US Futures Rise With NVDA At New All-Time High

US equity futures are up small this morning as yields continue to rise (SPX +17bps; NDX +5bps; US 10 year yield higher at 4.64%). As a reminder equities typically struggle when rates rise by 2 standard deviations in a given month, which in today’s terms is ~60bps. Stocks remain wobbly after yesterday's performance which saw big tech \the standout, vs the Dow and S&P equal weight down on the day. Nvidia rose 1.9% in premarket trading to a new record high after CEO Jensen Huang announced a raft of new chips, software and services. Uber also gained on news about a collaboration with Nvidia for autonomous driving technology. Overnight, Europe is broadly higher with Eurozone inflation coming in line with forecasts, though ECB survey shows consumer inflation expectations picked up. Asia closed mixed (Shanghai +71bps/Hang Seng -1.22%/Nikkei +1.97%) with Japan leading the way driven by tech strength (Tokyo Electron +11%). The yen weakened to a 6-month low in the morning before verbal intervention from Finance Minister Kato. The macro focus for today will be Richmond Fed President Barkin (voter) speaks (8am est), JOLTS (10am est, GS 7,750k, consensus 7,745k, last 7,744k), ISM Services Index (10am, GS 53.5, consensus 53.5, last 52.1), & Treasury selling $39B of 10-year notes.

In premarket trading, mag 7 names are mixed: Apple (AAPL) -1%, Nvidia (NVDA) +2%, Microsoft (MSFT) +0.3%, Alphabet (GOOGL) -0.2%, Amazon (AMZN) is flat, Meta Platforms (META) -0.7% and Tesla (TSLA) -1%. Nvidia rises 2% after CEO Huang announced a raft of new chips, software and services, aiming to stay at the forefront of artificial intelligence computing. Apple dropped 1% as MoffettNathanson downgrades the iPhone maker, citing high valuation, antitrust overhang and weakening position in China. Tesla (TSLA) slips 1% after BofA stepped away from its bullish rating, citing valuation and execution risks. Here are some other notable premarket movers:

• Arbe Robotics jumps 11% after the robotics systems maker announced a collaboration with Nvidia to enhance radar-based free space mapping.
• Aurora Innovation soars 43% as the self-driving technology company partners with Continental and Nvidia to deploy driverless trucks at scale.
• Micron rises 3% after Nvidia CEO Jensen Huang said the company is providing memory chips for its new GPUs.
• Moderna gains 3%, along with other vaccine developers, as seasonal flu cases across the country continue to increase.
• Uber rises 2% after the ride-hailing company said it’s teaming up with Nvidia in order to accelerate the development of autonomous driving technology.

European stocks gained after money markets shrugged off an uptick in regional inflation and kept expectations for European Central Bank interest-rate cuts steady. The Stoxx 600 rose 0.2%, clawing back earlier losses of as much as 0.4% led by gains in financial services, retail and real estate. Data showed euro-area consumer prices rose 2.4% from a year ago in December, up from 2.2% in November and matching the median estimate in a Bloomberg poll. The increase was largely driven by energy costs, which climbed for the first time since July, Eurostat said. Swaps pricing points to just over 100 basis points of ECB easing by year-end. Here are the biggest movers Tuesday:

