil. He said that the oil demand could be exacerbated by the replenishment of the Strategic Petroleum Reserve.
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Andy Home: Uranium revival brings it back to the forefront of critical issues
Is Uranium a Critical Mineral? The U.S. Geological Survey has decided that it is not a critical mineral. It was removed from the list of critical minerals in 2022 because it wasn't a "fuel-mineral". Donald Trump, the president of the United States, wants you to reconsider. In one of Trump's "Unleashing America's Energy" directives, the Secretary of Interior is required to instruct the Director of the USGS "to consider updating the survey list of critical mineral including the possibility of including uranium." Included on the list, domestic uranium project funding and approvals would be expedited. It is curious that uranium slipped through the legal loophole in the Energy Act of 2020 which states only "non-fuel minerals" can be classified as critical minerals. Uranium checks off many criticality boxes. Uranium is experiencing a dramatic increase in demand. The global supply is highly concentrated, and the United States imports almost all of its uranium. These changing dynamics are reflected in the uranium prices. The frothy rally of last year to a 16-year peak of $106 per lb is over. At $71 per lb today, the price of uranium remains higher than it was in any decade following the Fukushima nuclear disaster in Japan in 2011. NUCLEAR COMBAT Fukushima forced many countries to reconsider the role nuclear energy plays in their energy mix, but the threat from global warming has brought the nuclear power back into the spotlight. This affirmation was made at the COP28 Summit in December 2023 when more than twenty countries released the "Declaration to Triple Nuclear Power". The official recognition was that "nuclear energy plays a key role in achieving net-zero global greenhouse gas emissions by the year 2050, and maintaining the 1.5 degree goal within reach." Trump's administration may not be impressed by such green credentials, but Republicans see nuclear energy as an important component of national defense, which is why it has bipartisan support, even if for different reasons. The big tech companies are also eager to find more power for their data centers. Microsoft signed an agreement with Constellation Energy to help revive a unit at the Three Mile Island Nuclear Plant in Pennsylvania in September. Re-embrace nuclear power is an international trend. According to the International Energy Agency, the generation from nearly 420 nuclear reactors around the world is set to reach new levels in 2025. The IEA reported that 63 reactors were currently being built, which is the most since 1990. Over 60 reactors' lifetimes will also be extended. SHORTAGE OF SUPPLIES As nuclear power is on the rise, the world will need more uranium. The supply of uranium is not keeping up with demand. According to the IEA, a decade of low oil prices has had a negative impact on production, especially in the United States. Production fell from nearly five million lb per year in 2014 to only 21,000 lb by 2021. The global uranium industry is heavily concentrated. According to the World Nuclear Association, Kazakhstan, Canada, and Australia will account for two-thirds or more of global production in 2022. One of the factors that triggered the price spike in January 2024 was the warning by Kazatomprom of Kazakhstan, the largest producer of sulphuric acids, that it may not be able to meet its production targets because of a lack of sulphuric. Political stress and market stress are often combined. The United States wants to reduce its dependency on Russia in terms of enriched uranium. In 2023, Russian material will account for 27% of enriched uranium supplies to U.S. commercial nuclear reactors. The Joe Biden Administration banned Russian imports. However, there were waivers until 2027. Russia responded by placing restrictions on shipments into the United States. Trump's threats to impose tariffs against Canada, the biggest supplier of uranium for the U.S. Market, further complicates the situation. Going Critical After a decade of hibernation, the uranium markets are re-energized. Last year's price surge was driven by speculative frenzy, with institutional investors like Goldman Sachs as well as retail investment vehicles like Sprott Physical Uranium Trust following the rally. The uranium prices remain historically high. The market has priced in a shortfall of supply relative to the demand from an expanding global fleet nuclear reactors. Many of these projects use leach technology to help fill the gap. The difference between a mineral that is critical and one called a "fuel-mineral" which is becoming increasingly critical will determine how quickly they can activate. The author is a columnist at
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New Zealand aims to reduce emissions by 51-55% by 2035
