European leaders genuinely concerned about Greenland threats by Trump

EU Mid-Market Update: European leaders genuinely concerned about Greenland threats by Trump; AMD and Nvidia keynotes from CES in focus.

Notes/observations

- Risk sentiment remains constructive. European equities opened higher, tracking gains in Asia and US equity futures, with several European markets closed for Epiphany Day. Cyclicals, technology and resources are leading, while defense stocks continue to outperform amid heightened tensions from Russia/Ukraine and vulnerability of NATO breakdown. Bonds are mixed, with US Treasuries and gilts modestly higher in yield, while US dollar is softer.

- Markets continue to largely look through Venezuela-related geopolitical developments. Oil prices remain under pressure due to oversupply risks

- AI remains a dominant theme. Semiconductor leaders unveiled next-generation AI server platforms and GPUs earlier than expected (AMD at CES), reinforcing medium-term demand visibility. Partnerships across autonomous driving, robotics and LiDAR ecosystems boosted select after-hours names. Analysts continue to highlight AI’s spillover benefits into autos, robotics, cloud infrastructure and Asian semiconductor supply chains. AMD, Nvidia, Intel and Qualcomm announcements in focus (details below).

- Macro data was primarily supportive French Dec inflation eased to 0.8% YoY, UK shop price inflation edged up to 0.7%, and final services PMIs were mostly uneventful, but Italian reading had notable weakness of 51.5 v 54.1 estimate. Sterling strengthened on firmer UK food inflation, reducing expectations for near-term BoE easing. Yesterday in the US, weak ISM manufacturing data weighed on the dollar ahead of Friday’s nonfarm payrolls.

- In Asia, Japan’s bond yields reached multi-decade highs amid soft auction demand, while China’s long-dated bond futures fell on redemption concerns.

- European corporate news was relatively light. UK retailer Next raised profit guidance following strong full-price sales growth. Several European industrial and materials names traded lower on cautious updates.

- AMD key points: New Ryzen AI 400 Series processors for AI PCs (up to 60 TOPS NPU, stronger performance for laptops/desktops). Expanded Ryzen AI Max+ lineup (e.g., 392 and 388 SKUs) with powerful integrated graphics for thin laptops, workstations, and mini-PCs. Ryzen 7 9850X3D, a Zen 5-based gaming CPU with 3D V-Cache, claimed as the fastest gaming processor. Helios rack-scale AI platform with upcoming MI455X/MI500-series GPUs for data centers.

- Nvidia key points: Rubin (formerly Vera Rubin) next-gen AI platform now in production, promising ~5x performance over Blackwell for data centers (shipping ramp in 2H 2026). DLSS 4.5 updates with improved super-resolution and multi-frame generation. Advances in robotics, autonomous driving (Alpamayo model), and cloud gaming/GeForce Now expansions.

- Intel key points: Launched Intel Core Ultra Series 3 processors (codename Panther Lake), the first AI PC platform built on Intel's 18A process node. Combines efficiency of Lunar Lake with performance scaling of Arrow Lake; up to 60% better performance, strong integrated Arc graphics (new Arc B390 iGP claimed 2x faster than AMD in select titles). Pre-orders for laptops start Jan. 6, 2026; broad availability soon after. Also teased handheld gaming platforms and edge/industrial uses.

- Qualcomm key points: Unveiled Snapdragon X2 Plus (mid-range Arm-based chip for affordable Windows laptops, ~$800+). Features 6- or 10-core Oryon CPU, up to 80 TOPS NPU for AI; 35% faster peak performance and 43% less power than prior X Plus. Joins Snapdragon X2 Elite/Extreme lineup; first devices expected Q1/Q2 2026. Also announced Dragonwing IQ10 robotics platform for humanoids and industrial bots, plus AI/robotics expansions.

- Asia closed mixed with KOSPI outperforming +1.5%. EU indices +0.5% to -0.5%. US futures -0.2% to flat. Gold -0.1%, DXY +0.1%; Commodity: Brent +0.3%, WTI +0.2%; Crypto: BTC +0.4%, ETH +1.6%.

Asia

- Australia Dec Final PMI Services: 51.1 v 51.0 prelim (confirmed 23rd month of expansion).

- Japan’s monetary base fell in 2025 for the first time in nearly two decades, underscoring the Bank of Japan’s steady retreat from ultra-loose monetary policy.

