Market movers today
It is another quiet day on the data front with only the ZEW indicator in Germany and consumer confidence in the eurozone for January as the noteworthy releases.
Market focus will in coming days be on the political announcements from the gathering of leading policy makers and experts at the World Economic Forum in Davos. The meeting this year will be particularly interesting after the Trump administration yesterday imposed tariffs on solar panels and washing machines, drawing strong criticism from China and South Korea.
Selected market news
Asian shares are generally rising this morning to fresh highs. One positive aspect is the reopening of the US government starting today as the Republicans and the Democrats yesterday agreed on a short -term funding bill expiring on 8 February in an at tempt to get more time to negotiate the immigration reform. The deal probably comes as the Democrats were concerned about losing support , as a shutdown is very unpopular among voters amid the looming mid-term election in November. As the shutdown only lasted a few days, there are no real economic costs and thus we still believe the Fed is on track to deliver a hike in March (for more details see our flash comment here).
The rise in the Asian stock markets comes despite the US administ ration imposing temporary tariffs on imported solar panels and washing machines. A tariff of 30% will be applied to imported solar panels while tariffs will begin at 20% on large residential washing machines. The decision comes after the independent US International Trade Commission (ITC) determined that imports of solar panels and washers had hurt American companies. Tariffs will be in place for three years and will taper down. Most of US imports of solar panels come from China. The US move drew strong criticism from China and South Korea, with the South Koreans warning to taking the case to the WTO. The move by the US administration is particularly interesting ahead of new negotiations on NAFTA later this week and US President Trump participating in the World Economic Forum in Davos with all world leaders.
This morning, the Bank of Japan (BoJ) kept its monetary policy steady (keeping its short -term interest and 10-year yield targets unchanged), while sounding slightly more upbeat on inflation expectations. It left JGB purchases unchanged at the current pace of about JPY80trn. The USD/JPY dropped 30 pips to 110.60 initially, before rebounding back to 110.80. The press conference is due to start at 7:30 CET.
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