• European retail stocks outperform on Tuesday after UK clothing seller Next boosted its profit forecast, driven by a strong showing from its international online business
• Kion shares rose as much as 10% in Frankfurt trading after the company said it’s working with Accenture to optimize supply chains using Nvidia’s AI and simulation technologies
• BE Semiconductor shares rise as much as 5.4% to the highest since July after UBS raises its recommendation to buy from neutral, saying 2025 could mark the turning point for the company, with demand for mainstream chip packaging equipment recovering
• Boliden gains as much as 4.1% after UBS raised the stock to neutral from sell, seeing a more balanced risk/reward ratio after the acquisition of Lundin Mining’s operations in Nerves-Corvo in Portugal and Zinkgruvan in Sweden
• Next shares advance as much as 4.3%, after the UK clothing retailer boosted its full-year earnings forecast. Sales to date are ahead of previous guidance, driven by the strength of international online operations, RBC analysts said
• Deutsche Lufthansa shares rally as much as 2.4% after Citi double upgraded the airline to buy. Analysts say 2024 was likely a trough year for the German flagship airline and see potential for capacity growth and greater productivity
• Sodexo drops as much as 9.5%, the most since late September, after delivering a first-quarter performance below analyst expectations. The French catering company maintained its organic growth target for the full year
• Alstom falls as much as 6.1%, after Goldman Sachs downgraded the French rolling-stock manufacturer to sell from neutral, projecting the company’s 94% surge in 2024 will be “difficulty to sustain”
• Pennon slides as much as 5.1%, the most in over five months, after Deutsche Bank downgrades to give the water company its only sell recommendation, citing the likelihood of a large equity raise
• Sika declines drop as much as 2.3% after Barclays downgrades the building materials company by two notches to underweight from overweight and slashes its price target to CHF215 from CHF330

For European markets, “a lot of bad news is priced in already,” Florian Ielpo, head of macro reserach at Lombard Odier Asset Management, told Bloomberg TV. “You have a recovery that is only starting and that recovery can come with a tad more inflation. European equities could be capturing some of that in the next 12 months.”

Asian stocks gained, boosted by the technology sector as Nvidia chief Jensen Huang’s speech fueled optimism in artificial intelligence. The MSCI Asia Pacific Index rose as much as 0.8%, with chip stocks TSMC and Tokyo Electron among the biggest contributors. Japan led gains among regional markets, followed by Taiwan. Hong Kong shares fell after the US blacklisted Tencent and other companies. Optimism for global AI-related stocks was heightened as Huang unveiled new products featuring Nvidia’s Blackwell chips at the CES trade show in Las Vegas. Shares of chipmakers and related companies have been benefitting from robust public and private investment into AI infrastructure, as well as hopes for improvement in broader tech demand.

In FX, the Bloomberg Dollar Spot Index is down 0.3%, falling for a third day as investors keep a close eye on trade tensions after US President-elect Trump denied a report that he might moderate plans for across-the-board tariffs. Washington’s move to blacklist some Chinese companies, including Tencent Holdings, served as another reminder of growing frictions. Prior to this week’s pullback, the dollar had surged more than 7% over a three-month period as traders’ anticipated that future US policies would dent global trade and boost the local economy. That said, the greenback’s retreat over the past couple of days doesn’t constitute a lasting trend, said Jacques Henry, head of cross-asset research at Silex in Geneva. “The dollar is in a rising cycle due to the resilience of its economy that’s likely to last,” he said. Meanwhile, the Canadian dollar continued its advance following Prime Minister Justin Trudeau’s resignation as head of the Liberal Party. The yen edged off a six-month low after Japan’s finance minister warned about “excessive” FX movements. Monday’s political headlines triggered the most hectic trading day in nearly two months in the currency options markets. Volumes surged to $108 billion by the close of trade, surpassing the activity seen on the Federal Reserve and Bank of Japan monetary policy announcement days last month, according to data from Depository Trust and Clearing Corp.

Treasuries are lower with front-end yields richer by around 1bp and long-end yields slightly cheaper. The Treasury curve extends steepening trend with 2s10s and 5s30s spreads wider by more than 1bp on the day; US 10-year yield around 4.63% is little changed after touching 4.64%, the highest level since May. German yield curve has more pronounced steepening move following euro-area inflation figures for December and bond sales by Germany and Austria. Gilts lag after soft demand for a UK 30-year auction. Focal points of US session include November JOLTS job openings, December ISM services index and 10-year note auction that may draw highest yield since 2007. Meanwhile, the UK’s long-term borrowing costs surged to the highest level since 1998 as investors grapple with a flood of bond sales this year. The yield on 30-year gilts climbed four basis points to 5.22% after a sale of same-maturity securities.

