- Asian Stocks Gain as DeepSeek Fuels China AI Rally: Markets Wrap
Asian shares rose partly on optimism about artificial intelligence in China, defying broader market caution
after a last-minute deal reversed Donald Trump’s decision to impose tariffs on Colombia. Shares advanced in
Japan, Hong Kong and mainland China, with Chinese tech firms linked to DeepSeek’s business model rallying
after the AI startup gained traction. In contrast, US futures slid amid concerns that the Chinese app may
disrupt US technological leadership. The dollar rose along with Treasuries, even after the White House said
Trump will hold off on imposing threatened tariffs and sanctions on Colombia following a bilateral agreement
on the return of deported migrants. - S&P 500 slides on Friday as rally pauses, but stocks notch back-to-back weekly gains
The S&P 500 closed lower after hitting new records on Friday, as investors took some profit to end a solid
week centered on President Donald Trump’s return to the White House. The benchmark index shed 0.3% to
6,101.24, reversing course after hitting a fresh intraday record earlier in the session. The Nasdaq
Composite slipped 0.5% to 19,954.30. The Dow Jones Industrial Average dropped 140.82 points, or 0.3%, to
44,424.25. Friday’s losses snapped a four-day winning streak for the three major indexes. Some megacap
tech stocks that helped drive the market to all-time highs pulled back in the session, putting downward
pressure on equities. Nvidia slid more than 3%, while Tesla fell more than 1%. Despite Friday’s retreat,
excitement toward Trump’s pro-business policies has largely pushed risk assets higher this week as investors
focused on his inauguration. Traders were also relieved that there have only been threats on the tariff front
from Trump — instead of formal action — during his first few days in the White House. - Oil slips as Trump repeats call for OPEC to reduce prices
Oil prices fell more than 1% on Monday after U.S. President Trump called on OPEC to reduce prices following
the announcement of wide-ranging measures to boost U.S. oil and gas output in his first week in office.
Brent crude futures dropped 87 cents, or 1.11%, to $77.63 a barrel by 0043 GMT after settling up 21 cents on
Friday. U.S. West Texas Intermediate crude was at $73.77 a barrel, down 89 cents, or 1.19%. Trump on
Friday reiterated his call for the Organization of the Petroleum Exporting Countries to cut oil prices to
hurt oil-rich Russia’s finances and help bring an end to the war in Ukraine. - Gold retreats as dollar firms; Federal Reserve meeting looms
Gold prices dipped on Monday pressured by a firmer U.S. dollar, while investors focused on the Federal
Reserve’s first meeting of 2025 for more guidance on the U.S. interest rate path. Spot gold dropped 0.6% to
$2,755.79 per ounce, as of 0304 GMT, after trading just below record high levels on Friday. U.S. gold
futures fell 0.6% to $2,761.20. The dollar was up 0.3% after U.S. President Donald Trump said he will impose
sweeping measures on Colombia, including tariffs and sanctions. A stronger dollar makes gold expensive for
other currency holders. - Trump imposes 25% tariffs on Colombia as deported migrant flights blocked
US President Donald Trump has said he will impose 25% tariffs and sanctions on Colombia after its president
barred two US military planes carrying deported migrants from landing in the country. Trump said the tariffs
“on all goods” coming into the US from Colombia would be put in place “immediately”, and in one week the
25% tariffs would be raised to 50%. Colombian President Gustavo Petro responded by saying he would
impose retaliatory tariffs of 25% on the US. Petro earlier on Sunday said he had denied entry to US military
deportation flights. He said he would “receive our fellow citizens on civilian planes, without treating them like
criminals” and migrants must be returned “with dignity and respect”. US officials told the BBC’s US partner,
CBS News, that two military planes from San Diego were due to land in Colombia on Sunday with migrant
deportees, but those plans were scrapped due to complications. In response, Trump announced “urgent and
decisive retaliatory measures” in a post on TruthSocial. He said the US will impose a travel ban and
“immediate visa revocations” on Colombian government officials, as well as its allies and supporters.
Trump also said there would be visa sanctions on supporters of the Colombian government, and enhanced
Customs and Border Protection inspections “of all Colombian nationals and cargo on national security
grounds”. - Universal Music Group and Spotify strike new agreement
Universal Music Group (UMG), the world’s biggest music label, and Swedish streaming giant Spotify have
reached a new multi-year agreement for recorded music and music publishing, they said on Sunday.