Global Conflict/tensions

- President Trump stated that the US was not at war with Venezuela; Venezuela won’t have elections in the next 30 days; US might subsidize an effort by large oil companies to rebuild Venezuela’s energy infrastructure.

- President Trump was briefed VP Rodriguez would be best placed to maintain near term stability and lead a temporary govt. CIA concluded that Maduro loyalists were better able than the Opposition party to lead Venezuela.

- Venezuela Representative to UN: Institutions were functioning normally, constitutional order preserved and govt was in control of Venezuelan territory.

- Venezuela opposition leader Machado: Venezuela would be the United States' principal ally in matters of security, energy, democracy, and human rights.

- Israeli PM Netanyahu said to have asked Russian President Putin to tell Iran that Israel did not plan further strikes.

Europe

- UK Dec BRC Shop Price Index Y/Y: 0.7% v 0.6% prior; Food prices 3.3% v 3.0% prior.

Americas

- Fed's Kashkari (voter) noted that he guess was the Fed was pretty close to neutral right now; Jobs market clearly cooling; Did think there was a risks that unemployment rate could pop.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.05% at 602.08, FTSE +0.44% at 10,048.30, DAX +0.09% at 24,878.33, CAC-40 -0.55% at 8,166.00, IBEX-35 -0.20% at 17,579.48, FTSE MIB -0.01% at 45,843.50, SMI -0.04% at 13,230.20, S&P 500 Futures -0.06%].

Market Focal Points/Key Themes: European indices opened generally positive but failed to maintain momentum in early trading; several indices closed for holidays including Cyprus, Finland, Greece and Sweden; geopolitical situation seen affecting risk sentiment; among outperforming sectors are financials and industrials; underperforming sectors include consumer discretionary and technology; AB InBev acquires minority stake in in its US-based metal container plants from Apollo; InPost receives potential takeover offer; focus on German CPI later in the day; earnings expected in the upcoming US session include ARR.

Equities

- Consumer discretionary: Next [NXT.UK] +2.5% (trading update; guidance), Adidas [ADS.DE] -6.5% (double analyst downgrade).

- Industrials: InPost [INPST.NL] +18.5% (proposal to be acquired), Bucher Industries [BUCN.CH] -2.5% (analyst downgrade).

- Technology: Infineon [IFX.DE] +4.5% (Microchip raised outlook), ASML [ASML.NL] -1.0% (AMD/Nvidia comments at CES).

Speakers

- ECB’s Villeroy (France): Recent French CPI reading was good news for favorable rates. Attacks on Fed independence could undermine USD.

- Japan government panel member Wakatabe said to 'urge' the BOJ to anchor inflation expectations around the 2.0% target.

- China Commerce Ministry announce to step up control of exports of duel-use items to Japan, effective immediately.

- China PBOC stated it would continue to implement appropriately loose monetary policy; To use RRR cut and interest rate cut tools flexibly in 2026.

Currencies/fixed income

- USD was steady in quiet trade during the session.

- EUR/USD holding above the 1.17 level as EU inflation data should a softening in the recent trend. ECB’s Villeroy reiterated view that recent CPI readings was good news for favorable rates.

- GBP/USD at 16-week highs as food inflation remained a concern and reduced any prospect of further near-term interest-rate cuts. Pair at 1.3550 by mid-session.

- USD/JPY at 156.25 as higher Japanese bond yield provided an excuse for the yen to firm up. The 160 area remains key resistance in the pair - 10-year German Bund yield last at 2.86%, France 10-year Oat at 3.56% and 10-year Gilt yield at 4.51% 10-year Treasury yield: 4.17%; 10-year JGB: 2.12%.

Economic data

- (ZA) South Africa Nov PMI (whole economy): # v 49.0 prior (3rd month of contraction).

- (HU) Hungary Nov Trade Balance: -€0.1B v +€0.6B prior.

- (FR) France Dec Preliminary CPI M/M: 0.1% v 0.2%e; Y/Y: 0.8% v 0.9%e.

- (FR) France Dec Preliminary CPI EU Harmonized M/M: 0.1% v 0.2%e; Y/Y: 0.7% v 0.7%e.

- (CZ) Czech Nov National Trade Balance (CZK): B v 30.6Be.

- (ES) Spain Dec Services PMI: 57.1 v 54.7e; Composite PMI: 55.6 v 54.3e.

- (TW) Taiwan Dec Foreign Reserves: $602.6B v $599.8B prior.

- (IT) Italy Dec Services PMI: 51.5 v 54.1e (13th month of expansion); Composite PMI: 50.3 v 53.3e.

