Asia-Pacific markets traded mostly higher Wednesday, continuing their rally despite AI fears and weak economic data spooking U.S. investors. The U.S. December retail sales report showed that consumer spending was flat, missing the 0.4% monthly gain that economists polled by Dow Jones were expecting. In Asia, investors are assessing the latest data coming out from China. The country’s consumer price index rose 0.2% in January from a year earlier, China’s National Bureau of Statistics data showed Wednesday. That’s below economists’ forecast of 0.4% increase in a Reuters poll, a sign of continued deflationary pressure in the absence of stronger stimulus.
The S&P 500 slipped on Tuesday as investors reacted to weaker-than-expected retail sales data and grew concerned about the threat artificial intelligence poses to the financial sector. The broad-based index lost 0.33% and ended at 6,941.81, while the Nasdaq Composite slipped 0.59% and closed at 23,102.47. The Dow Jones Industrial Average rose 52.27 points, or 0.10%, posting a closing record of 50,188.14. The index had scored its third consecutive intraday record earlier in the day, a move that comes after it surpassed the 50,000 level for the first time ever last week.
Gold firmed above $5,040 per ounce on Wednesday, staying near an almost two-week high, supported by expectations of a more accommodative Federal Reserve. The move followed soft US data, as December retail sales fell short of forecasts, signalling a slowdown in consumer spending and reinforcing concerns about slowing growth. Markets have since priced in a higher probability of three Fed rate cuts this year, up from two just a week ago. Investors are now watching upcoming US jobs and inflation reports for further clues on the economy’s trajectory and potential Fed policy moves. Adding to the support, central bank demand remains strong, with the PBoC extending its gold purchases for the 15th consecutive month in January.
WTI crude oil futures rose above $64 per barrel on Wednesday, reversing losses from the previous session, as lingering tensions between the US and Iran supported prices. Reports suggested Washington may consider intercepting tankers carrying Iranian crude and could deploy an additional carrier strike group if negotiations over Iran’s nuclear program collapse. While initial talks last week were positive, traders fear failed negotiations could trigger US strikes on Tehran, risking Iranian oil supplies or prompting retaliation. Capping further gains, however, was a US industry report showing a sharp build in stockpiles, with inventories rising by 13.4 million barrels last week, the largest increase since November 2023 if confirmed by official data.
China’s consumer inflation rose less than expected in January while the deflation in producer prices persisted, in a sign of continued deflationary pressure in the absence of stronger stimulus. The consumer price index rose 0.2% in January from a year earlier, China’s National Bureau of Statistics data showed on Wednesday, below economists’ forecast of 0.4% increase in a Reuters poll. That followed a 0.8% growth in December, its highest level in nearly three years. Prices rose 0.2% month-on-month, below economists’ forecast of a 0.3% increase. Core CPI, which strips out volatile food and energy prices, jumped 0.8% from a year earlier, easing from the 1.2% in December.
U.S. retail sales were unexpectedly unchanged in December as households scaled back spending on motor vehicles and other big-ticket items, potentially setting consumer spending and the economy on a slower growth path heading into the new year. The Commerce Department also revised down retail sales for October, suggesting consumer fatigue amid rising cost-of-living challenges that have been partly attributed to higher prices due to tariffs on imports. The weak report, together with a marginal rise in business inventories, prompted economists to downgrade their economic growth estimates for the fourth quarter. Frigid temperatures in January could also weigh on spending this quarter. While spending could still be supported by expected larger tax refunds as part of President Donald Trump’s tax cuts, economists also said some households could opt to save the windfall given labour market sluggishness.
Dallas Federal Reserve President Lorie Logan said on Tuesday she’s "cautiously optimistic" that the Fed’s current policy rate setting will get inflation headed to its 2% goal while keeping the job market stable, and that economic data in coming months will show if that hope bears out. "If so, this would tell me that our current policy stance is appropriate and no further rate cuts are needed to achieve our dual mandate goals," Logan said in remarks prepared for delivery in Austin, Texas. If instead inflation falls but the labour market cools materially, "cutting rates again could become appropriate. But right now, I am more worried about inflation remaining stubbornly high."
