Next page of Trump tariff plan sees steel and aluminium imports targeted at 25%

EU mid-market update: Next page of Trump tariff plan sees steel and aluminium imports targeted at 25% but EU vows response; US futures bounce after Friday selloff triggered by robust jobs report.

Notes/observations

- Trade war tensions dominate the narrative as US Pres Trump announced plans to impose a 25% tariff on all steel and aluminum imports. The move, set to take effect today, comes alongside China’s retaliatory tariffs on select US exports, which also kicked in today. German Chancellor Olaf Scholz warned the EU is prepared to respond "within an hour" if US tariffs target European goods. Steelmakers across Europe, including Thyssenkrupp and ArcelorMittal, faced pressure, while US steel rebar futures hovered near CNY 3,300 per tonne. Aluminum futures held above $2,640 per tonne.

- Major indices started week cautiously higher. Real estate, tech, oil and gas, and telecoms led gains, while basic resources underperformed. BP surged nearly 8% after activist investor Elliott Management acquired a stake in the company. Meanwhile, European natural gas futures (TTF) climbed to €58/MWh, the highest since January 2023, as colder weather increased heating demand and strained already low storage levels.

- Overnight, Asian markets opened lower but pared losses as the session progressed. Japan’s Nikkei fell 1.0%, while South Korea’s KOSPI closed flat after steelmakers like POSCO and Hyundai Steel initially dropped but recovered. Hong Kong’s Hang Seng outperformed, rising 1.7%, supported by China’s stronger-than-expected January CPI data, which showed inflation rising to 0.5% YoY, driven by Lunar New Year holiday effects. Japan’s 10-year yield edged up to 1.32%, a level not seen since 2011, as the country posted a record current account surplus in 2024.

- Asia closed mixed with Hang Seng outperforming +1.8%. EU indices -0.1% to +0.4%. US futures +0.3-0.6%. Gold +1.6%, DXY +0.2%; Commodity: Brent +0.9%, WTI +0.9%; Crypto: BTC +0.9%, ETH -0.1%.

Asia:

- China Jan CPI Y/Y: 0.5% v 0.4%e; PPI Y/Y: -2.3% v -2.2%e.

- Japan Dec Current Account Balance: 1.077¥ v ¥1.374Te; overall 2024 Current Account surplus of ¥29.3T was a record high.

- Japan 10-year yields continue edge up to 1.32% (highest since early 2011).

- Japan Chief Cabinet Sec Hayashi noted that Govt was aware of US Pres Trump's comments on steel and aluminum tariffs; To respond appropriately after assessing details, impact on country.

- Pres Trump stated after meeting Japan PM that Japan had committed to double defense spending by 2027 compared to first Presidential term (2017-21); US would extend full strength of American deterrence capabilities in defense of Japan.

- Reports circulated that Pres Trump would consider allowing Nippon Steel's takeover bid.

Americas

- Pres Trump said to announce 25% tariffs on all steel and aluminum imports on Monday (Feb 10th), on top of existing metals duties; No date as yet for implementation.

- US judge temporarily blocked Musk's DOGE from accessing Dept of Treasury's payment and data systems.

- House Republicans said to consider tax-cut figure of ~$4.7T for their budget reconciliation package.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.26% at 544.16, FTSE +0.29% at 8,726.04, DAX +0.20% at 21,806.86, CAC-40 +0.03% at 7,975.32, IBEX-35 +0.23% at 12,704.32, FTSE MIB +0.13% at 37,105.00, SMI -0.09% at 12,593.00, S&P 500 Futures +0.34%].

Market Focal Points/Key Themes: European indices open generally higher and remained upbeat through the early part of the session; Malta closed for holiday; among sectors leading the way higher are energy and real estate; lagging sectors include materials and health care; mining stocks weighted down by threat of tariffs, while oil & gas subsector supported after crude prices gained on tariffs; Netcompany to acquire SDC; reportedly BASF to sell its paints business; reportedly Iliad and Poste Italiane interested in Telecom Italia; earnings expected in the upcoming US session include McDonald’s, Loews Banca Generali and Coty.

Equities

- Energy: BP [BP.UK] +6.5% (reportedly Elliott taken significant stake in BP).

- Industrials: ArcelorMittal [MT.NL] -3.0%, Thyssenkrupp [TKA.DE] -1.0%, Salzgitter [SZG.DE] -1.5%, Voestalpine [VOE.AT] -1.0% (US Pres Trump said to announce 25% tariffs on all steel and aluminum imports Monday (US time), on top of existing metals duties; No date as yet for implementation), Rheinmetall [RHM.DE] -0.5% (President Trump confirmed he has spoken to Russia Pres Putin on the phone to try to negotiate an end to the Ukraine war), Gerresheimer [GXI.DE] -1.5% (confirmed talks with PE investors; Discussions are still in a very preliminary stage), Porsche [P911.DE] -1.0% (Oddoe and Bankaus cut analyst rating), Saab [SAABB.SE] +1.5% (SEB and Boutique firm raises analyst rating), Iveco [IVG.IT] +1.0% (Oddo raised to outperform) - Technology: Infineon Technologies [IFX.DE] -1.5% (TSMC guided Q1 Rev forecast closer to lower end of $25-25.8B due to impact of Jan 21st earthquake).

Speakers

- ECB’s De Guindos (Spain) commented that it was very important to avoid a trade war.

Currencies/fixed income

- USD maintained a firm tone on safe haven flows. Greenback was resilient as markets assessed the latest headlines surrounding US President Trump's tariff policy. Dealers were also awaiting Fed Chair Powell testimony before the Senate Banking Committee on Tuesday and before the House Financial Services Committee on Wednesday.