In commodities, oil prices advance, with WTI up 0.2% to $73.70. Spot gold adds $7 to  $2,644/oz.

Market Snapshot

• S&P 500 futures little changed at 6,024.00
• STOXX Europe 600 little changed at 513.38
• MXAP up 0.6% to 182.34
• MXAPJ up 0.2% to 572.71
• Nikkei up 2.0% to 40,083.30
• Topix up 1.1% to 2,786.57
• Hang Seng Index down 1.2% to 19,447.58
• Shanghai Composite up 0.7% to 3,229.64
• Sensex up 0.3% to 78,201.48
• Australia S&P/ASX 200 up 0.3% to 8,285.10
• Kospi up 0.1% to 2,492.10
• German 10Y yield up 1.5 bps at 2.46%
• Euro up 0.4% to $1.0428
• Brent Futures little changed at $76.35/bbl
• Gold spot up 0.2% to $2,642.55
• US Dollar Index down 0.31% to 107.93

Top Overnight News

• Fed Governor Bowman is reportedly the top candidate to replace Fed's Barr as Vice Chair of Supervision: Semafor.
• New York judge denied US President-elect Trump's request to delay sentencing in hush money case: RTRS
• US President-elect Trump commented on Truth Social that many people in Canada love being the 51st state and the US can no longer suffer the massive trade deficits and subsidies Canada needs to stay afloat. Furthermore, he stated if Canada merged with the US, there would be no tariffs, taxes would go down, and they would be completely secure from the threat of Russian and Chinese ships constantly surrounding them.
• Canada reportedly considers an early release of retaliatory tariffs against the US: Globe and Mail.
• China Foreign Ministry on US President-elect Trump talking to President Xi through aides, about the exchanges between China/US, says China attaches importance to the remarks of Trump.
• Chinese-state sponsored hackers penetrated the executive branch of the Philippines government and stole sensitive data as part of a years-long campaign, people familiar said. BBG
• The yen retreated from a six-month low. Japan Finance Minister Katsunobu Kato reiterated Tokyo's discomfort over excessive foreign exchange moves and put speculators on notice that authorities are ready to act to stabilize a faltering yen. RTRS
• Eurozone CPI for Dec was right inline w/the Street at +2.4% headline (up from +2.2% in Nov) and +2.7% core (flat vs. Nov) BBG.
• Eurozone inflation expectations rise according to the latest ECB survey, climbing from 2.5% to 2.6% over 12 months and from 2.1% to 2.4% over 36 months (the 2.4% is the highest since Jul 2024). ECB
• Nvidia shares rose premarket (~+2%) after it unveiled a new lineup including gaming chips and a $3,000 desktop computer. The chipmaker also announced partnerships with Toyota and Uber, showcasing its vision for AI-powered robots, factories and self-driving vehicles. BBG
• MU (Micron) +4.82% after Jensen Huang disclosed that Micron is providing the memory chips for NVDA’s newest GPUs. BBG
• Mark Carney said he’s considering entering the race to replace Justin Trudeau as Canada’s PM. The former BOC and BOE chief, who is chair of Bloomberg Inc. and Brookfield Asset Management, joins a list of possible contenders with ex-Finance Minister Chrystia Freeland. BBG
• US corporate bankruptcies have hit their highest level since the aftermath of the global financial crisis as elevated interest rates and weakened consumer demand punish struggling groups. At least 686 US companies filed for bankruptcy in 2024, up about 8 per cent from 2023 and higher than any year since the 828 filings in 2010. FT
• Congress won’t be able to dial back portions of Biden’s 2021 infrastructure law to pay for other priorities according to a memo, dealing a blow to the GOP’s fiscal ambitions. Politico

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly higher following the tech strength stateside where Nvidia briefly reclaimed the largest market cap title and closed at a fresh record. ASX 200 eked mild gains as strength in tech and telecoms picked up the slack from the weakness in the utilities, miners and materials sectors, while advances were limited amid disappointing Building Approvals data which showed a wider-than-expected contraction. \Nikkei 225 outperformed on a break above the 40,000 level with the index propelled by a weaker currency. Hang Seng and Shanghai Comp were pressured from early in the session with heavy losses in Hong Kong after the Pentagon added several companies including Tencent (700 HK) and CATL to the US list of firms alleged to help Beijing's military, while the downside in the mainland was gradually cushioned following the announcement that China is to hold a briefing on consumer goods trade-in program on Wednesday involving officials from the PBoC, MoF and NDRC.