Taiwan’s trade negotiating team has left for the U.S. to hold their final meeting on a trade and tariff deal struck last month, the island’s government said on Tuesday. Under the terms of the agreement, tariffs on Taiwan’s exports to the U.S. will be cut to 15% from 20%. Taiwan companies will also invest $250 billion to boost production of semiconductors, energy and artificial intelligence in the U.S., while Taiwan will also guarantee an additional $250 billion in credit to facilitate further investment. Taiwan Vice Premier Cheng Li-chiun and chief trade negotiator Yang Jen-ni departed on Tuesday night and are expected to hold "a final meeting with the U.S. side regarding the ’Taiwan–U.S. Agreement on Reciprocal Trade’", Taiwan’s cabinet said in a statement. Once the agreement is finally signed, the government will report the full details to the public and it will then go to parliament for approval, the statement added.
Alibaba on Tuesday launched an artificial intelligence model designed to power robotics, as more tech giants push into the fast-growing field. The model, called RynnBrain, is designed to help robots comprehend the physical world around them and identify objects. One video released by Alibaba’s DAMO Academy shows a robot identifying fruit and putting it in a basket. While these tasks seem simple, they involve complex AI that governs a robot’s understanding of individual items as well as movement. Robotics falls under the umbrella term dubbed “physical AI,” which includes machines that rely on artificial intelligence, such as self-driving cars – an area China has prioritized as it competes with the U.S. for technological leadership.
Ford Motor reported its largest quarterly earnings miss in four years in its fourth-quarter results released Tuesday, while guiding for 2026 to be a rebound year for the automaker. Ford’s 2026 guidance includes adjusted EBIT of between $8 billion and $10 billion, up from $6.8 billion last year; adjusted free cash flow of between $5 billion and $6 billion, up from $3.5 billion in 2025; and capital expenditures of $9.5 billion to $10.5 billion, up from $8.8 billion. The EPS coming in 32% below consensus was the company’s first quarterly miss since 2024 and its worst since a 42% difference when reporting its 2021 fourth-quarter results, according to LSEG. House and Ford CEO Jim Farley said the company’s 2025 results continue to demonstrate the company’s underlying business is improving despite the special items impacting results.
Hedge fund Ancora Holdings has built a roughly $200 million stake in Warner Bros Discovery and plans to oppose a deal to sell its movie and television studios to Netflix in Favor of an offer from Paramount Skydance, the Wall Street Journal reported on Tuesday. Ancora could announce its position as soon as Wednesday, and believes Warner Bros Discovery Inc failed to adequately engage with an offer from David Ellison’s Paramount Skydance Corp, the WSJ reported, citing people familiar with the matter. Ancora’s involvement in the deal presents a new layer of uncertainty for Warner’s attempts to sell its core operations. Paramount on Tuesday sweetened its offer for Warner by offering shareholders extra cash for each quarter the deal does not close, while also offering to cover a breakup fee for Warner walking away from a deal with Netflix.
Tesla has named its head of European operations, Joe Ward, to oversee the company’s sales globally, Bloomberg News reported on Tuesday, citing people familiar with the matter. The move follows the departure of Tesla’s head of North American sales, Raj Jegannathan, marking the latest in a string of executive exits at the EV maker over the past couple of years. Tesla did not immediately respond to a Reuters request for comment. Ward joined Tesla as a logistics intern in 2010 and rose up the ranks to be named vice president for the EMEA region in 2022, according to his LinkedIn profile. The Elon Musk-led EV maker’s sales have been pressured by increasing competition, particularly from Chinese and legacy automakers offering lower-priced EVs and brand damage from the CEO’s right-wing political stance.