New Zealand announced late Thursday night that the country will commit to reducing emissions from 2005 levels by 51-55% by 2035. This commitment is part and parcel of the country's Paris Agreement commitment. The initial commitment was to reduce emissions 50% by 2030, and it is part of its pledge to reach net zero emissions by 2050. Climate Change Minister Simon Watts stated in a press release that "we have worked hard to establish a target which is both achievable and ambitious, reinforcing the commitment we feel to the Paris Agreement as well as global climate action." "Meeting the target will mean that we are doing our fair part towards reducing climate change," added he. Watts stated that New Zealand is on track to meet its obligations as early as 2044. Climate Commission, an independent but government-funded expert, called on New Zealand in December to reduce emissions even further than it had planned. Many comparable countries already have higher targets than New Zealand, and the evidence indicates that global action will not be enough to limit global warming below 1.5 degrees Celsius. (Reporting and editing by David Gregorio; Lucy Craymer)
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Infinity Natural Resources, backed by Pearl Energy, raises $265 mln through an IPO in the US
Infinity Natural Resources, a private equity-backed oil-and-natural-gas producer in the U.S. raised $265M in its initial public offer on Thursday. This is the latest energy company to sell shares for the first time in New York. The Morgantown, West Virginia based company was valued at $1.18 billion in the IPO. The company sold 13.5 millions shares for $20 within the range of $18 to $21. The energy industry has been a key theme on the IPO market this year, as companies look to capitalize on investor fervor for the sector. Infinity was founded in 2017 and produces oil, gas, and liquid natural gas. Its operations are located in the Appalachian Basin in the northeastern United States. Infinity goes public after its revenue has more than doubled in the first nine month of 2024. The company's production volume grew as a result of wells it acquired in October from Utica Resources Ventures & PEO Ohio for $279m. Venture Global, a LNG exporter and Flowco, a private equity-backed artificial lifting firm, both went public earlier this month in New York. Other energy-related IPO candidates include drilling equipment and marine transportation services provider HMH Holding. Infinity, which tapped fourteen banks for the IPO is expected to start trading on the New York Stock Exchange on Friday under the symbol "INR". Citigroup, Raymond James, and RBC Capital Markets led the underwriters of the offering. The proceeds of the IPO will be used for Infinity to pay off its outstanding debt as well as other purposes. Pearl and NGP together will hold a significant majority of Infinity’s common stock, and therefore voting power, after the offering. (Reporting from Arasu Kanagi Basil and Jaiveer S. Shekhawat, Bengaluru. Editing by Maju Sam)
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Japan, a country with limited resources, was bracing itself for a surge in AI energy. DeepSeek increased the stakes.
The rise of Chinese startup DeepSeek, which has shocked the world by upending conventional wisdom about the future energy demands of the AI sector, comes just weeks after Japan announced details of its landmark energy plan designed in part to keep pace with the expected AI surge. Tokyo only recently re-evaluated its long-held predictions that its electricity consumption would decline with the ageing of its population and began to account for increased AI-driven usage by data centres and chip makers. The government released a new document in late December. A draft The basic energy plan of the government, which is a major document that's reviewed every three years, projected an increase in electricity production between 10-20% b 2040, and cited these factors. Analysts say that while Tokyo is unlikely to rush to revise its forecasts, DeepSeek models' apparent leaner designs have triggered an extensive rethinking of AI energy requirements. The world's resource-poorest major economy, they argue, would be remiss if it ignored this. Andrew DeWit is a professor at Rikkyo's School of Economic Policy Studies, Tokyo. DeepSeek launched last week a free AI Assistant that, according to the company, uses less data and costs a fraction of what other services do. It had surpassed its U.S. competitor ChatGPT by Monday in the number of downloads on Apple's App store, which triggered a selloff across tech stocks. Investors weighed DeepSeek models that appeared to be more energy efficient, and their stock prices fell. As analysts analyze DeepSeek's impact, a new view is emerging: its success could lower the entry barrier in a sector dominated largely by Silicon Valley giants. It may also catalyze a higher demand for electricity from new AI-based entrants. It is a serious problem for