Top Asian news

• US Treasury Secretary Yellen spoke with Chinese Vice Premier He Lifeng and discussed economic developments, while she raised issues of concern including China's non-market policies and industrial overcapacity, as well as expressed serious concern about 'malicious' cyber activity by Chinese state-sponsored actors. Furthermore, she underscored 'significant consequences' facing Chinese companies for material support to Russia, according to Reuters.
• Japanese Finance Minister Kato said they are seeing one-sided and sudden FX moves. He reiterated that it is important for currencies to move in a stable manner reflecting fundamentals. Kato said he is alarmed over FX moves including those driven by speculators and will take appropriate action against excessive moves, while he also commented that they cannot rule out the chance of Japan going back to deflation.
• Japan's Keizai Doyukai (business lobby) Chief Ninami says wage growth this year at big firms will likely match levels similar to that of last year.
• Japan's Chamber of Commerce and Industry Head says the number of small/medium-sized firms which will raise wages should rise slightly this year.

European bourses opened mostly in the red, but sentiment lifted slowly as the morning progressed to display a more mixed picture in Europe. European sectors began the morning with a slight negative bias, but now display a more mixed picture. Financial Services takes the top spot, joined closely by Retail and then by Basic Resources to complete the top 3. The latter is buoyed by gains in underlying metals prices. Banks sit at the foot of the pile, but with losses to a similar magnitude as Insurance and Healthcare.

Top European news

• Barclays UK December consumer spending was flat Y/Y compared to December 2023.
• ECB Consumer Expectations Survey (Nov): See inflation in next 12 months at 2.6% (prev. 2.5%); 3y ahead sees 2.4% (prev. 2.1%). Economic growth expectations for the next 12 months became more negative, to stand at -1.3% in November, compared with -1.1% in October.

FX

• USD is softer vs. all peers with DXY down for a third consecutive session. Recent price action for the Greenback has been dictated by the recent Washington Post report that Trump's tariff plans may not be as bad as initially feared. Whilst Trump did later attempt to downplay this, ING is of the view that "there is no smoke without fire". For today's docket, attention will be on ISM services PMI and JOLTS data ahead of NFP on Friday. DXY has been as low as 107.84 but is holding above yesterday's 107.75.
• EUR remains supported after being catapulted from a 1.0294 base yesterday in the wake of reports that the Trump tariff programme may be less stringent than initially feared. The macro focus has been on the December Eurozone inflation report which showed headline HICP advancing to 2.4% from 2.2% as expected and the super-core rate holding steady at 2.7%. Some minor softness was observed in EUR/USD amid expectations of a potentially hotter figure given the outturn for Germany yesterday; currently 1.0430.
• JPY is flat vs. the USD after USD/JPY reached its highest level since July during APAC trade at 158.41. This subsequently triggered some jawboning from Japan's Finance Minister Kato who noted they are recently seeing one-sided, rapid moves and reiterated to take appropriate action against excessive moves. Elsewhere, Barclays have shifted their BoJ view and now see the Bank hiking in March and October vs. previous forecast of January and July
• GBP has extended on yesterday's tariff-induced gains vs. the USD with major fresh macro drivers for the UK on the light side today. As such, Cable has eclipsed yesterday's peak at 1.2550 but has failed to sustain a move above its 21DMA at 1.2573.
• Antipodeans are both at the top of the G10 leaderboard with markets continuing to deliberate the prospect of a potentially more friendly tariff programme by the Trump regime.
• CHF is a touch softer vs. the EUR post-Swiss CPI metrics. Y/Y headline CPI fell to 0.6% from 0.7% as expected, whilst the core rate fell to 0.7% from 0.9% (expected 0.8%). The 0.6% outturn means that the average across Q4 as a whole came in around 0.63% and is shy of SNB's 0.7% projection for Q4. EUR/CHF moved back onto a 0.94 handle following the data and is eyeing the 30th December peak at 0.9441.
• PBoC set USD/CNY mid-point at 7.1879 vs exp. 7.2994 (prev. 7.1876)