The publishing agreement establishes a direct license between Spotify and UMG across Spotify’s current
product portfolio in the U.S. and several other countries, they said in a statement. “Artists, songwriters and
consumers will benefit from new and evolving offers, new paid subscription tiers, bundling of music and non
music content, and a richer audio and visual content catalog,” the companies said. The partnership will
ensure constant innovation, making music subscriptions even more attractive to a broader worldwide
audience, Spotify founder and CEO Daniel Ek said. Spotify has laid off employees, pulled back podcasts and
cut marketing spending over the past year to boost profitability. It has also raised prices of its U.S. plans to
capitalize on demand for its premium products. - China manufacturing activity unexpectedly shrinks in Jan- PMI
Chinese manufacturing activity unexpectedly shrank in January, purchasing managers index data showed on
Monday, as local businesses took only fleeting support from recent stimulus measures from Beijing.
Growth in non-manufacturing activity also slowed sharply in January, as the outlook for local businesses was
clouded by the prospect of increased U.S. trade tariffs. Manufacturing PMI fell to 49.1 in January, compared
to expectations that it would remain steady at the 50.1 seen in December. A reading below 50 indicates
contraction in the sector, with manufacturing PMI now falling back into contraction after three months of
growth. Non-manufacturing PMI slid to 50.2, much lower than December’s reading of 52.2. This brought
China’s composite PMI to 50.1, much lower than expectations of 52.1 and December’s reading of 52.2.
Monday’s PMI data indicates that Chinese businesses took limited support from a swathe of aggressive
stimulus measures launched by Beijing through late-2024, highlighting the need for more support from the
government. The data comes just before the Lunar New Year holiday, which will see Chinese markets closed
for a week. The holiday usually boosts local business activity, especially in the non-manufacturing sector,
amid increased holiday travel and spending. Monday’s data also comes amid heightened concerns over
increased U.S. trade tariffs against China. U.S. President Donald Trump warned he could impose 10% tariffs
on all Chinese imports by February 1. China is expected to dole out even more supportive measures to offset
the impact of Trump’s planned tariffs. - Perplexity AI revises Tiktok merger proposal that could give the U.S. government a 50% stake
Perplexity AI on Sunday revised the merger proposal it had submitted to TikTok parent ByteDance. The
proposal, which would create a new entity combining Perplexity and TikTok U.S., would now also allow for
the U.S. government to own up to 50% of the new company upon a future IPO, CNBC has learned.
A proposal document viewed by CNBC, which was shared with ByteDance and prospective new investors,
detailed the creation of a new U.S. holding company, “NewCo.” The document proposes ByteDance
contribute TikTok U.S., minus its core recommendation algorithm, in exchange for the company’s existing
investors receiving equity in the new company. Perplexity AI would offer itself up in exchange for its own
investors receiving a distribution of the NewCo equity. Money for the merger would come from “new third
party capital provider(s) (to be mutually agreed upon),” per the proposal document, which would provide
capital for a “one-time dividend payment to ByteDance investors in exchange for simplified governance” and
to help the new entity grow. Perplexity AI, the artificial intelligence search engine startup competing with
OpenAI and Google, started 2024 with a roughly $500 million valuation and ended the year with a valuation
of about $9 billion, after attracting increasing investor interest amid the generative AI boom — as well
as controversy over plagiarism accusations. Investors have viewed AI-assisted search as one of Google’s key
risks, as it potentially changes the way consumers access information online. Last year, OpenAI, which started
the generative AI craze in late 2022 with ChatGPT, introduced a search engine called SearchGPT. Google
later launched “AI Overviews” in search, allowing users to see a quick summary of answers at the top of
results. - Monte dei Paschi shares fall 7% after lender launches surprise 13-billion-euro bid for Mediobanca
Offering 23 of its shares for 10 of its acquisition target, Monte dei Paschi values Mediobanca’s stock at
roughly €15.992 each, a 5% premium to the close price of Jan. 23. Monte dei Paschi, the world’s oldest bank,
required a state rescue in 2017 after years of crippling losses, but has turned the tides of its fortunes under
the leadership of UniCredit veteran Luigi Lovaglio. The Friday offer adds to a picture of heating M&A appetite
in Italy’s banking and financial services sector. - Novo Nordisk shares rose 7.1% after topline results from an early-stage clinical trial showed people
treated with amycretin achieved weight loss of as much as 22%, boosting investors’ hopes for the
drugmaker’s pipeline
People treated with amycretin achieved an estimated body weight loss of 9.7% after 20 weeks, 16.2% after
28 weeks and 22% after 36 weeks. People treated with placebo experienced an estimated 1.9%, 2.3% and