Japan. The country produces only 13% of the energy it needs domestically, the second-lowest ratio among all 38 OECD nations, behind only Luxembourg. If AI is cheaper to develop than expected, it will accelerate mass adoption rather than slowing. It would actually increase the demand for power in the country, said Yuriy Huber, CEO of K.K. Yuri Group is an energy consulting and research firm based in Tokyo. The Japanese officials took their time in adjusting power demand estimates, even though AI boom was evident two years ago. He said that he expected them to closely monitor the new developments. The Trade Ministry, which is responsible for the long-term planning of energy in the country, did not respond immediately to a comment request. Unnamed senior officials at the ministry said that despite the impressive nature of DeepSeek, it did not improve existing systems. He thought the markets had overreacted. Tepco, Japan’s largest power company by revenue, said that it closely monitored DeepSeek’s potential impact on electricity demand but had yet to assess the full effects. 'BITTER LEARNING' Grid monitors in Japan have predicted for years that future electricity demand will decline due to energy-efficient equipment adoption and a shrinking populace. In 2024 it revised its outlook, reflecting an increase in overall demand, driven primarily by a new 5,14 million kWh power demand expected from data centres and chips plants by 2034. The government has also stated that AI-related energy requirements are a reason for restarting nuclear reactors. This is a sensitive topic in a nation that experienced one of the worst nuclear disasters in the world when the Fukushima nuclear plant was crippled in 2011 by an earthquake and tsunami. Mika Ohbayashi of the Renewable Energy Institute, Tokyo, stated that DeepSeek was "clear evidence" that AI could become more efficient, and require less power. She criticised Japanese officials for linking AI energy to nuclear power and said that the government should instead do more to promote renewable energy. Analysts say that DeepSeek technology must be thoroughly tested to determine if it will lead to a future with more or less AI energy demand. DeWit from Rikkyo university said that Japan had made mistakes in its energy technology preparations in the past. He cited the years leading up to the burst of its economic bubble in the late 1980s. "Japan, at the time, was the leader in the chip market. They thought they would be number one. So they developed the power system. As the bubble burst in the 1990s, the power demand didn't materialize. "They have learned bitter lessons." "Policy makers should take this very seriously," he said. (Reporting and editing by Kim Coghill; Additional reporting and reporting by Tim Kelly, Yuka Obayashi and John Geddie)
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Trump announces that the tariffs imposed on Canada and Mexico this Saturday may not include oil
Donald Trump, the U.S. president, said on Thursday that he will decide soon whether or not to exempt Canadian and Mexican oil from the 25% tariffs he had promised to impose Saturday on their products. "We might or might not." Trump stated that he will make a decision about imposing tariffs on Canadian or Mexican oil "probably tonight." Trump said that the decision would be based in part on price and whether or not both countries "treat" him properly. Trump has set Saturday as the deadline for imposing 25% tariffs on imported goods from Mexico and Canada in order to pressure the two biggest U.S. trading partner to take action and stop illegal migrants and shipments fentanyl crossing their border into the U.S. Trump said on Thursday that the North American tariffs would be imposed for "a number of different reasons," and that the tariff level "may, or may not, rise over time." Trump said that he is still considering new tariffs for Chinese goods due to its role in the fentanyl traffic. Trump has threatened to impose a 10% tariff on all Chinese products, after imposing punitive duties on $370 billion of Chinese imports in his first term. Trump said that he was also considering a solution for China, because it is sending fentanyl to our country. This has caused us hundreds of thousand of deaths. China will also pay a tariff as retaliation and we are in the process of doing this. "We will decide what the solution is, but China must stop sending fentanyl to our country to kill our people." Beijing has called for Washington to take measures to curb drug demand. Mexico's Economy Ministry declined to comment on Trump's most recent remarks. Justin Trudeau's office in Canada was not available to comment. Reporting by Steve Holland and Brendan O'Boyle; Writing by David Lawder, Jason Lange and Caitlin Babington; Editing and proofreading by Caitlin Babington and Deepa Babyington
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Cerruti, Northvolt's CEO and co-founder of the North American division, steps down.
