• US stocks saw strong gains on Friday with outperformance in the tech-heavy Nasdaq 100 (+1.7%) which was supported by advances in Nvidia (NVDA) (+4.5%) and Tesla (TSLA) (+8.3%), while newsflow was sparse to the end the week as participants continued to return from the holidays ahead of risk events picking up in the week ahead with FOMC Minutes and the latest US jobs report scheduled. Furthermore, ISM Mfg. PMI beat on the headline and surpassed the top end of the analyst forecast range, while internals were more mixed as prices paid rose above expectations and employment disappointed.
• Fed’s Kugler commented over the weekend that inflation has been coming down but the job on inflation is not done, while she said they have moved to a more moderate level of restrictiveness and that they are heading towards the 2% inflation target, according to Reuters.
• Looking ahead, highlights include Japanese Final Services & Composite PMI, Philippines CPI, Chinese Caixin Services & Composite PMIs.

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LOOKING AHEAD

• Highlights include Japanese Final Services & Composite PMI, Philippines CPI, Chinese Caixin Services & Composite PMIs.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks saw strong gains on Friday with outperformance in the tech-heavy Nasdaq 100 (+1.7%) which was supported by advances in Nvidia (NVDA) (+4.5%) and Tesla (TSLA) (+8.3%), while newsflow was sparse to the end the week as participants continued to return from the holidays ahead of risk events picking up in the week ahead with FOMC Minutes and the latest US jobs report scheduled. Furthermore, ISM Mfg. PMI beat on the headline and surpassed the top end of the analyst forecast range, while internals were more mixed as prices paid rose above expectations and employment disappointed.
• SPX +1.26% at 5,942, NDX +1.67% at 21,326, DJIA +0.80% at 42,732, RUT +1.65% at 2,268.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Kugler (voter) said on Friday that the economy ended 2024 in a good place with good growth and the process of disinflation has kept going, while she added that the labour market remains resilient and has been cooling gradually. Furthermore, Kugler said data will drive what the Fed does with policy and that there is a view that the Fed can take time on future rate cuts, according to CNBC. Kugler also commented over the weekend that inflation has been coming down but the job on inflation is not done, while she said they have moved to a more moderate level of restrictiveness and that they are heading towards the 2% inflation target, according to Reuters.
• Fed's Barkin (2027 voter) said on Friday that he still perceives core underlying inflation is coming down nicely, while he added the message from businesses is loud and clear that consumers are becoming more price sensitive. Barkin said he is in the camp of staying restrictive for longer given possible upside inflation risks and noted that conditions for cutting rates again include confidence in inflation's return to 2% or weakening of demand.
• Fed’s Daly (2027 voter) said inflation remains uncomfortably above their target, according to Reuters.
• US Republican Mike Johnson was re-elected as House Speaker on Friday.
• New York became the first US city to launch a congestion charge zone on Sunday, according to FT.

FX

• Another Liberal MP joined several caucus colleagues in publicly calling for Canadian PM Trudeau to resign as leader of the Liberal Party and Polymarket’s odds for Trudeau to resign before February surged to over 70% over the weekend from around 33% on Friday. Furthermore, Globe & Mail columnist Lawrence Martin commented on social media platform X that “Everybody's gearing up for Trudeau's resignation announcement, expected by Monday”.

COMMODITIES

• LNG tanker Coral Nordic will unload at Belgium’s Zeebrugge terminal on January 9th from Ruvys.
• German energy import Uniper’s (UN01 GY) CEO Mike Lewis said the company is working to protect its fleet of LNG tankers from seizure by nations friendly to Russia after it was hit with a EUR 14bln penalty by a Russian court in March as part of an international dispute with a subsidiary of Russian state-backed gas company Gazprom, according to FT.

GEOPOLITICAL

MIDDLE EAST

• US President Biden notified Congress of USD 8bln arms sale to Israel, according to Axios.
• Hamas said it approved a list of 34 hostages presented by Israel to be exchanged in a ceasefire deal. However, it stated that any deal would depend on an agreement regarding a withdrawal and ceasefire, while it has not seen progress on issues regarding this. Furthermore, Israeli PM Netanyahu’s office later stated that Hamas had not yet provided a list of hostage names.
• Saudi Foreign Minister met with US envoy Hochstein in Riyadh where they discussed developments in Lebanon and regional issues.
• Syrian Foreign Minister Al-Shibani travelled to Doha to meet with senior Qatari officials.

RUSSIA-UKRAINE

• IAEA said staff reported hearing loud blasts near Ukraine's Zaporizhzhia Nuclear Power Plant on Sunday which coincided with reports of a drone attack on the plant's training centre, while the IAEA has not been able to confirm any impact and noted that reports stated there were no casualties and no impact on any nuclear power plant equipment, according to Reuters.
• Ukrainian President Zelensky said there were heavy Russian and North Korean losses in Russia’s Kursk region.
• Ukraine’s air force said on Sunday morning that it had downed 61 drones launched by Russia in an overnight attack.
• Russia’s Defence Ministry said Russian forces took control of the Nadiya settlement in Ukraine’s Luhansk region, while it also announced that Ukraine launched a counter-attack in Russia’s Kursk region.

ASIA-PAC

NOTABLE HEADLINES

• PBoC pledged more financial support for innovation and consumption, while it will encourage foreign capital to invest in domestic tech.

EU/UK

NOTABLE HEADLINES

• Austrian Chancellor Nehammer said coalition talks between the two largest centrist parties in Austria on forming a government without the far-right Freedom Party have collapsed, while he will stand down as Chancellor and leader of the People’s Party in the coming days. It was later reported that the Austrian President van der Bellen agreed to meet with far-right Freedom Party leader Kickl on Monday and that Conservative People’s Party (OVP) Secretary-General Stocker was named as interim party leader. Furthermore, Stocker expects far-right leader Kickl will be tasked with forming a government and said the OVP will take part in coalition talks with the far-right Freedom Party and take them seriously.
• Many Eurozone economists warned that the ECB has been too slow to cut interest rates to help the economy and 46% of the economists surveyed said the ECB had fallen behind the curve, according to a poll by FT.