- USD/JPY was back above 152.30 after the pair lost over 2% last week.

-EUR/USD at 1.0330 by mid-session and GBP/USD at 1.2415.

- Spot gold continued its march upwards to hit fresh record highs above $2,900/oz.

- EU yields were slightly higher with focus on gas prices. European gas prices climb to a two-year high on supply concerns. German 10-year Bunds at 2.38%, UK 10-year Gilts at 4.48% and the US 10-year Note yield at 4.50%.

Economic data

- (SE) Sweden Feb SEB Housing-Price Indicator: 50 v 45 prior.

- (NL) Netherlands Dec Manufacturing Production M/M: -1.0% v +1.2% prior; Y/Y: -4.4% v -0.1% prior; Industrial Sales Y/Y: +2.3% v -1.4% prior.

- (FI) Finland Dec Industrial Production M/M: -1.7% v +0.7% prior; Y/Y: 1.6% v 2.2% prior.

- (SE) Sweden Dec Private Sector Production M/M: 1.0% v 1.3% prior; Y/Y: 3.0% v 2.5% prior.

- (SE) Sweden Dec Industrial Orders M/M: 2.0% v 2.7% prior; Y/Y: 5.8% v 5.0% prior.

- (SE) Sweden Dec Industry Production Value Y/Y: 9.0% v 2.6% prior; Service Production Value Y/Y: 1.6% v 3.5% prior.

- (SE) Sweden Dec Household Consumption M/M: -0.3% v +1.1% prior; Y/Y: 0.7% v 1.8% p.

- (NO) Norway Jan CPI M/M: 0.2% v 0.1%e; Y/Y: 2.3% v 2.2%e.

- (NO) Norway Jan CPI Underlying M/M: +0.1% v -0.1%e; Y/Y: 2.8% v 2.6%e.

- (NO) Norway Jan PPI including Oil M/M: 4.7% v 1.1% prior; Y/Y: 18.1% v 9.3% prior.

- (DK) Denmark Dec Current Account Balance (DKK): 50.7B v 39.5B prior.

- (DK) Denmark Jan CPI M/M: +0.6% v -0.3% prior; Y/Y: 1.5% v 1.9% prior.

- (DK) Denmark Jan CPI EU Harmonized M/M: +0.7% v -0.3% prior; Y/Y: 1.4% v 1.8% prior.

- (TR) Turkey Dec Unemployment Rate: 8.5% v 8.6% prior.

- (TR) Turkey Dec Industrial Production M/M: 7.0% v 1.6% prior; Y/Y: 7.0% v 1.6% prior.

- (AT) Austria Dec Industrial Production M/M: -2.9% v -1.8% prior; Y/Y: -9.6% v -4.5% prior.

- (CZ) Czech Dec Import Price Index Y/Y: 3.5% v 2.4% prior; Export Price Index Y/Y: 4.9% v 4.5%.

- (CZ) Czech Jan Unemployment Rate: 4.3% v 4.3%e.

- (CH) Swiss weekly Total Sight Deposits (CHF): 438.1B v 441.9B prior; Domestic Sight Deposits: 428.1B v 432.9B prior.

- (EU) Euro Zone Feb Sentix Investor Confidence: -12.7 v -16.5e.

- (GR) Greece Dec Industrial Production Y/Y: % v 4.9% prior.

- (HU) Hungary Jan Budget Balance YTD: B v -4095.8B prior.

Fixed income issuance

- None seen.

Looking ahead

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

- 05:30 (TR) Turkey to sell Bonds.

- 06:00 (IE) Ireland Jan Live Register Monthly Change: No est v +3.2K prior; Live Register Level: No est v 166.6K prior.

- 06:00 (PT) Portugal Dec Trade Balance: No est v -€2.5B prior.

- 06:00 (IL) Israel Jan Consumer Confidence: No est v 42 prior.

- 06:00 (RO) Romania to sell RON600M in 6.85% July 2030 bonds.

- 06:00 (IL) Israel to sell combined ILS2.95B in 2027, 2029, 2033, 2035, 2042 and 2051 bonds.

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 07:00 (IS) Iceland Jan Unemployment Rate: No est v 3.8% prior.

- 07:00 (MX) Mexico Jan Vehicle Production: No est v 224.9K prior; Exports: No est v 266.0K prior.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

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

- 08:30 (UR) Ukraine Jan CPI M/M: No est v 1.4% prior; Y/Y: 12.9%e v 12.0% prior.

- 09:00 (BR) Brazil Jan Vehicle Production: No est v 190.1K prior; Vehicle Sales: No est v 257.4K prior ; Vehicle Exports: No est v 31.4K prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.6-7.2B in 3-month, 6-month and 12-month bills.

- 11:00 (US) Jan NY Fed 1-Year Inflation Expectations Survey: No est v 3.0% prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 88.5 prior.

- 18:30 (AU) Australia Feb Westpac Consumer Confidence: No est v 92.1 prior.

- 19:01 (UK) Jan BRC Sales Like-For-Like Y/Y: 1.0%e v 3.1% prior.

- 19:30 (AU) Australia Jan NAB Business Confidence: No est v -2 prior; Business Conditions: No est v 6 prior.

- 20:01 (IE) Ireland Jan AIB Construction PMI: No est v 51.6 prior.

- 22:00 (ID) Indonesia Jan Consumer Confidence: No est v 127.7 prior.

- 22:00 (TH) Thailand to sell THB30B in 2028 Bonds.

- 22:30 (HK) Hong Kong to to sell 3-month, 6-month and 12-month bills.