- (FR) France Dec Final Services PMI: 50.1 v 50.2 prelim (confirmed 2nd month of expansion); Composite PMI: 50.0 v 50.1 prelim.

- (DE) Germany Dec Final Services PMI: 52.7 v 52.6 prelim (confirmed 4th month of expansion); Composite PMI: 51.3 v 51.5 prelim.

- (EU) Euro Zone Dec Final Services PMI: 52.4 v 52.6 prelim (confirmed 7th month of expansion); Composite PMI: 51.5 v 51.9 prelim.

- (DE) Germany Dec CPI North Rhine Westphalia M/M: 0.0% v -0.3% prior; Y/Y: 1.8% v 2.3% prior.

- (DE) Germany Dec CPI Hesse M/M: +0.1% v -0.2% prior; Y/Y: 2.2% v 2.5% prior.

- (DE) Germany Dec CPI Brandenburg M/M: +0.1% v -0.2% prior; Y/Y: 2.2% v 2.6% prior.

- (DE) Germany Dec CPI Saxony M/M: +0.2% v -0.2% prior; Y/Y: 1.9% v 2.2% prior.

- (UK) Dec New Car Registrations Y/Y: +3.9% v -1.6% prior.

- (UK) Dec Final Services PMI: 51.4 v 52.1 prelim (confirmed 8th month of expansion); Composite PMI: 51.4v 52.1 prelim.

- (UK) Dec Official Reserves Changes: $1.5B v $1.4B prior.

Fixed income issuance

- None seen.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:15 (CH) Switzerland to sell 3-month Bills.

- 05:30 (DE) Germany to sell €6.0B in 2% Dec 2027 Schatz.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR).

- 06:00 (IE) Ireland Dec Preliminary CPI EU Harmonized M/M: No est v -0.2% prior; Y/Y: No est v 3.1% prior.

- 06:00 (PT) Portugal Nov Industrial Production M/M: No est v 0.4% prior; Y/Y: No est v -0.9% prior.

- 06:00 (TR) Turkey to sell Bonds.

- 06:30 (TR) Turkey Dec Real Effective Exchange rate (REER): No est v 71.79 prior.

- 06:30 (EU) ESM to sell €1.1B in 3-month bills;

- 06:30 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 07:00 (MX) Mexico Dec Vehicle Domestic Sales: No est v 148.4K prior.

- 07:00 (MX) Mexico Dec Consumer Confidence: No est v 44.2 prior.

- 08:00 (BR) Brazil Dec Services PMI: No est v 50.1 prior; Composite PMI: No est v 49.6 prior.

- 08:00 (DE) Germany Dec Preliminary CPI M/M: 0.3%e v -0.2% prior; Y/Y: 2.1%e v 2.3% prior.

- 08:00 (DE) Germany Dec Preliminary CPI EU Harmonized M/M: 0.4%e v -0.5% prior; Y/Y: 2.2%e v 2.6% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (US) Fed’s Barkin.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:30 (CA) Canada Dec Services PMI: No est v 44.3 prior; Composite PMI: No est v 44.9 prior.

- 09:45 (US) Dec Final S&P Services PMI: 52.9e v 52.9 prelim; Composite PMI: No est v 53.0 prelim.

- 11:30 (US) Treasury to sell Week Bills.

- 13:00 (BR) Brazil Dec Trade Balance Monthly: $7.1Be v $5.8B prior; Exports: $30.6Be v $28.5B prior; Imports: $23.6Be v $22.7B prior.

- 16:30 (US) Weekly API Crude Oil Inventories:

- 19:30 (JP) Japan Dec Final PMI Services: No est v 52.5 prelim; PMI Composite: No est v 51.5 prelim.

- 19:30 (AU) Australia Nov Building Approvals M/M: +2.0%e v -6.4% prior; Private Sector Houses M/M: No est v -2.1% prior.

- 19:30 (AU) Australia Nov CPI M/M: No est v 0.0% prior; Y/Y: 3.6%e v 3.8% prior; CPI Trimmed Mean M/M: No est v 0.3% prior; Y/Y: 3.2%e v 3.3% prior.

- 20:00 (PH) Philippines Nov Unemployment Rate: No est v 5.0% prior.

- 22:30 (TH) Thailand Dec CPI M/M: 0.0%e v 0.2% prior; Y/Y: -0.3%e v -0.5% prior; CPI Core Y/Y: 0.7%e v 0.7% prior.