2.0% body weight gain, respectively. Amycretin is a unimolecular GLP-1 and amylin receptor agonist intended
for once weekly subcutaneous administration. Barclays (overweight): The amycretin update “finally breaks
the tide of negative sentiment,” analyst Emily Field writes. Even though it’s a phase 1 trial with a multi-part
design, the weight loss at the highest dose is “on par with the best injectable data we’ve seen”. TD Cowen
(buy): The trial results are a “good starting point for a very important pipeline candidate,” analyst Michael
Nedelcovych writes. Even so, more data points are needed to understand the experimental drug’s tolerability
profile. Bloomberg Intelligence: Friday’s amycretin data “reinvigorates” the obesity challenge versus US rival
Eli Lilly, Bloomberg Intelligence analysts write. Cross-trial comparisons suggest “better efficacy than Eli Lilly’s
retatrutide”. - Burberry Group shares rose 9.9% after a pickup in US demand boosted the trench-coat maker’s results,
raising investor hopes for a luxury-market recovery
Retail sales fell 4% on a comparable basis, Burberry said, better than the drop of almost 13% forecast by
analysts. Sales in the Americas unexpectedly climbed, while China fell less than estimates. Chief Executive
Officer Joshua Schulman, who joined the company in July, vowed to overhaul the label and return it to its
roots in recognizable outerwear, including its £2,000 trench coats. Burberry had struggled as his predecessor
tried to push the brand further upmarket and expand its offerings into high-end handbags. The group’s latest
performance, showing glimmers of improvement, follows strong sales last week from Cartier owner
Richemont, underpinning hopes that luxury demand may have bottomed out. All eyes will now turn to LVMH
Moët Hennessy Louis Vuitton SE, the largest luxury group, which reports earnings next week. - American Express shares fell 1.4% after the credit-card company reported fourth-quarter results. KBW
said the results were good, but believed investors wanted more than the revenue guidance that was
provided
FOURTH-QUARTER RESULTS: EPS $3.04 vs. $2.62 y/y, estimate $3.04. Revenue $17.18 billion, +8.7% y/y,
estimate $17.17 billion. Total expenses $13.1 billion, estimate $12.88 billion. YEAR FORECAST: Sees revenue
+8% to +10%. Sees EPS $15 to $15.50, estimate $15.24. COMMENTARY: Sees 2025 adj EPS Growth 12%-16%.
Long-Term Rev. Growth Goal +10%. Long-Term Aspiration for EPS Growth Mid-Teens. Plans to boost
quarterly dividend by 17% to $0.82/share. 4Q revenue growth was driven by strong card member spending,
higher net interest income and accelerated card fee growth. KBW (outperform): Analyst Sanjay Sakhrani says
American Express had a good quarter. While the guidance was in-line, Sakhrani notes that this “may not be
good enough”. With accelerating spending trends, Sakhrani believes expectations “were for more on the
guidance vs. the 8%-10% revenue guidance provided”. Vital Knowledge: “The knee-jerk reaction may be one
of modest disappointment as EPS was ‘only’ in-line (they usually beat by a fairly healthy margin), but the
underlying fundamentals of the business remain quite healthy,” writes Adam Crisafulli. “While expenses ran
hot in Q4, AXP typically flexes this number up to absorb large non-operating tailwinds”. - Florida-based utility NextEra Energy climbed 5.2% as the company re-affirmed several years of
guidance and took a first step toward potentially restarting its shuttered nuclear plant in Iowa
The company posted 4Q adjusted EPS that came in just 1c short of analyst estimates and management
backed guidance through 2027. Evercore ISI analyst Durgesh Chopra writes that NextEra Energy posted
another strong quarter of renewable origination and noted the company’s progress with the
recommissioning of Duane Arnold nuclear plant. NextEra also announced it has partnered with GE Vernova to
build power generation for data centers and factories. NextEra aims to capitalize on the need for capacity
and gas generation, and expects its strategy to be helped by the Trump administration’s support for gas
power. - Twilio shares jumped 20.1% after the company reported preliminary fourth-quarter revenue growth
that topped the average analyst estimate. The software company also authorized a $2 billion share
buyback plan
COMMENTARY: Prelim. 4Q Revenue Growth About 11% Y/Y, estimate 8%. Targets 21%-22% Adj Operating
Margin for FY 2027. Authorized Share Buyback Program of $2.0B. Targets at Least $3B Cumulative Fcf 2025.
Expects 2024 Free Cash Flow Within Guidance Range. Sees 2025 organic revenue growth +7%-8% y/y.
Sees 2025 FCF $825 million to $850 million. YEAR FORECAST: Sees adjusted operating income $825 million to
$850 million. Baird analyst William Power (raised to outperform from neutral, PT $160): Following Twilio
investor day, came “away more confident in the company’s ability to continue to drive double-digit revenue
growth”. The stock’s valuation is reasonable, “particularly given potential upside scenarios”. Morgan Stanley
analyst Meta Marshall (equal-weight, PT $144 from $118): Walked away encouraged from Twilio’s event as
the company looks well placed to “grow more profitably than expected”. “AI was laid out as a bull case
driver, but so was cross-sell and GTM (go-to-market) improvements”.
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