Northvolt, a Swedish manufacturer of electric vehicle batteries, announced on Thursday that co-founder Paolo Cerruti would step down as Chief Executive Officer of its North American Division. Karen Chang, who played a major role in the Quebec-based battery megafactory project, Six, will be the interim CEO during the transition period. The statement stated that Cerruti would retain his position as chairman of Northvolt Six's board. He will also continue to be involved in its development. The move comes just one day after co-founder and CEO Peter Carlsson announced his resignation in November, a few days after the company filed for Chapter 11 bankruptcy in the United States. The two founders, who worked together at Tesla in 2015 in the supply chain and operations department, founded the Swedish company on October 16, 2016 with the aim of creating a sustainable European battery industry. Northvolt stated in its bankruptcy filing that it did not include its Canadian and German operations and will continue to progress. The company initially stated that the Canadian plant will begin operating in 2026. However, it has now said that the timeline is longer. In November, it was reported that Canada no longer plans to invest after the federal government and the Quebec province promised to contribute $1 billion each towards the first phase. In the past week, the company has sold its stake in a joint venture it had with Volvo Cars. The amount was not disclosed. It also said that they will be exploring possible collaborations in North America. Northvolt asked over 100 shareholders to contribute $1.29 billion in the next two year to help it restore its business. (Reporting and editing by Alan Barona; Urvi Dugar)
Gold reaches record highs amid Trump tariff uncertainty
Gold prices have reached a new record high due to the geopolitical uncertainty and concern over global economic growth in light of U.S. president Donald Trump's proposed tariffs. This has once again brought $3,000 as a key threshold on investors' radar.
Gold spot reached a record-high of $2,798.40 per troy ounce, kicking off 2025 with renewed vigor after recording its best annual performance since 2010.
Phillip Streible is the chief market strategist of Blue Line Futures. He said that there are concerns about the economic growth being affected by the policies and tariffs the current administration wants to implement.
When you have higher inflation and slower growth, then stagflation is the dominant economic theme. In that environment, gold tends to perform very well.
Trump's tariffs plans are perceived by many as inflationary, and have the potential to spark trade wars. This is driving up demand for safe-haven bullion because it has traditionally been seen as a hedge from price pressures and political uncertainty.
Bob Haberkorn is a senior market analyst at RJO Futures. He said, "I see gold trying to reach that $2,900 mark at some point in the first quarter. After we breach that level, we'll be setting new levels."
Gold could eventually trade above $3,000 at some point in this year.
The US Market
The U.S. Gold Futures are trading at a higher price than the spot price since several months. On Thursday, they increased the spread.
As a result of these fears, 12.9 millions troy ounces gold were delivered into COMEX approved warehouses
Deliveries came from London and Switzerland, among other major gold trading hubs.
The London Bullion Market Association announced on Thursday that they were monitoring the situation, and in contact with CME Group as well as U.S. authorities.
The London Gold Market stocks and liquidity are strong, with a daily average trade volume of 47.1 million ounces since January's start.
Gold and the US Rate Expectations
The Federal Reserve's rate cutting cycle, the demand for safe havens, and central bank purchases boosted gold to multiple records last year.
In its meeting in January, the Fed kept benchmark interest rate unchanged, as was widely expected. This follows a 0.5 basis point easing in 2024. This is the first pause in the Fed's easing cycle since September.
In an environment of low interest rates, non-yielding gold tends to flourish.
The People's Bank of China, which is a central bank in China, has been a major driver of the gold demand. It added bullion to their reserves despite price increases over the last year - as part of what analysts believe to be the PBOC's broader strategic goal to diversify reserves.
Analysts believe that the central bank of China could continue to purchase gold in order to support prices further over the next few months.
(source: Reuters)