Fixed Income

• USTs are flat, in a narrow 108-13+ to 108-20 band. Complex awaits US data incl. JOLTS and ISM Services alongside Fed’s Barkin (expected to reiterate remarks from 3rd Jan.) before 10yr supply. Last night’s 3yr auction was soft overall and weighed on USTs into settlement.
• Bunds pressured in-fitting with the above and the tentatively constructive European risk tone ahead of Flash HICP. Before that, the December HICP Y/Y figure for France came in cooler than newswire consensus though hotter than the prior.
• Thereafter, EGBs saw fleeting upside on the EZ data which came in in-line for the headline though with services and core slightly hot, upside perhaps driven by expectations for a hotter headline post-Germany; though, the Bunds upside proved shortlived.
• Gilts are underperforming. UK specifics light aside from Construction PMI which spurred no move and a strong BRC Retail Sales report for December, the latter perhaps weighing on Gilts. Given the pressure, which has taken Gilts to a 91.68 trough just above last week's 91.65 base and the contract low a tick below at 91.64, yields are firmer across the curve with the 30yr above 5.21% and at its highest since 1998. A slightly soft, but robust overall, UK auction spurred little move in Gilts.
• UK sells GBP 2.25bln 4.375% 2054 Gilt: b/c 2.75x (prev. 3.0x), average yield 5.198% (prev. 4.747%) & tail 0.3bps (prev. 0.4bps).
• Germany sells EUR 3.472bln vs exp. EUR 4.5bln 2.00% 2026 Schatz: b/c 2.30x (prev. 2.30x), average yield 2.18% (prev. 1.94%) & retention 22.8% (prev. 19.84%).

Commodities

• A relatively choppy start to the session for the crude complex, though benchmarks currently resides near the bottom end of the day’s ranges. Macro developments have been light thus far, so focus will likely be on US ISM Services PMI alongside JOLTS Job Openings. Brent'Mar currently towards the lower end of a USD 75.91-76.36/bbl range.
• Gold is firmer but only modestly so. Upside as a result of the soft USD and relatively tepid risk tone thus far. Furthermore, a modest bullish reaction was seen on China’s monthly reserves figures, which showed the second consecutive monthly increase in gold reserves. At the upper-end of USD 2632-2646/oz parameters, which is entirely within but towards the top-end of Monday’s parameters.
• Copper is modestly firmer, taking impetus from the softer USD and perhaps from the European risk tone, though that has been slightly more tentative thus far. 3M LME Copper holding above the USD 9k handle.
• BofA says natgas balances likely to tighten in 2025 as 2.5 BCF/D of demand growth outruns the 2.1 BCF/D of supply growth, supporting the bullish outlook

Geopolitics: Middle East

• Senior Israeli Foreign Ministry official says Israel is fully committed to conclude a hostage deal; the only way to get a deal is to put pressure on Hamas
• Israeli army said it bombed a cell of militants in the town of Tammun, south of Tubas, in the northern West Bank, according to Al Jazeera.
• Hamas leader said they asked for maps outlining the withdrawal process and the atmosphere pointing to an integrated deal to end the war in Gaza, according to Asharq News.
• "Iranian media report that the first phase of manoeuvres to test the defense systems of the Natanz nuclear facility has begun", according to journalist Elster.

Geopolitics: Other

• North Korea confirmed Monday's launch of a new hypersonic missile, while it was separately reported that North Korea plans to launch an ICBM before the Trump inauguration, according to Chosun Ilbo. In relevant news, South Korean acting President Choi said they are to respond sternly to North Korean provocation and that North Korea missile test poses a significant security threat.

US Event Calendar

• 08:30: Nov. Trade Balance, est. -$78.3b, prior -$73.8b
• 10:00: Nov. JOLTs Job Openings, est. 7.74m, prior 7.74m
  • Nov. JOLTS Layoffs Rate, prior 1.0%
  • Nov. JOLTS Layoffs Level, prior 1.63m
  • Nov. JOLTS Quits Rate, prior 2.1%
  • Nov. JOLTS Quits Level, prior 3.33m
  • Nov. JOLTS Job Openings Rate, est. 4.6%, prior 4.6%
• 10:00: Dec. ISM Services Index, est. 53.5, prior 52.1
  • Dec. ISM Services Employment, est. 51.4, prior 51.5
  • Dec. ISM Services New Orders, est. 54.2, prior 53.7
  • Dec. ISM Services Prices Paid, est. 57.5, prior 58.2

DB's Jim Reid concludes the overnight wrap

Morning from Helsinki where I've started my work year pretty much every year (ex-Covid) for the last 25. It’s cold but I’m acclimatised as I'm just back from a very snowy ski trip in the Alps which unfortunately coincided with a pretty dreadful bout of flu or perhaps Covid. My wife and I spent the entire two weeks drained and coughing and spluttering 24/7 which wasn't fun in the cold. The kids and Brontë didn't adjust their demands accordingly though so it was hard work. I could do with a fresh two week holiday to recover.

Talking of two weeks, yesterday it was only that length of time until Donald Trump’s inauguration. Ahead of that, tariffs were back in focus yesterday, as investors faced up to competing theories about how aggressively the new administration would increase them. The big moves over the last 24 hours began with a Washington Post report, which said that Trump’s aides were looking at a plan for universal tariffs on all countries, but just covering critical imports rather than everything. The article cited “three people familiar with the matter”, and led to an immediate market reaction, as investors felt this was less aggressive than some of the earlier plans that had been suggested. After all, this would only put tariffs on sectors that were seen as critical for national or economic security, and the article led to an immediate rally in Treasuries and a weakening in the US Dollar.

But shortly after, that market reaction unwounded as Trump posted on Truth Social that the story “incorrectly states that my tariff policy will be pared back. That is wrong.” So that led to a fresh bout of concern that Trump was still going to pursue a more aggressive tariff agenda, which in turn would lead to higher inflation and a more hawkish Fed. So over the course of this episode yesterday, the 10yr Treasury yield went from 4.61% before the article, to a low of 4.57% afterwards, before bouncing back after Trump’s post to close at 4.63%. The selloff was particularly clear at the long end of the curve, and it meant the 2s10s curve steepened to 35.1bps, the steepest since May 2022. 30yr US yields (4.85%) closed at 14-month highs. The next test will be today's JOLTS and services ISM.

Those concerns about higher inflation then got fresh support from Germany’s flash CPI release, which surprised on the upside in December. It showed headline inflation rising to an 11-month high of +2.9% on the EU-harmonised measure, which was three-tenths above consensus. Moreover, it came after the Spanish CPI print also surprised on the upside last week, so that’s raising concerns about the Euro Area-wide release that’s coming out today. Indeed, yields on 10yr bunds were up +2.4bps to 2.45%, which is their highest level since July. Bear in mind as well that the 10yr bund yield has already risen for 5 consecutive weeks. So if there’s a 6th rise this week, that would be the longest run of weekly gains since 2022, back when inflation was raging and the ECB were hiking by 75bps per meeting. Our European economists have started the year with a blog series on some of the most important drivers for the continent in 2025. Part one from yesterday is here and part two this morning (link here) looks at inflation which is topical given today’s Euro Area print.

Despite all the concerns about inflation and tariffs, equities actually managed to put in a solid session on both sides of the Atlantic. The gains were stronger in Europe, with the STOXX 600 up +0.95%, whilst the CAC 40 (+2.24%) posted its strongest daily advance since September. Over in the US, the S&P 500 (+0.55%) saw a more moderate gain, rising as much as +1.3% intra-day but then losing some steam as the session went on. That rise was led by the big tech stocks, with the Magnificent 7 up +1.92% as Nvidia (+3.43%) reached a new all-time high with a market cap of $3.66trn. Nvidia’s CEO Jensen Huang in his keynote speech at the CES 2025 conference (after the closing bell) announced a raft of new chips, software and services to accelerate AI adoption in humanoid robots and self-driving cars and trucks. So there is seemingly no end to their ambition and excitement about tech and AI as we start 2025. By contrast, the equal-weighted S&P 500 was down -0.05% yesterday, as defensive sectors including utilities (-1.10%) and consumer staples (-0.98%) underperformed. So it was by no means a uniformly rosy picture.

The other notable underperformer was the US dollar, with the broad dollar index falling by -0.67% yesterday. It had been down as much as -1.2% after the Washington Post story before partially recovering after Trump’s retort. In turn, the euro saw its best day against the greenback in six weeks. That said, at 1.0387 it is still down by -7% since late September, having fallen to a 2-year low last Thursday.

Asian equity markets are mostly higher this morning outside of China. The Nikkei (+1.91%) is leading gains and is making a strong comeback after closing over -1% lower on the first trading day of 2025 on Monday. Meanwhile, the KOSPI (+0.34%) is paring back its initial stronger gains after climbing over +1% to surpass the 2,500 level for the first time since December 16. Elsewhere, the S&P/ASX 200 (+0.33%) is also edging higher. On the otherside of the ledger, Chinese stocks are lagging this morning with the Hang Seng (-2.17%) emerging as the biggest underperformer while the Shanghai Composite (-0.32%) and the CSI (-0.08%) are also trading in negative territory after the US labelled Tencent Holding Ltd. and Contemporary Amperex Technology Ltd. (CATL) - the world’s largest electric vehicle battery maker - as companies with alleged links to the Chinese military. Outside of Asia, S&P 500 (-0.15%) and NASDAQ 100 (-0.27%) futures are seeing minor losses.

In FX, the Japanese yen (-0.30%) is weakening for the second straight session, trading at 158.11 against the dollar, its weakest level since July even after Japan’s Finance Minister Katsunobu Kato stated that the government will take appropriate action against sudden foreign exchange moves.

Elsewhere yesterday, there were major political headlines out of Canada, as Prime Minister Justin Trudeau announced he’d be resigning as Liberal Party leader. The move follows significant pressure from other Liberal MPs on Trudeau to resign, and his position became increasingly uncertain after his Deputy PM Chrystia Freeland resigned last month. Trudeau will stay on as PM until a new leader is picked, and the Canadian parliament will be prorogued until March 24th in the meantime. A federal election is due to be held in Canada by October but may come sooner if opposition parties push for a confidence vote once parliament reconvenes. The Liberals are currently well behind the opposition Conservatives in the polls, with CBC’s tracker putting the Conservatives on 44% and the Liberals on just 20%.

Finally, we also got a bit of Fedspeak yesterday, with Governor Cook echoing the tone of other speakers this week. She said that “we can afford to proceed more cautiously with further cuts”, but that it was still “appropriate to move the policy rate toward a more neutral stance”. There was also some unexpected news from the Fed’s Vice Chair for Supervision, Michael Barr, who said he would step down as Vice Chair for Supervision at the end of February, or an earlier time if a successor was confirmed. However, Barr said he would continue to serve on the Fed’s Board of Governors.

To the day ahead now, and data releases from the US include the ISM services index for December, the JOLTS report for November, and the trade balance for November. In the Euro Area, we’ll also get the flash CPI release for December, and the unemployment rate for November. From central banks, we’ll hear from the Fed’s Barkin, and get the ECB’s Consumer Expectations Survey for November.