Futures Slide To Session Low As Bounce Fizzles With All Eyes On Trump In Davos

Futures have reversed modest overnight gains and are trading near session lows while small caps continue to outperform (for a record 12th day in a row) even as Japanese and global bond yields stabilize and the market awaits today's major catalysts including Trump's speech in Davos due within the hour after flight had to be changed due to mechanical issues, while the Supreme Court will consider whether Trump can fire the Fed’s Cook.Selling pressure initially eased after Trump struck a more conciliatory tone ahead of his departure for the World Economic Forum, even as he continued to insist the US should take control of the Danish territory. As of 8:00am, S&P futures are down 0.1%, while Nasdaq futures drop 0.3% with Mag7 names mixed in premarket trading, semis are bid; discretionary leading Staples; energy / mats seeing significant outperformance. Bond yields are 1-2bp lower and USD is once again lower on the day. Commodities are seeing strength in ags, natgas and precious, with gold approaching a record high at 4,900 The macro focus today is Davos and housing related data. 

In premarket trading, Magnificent Seven stocks are mostly lower (Nvidia +0.1%, Meta +0.01%, Tesla -0.2%, Amazon -0.3%, Microsoft -0.3%, Alphabet -0.9%, Apple -0.2%)

• Biohaven (BHVN) rises 3% after RBC upgraded the drugmaker to outperform, citing recent supportive data that reduces risk.
• Halliburton (HAL) climbs 2% after the fracking company reported fourth-quarter adjusted earnings per share that beat the average analyst estimate.
• Johnson & Johnson (JNJ) falls 1% after posting fourth-quarter sales.
• Kraft Heinz (KHC) declines 5% as Berkshire Hathaway may soon sell some or all of its stake in the company, just months after the cheese and ketchup maker announced plans to split into two.
• Nathan’s Famous (NATH) rises 8% as Smithfield Foods agreed to buy the company for $102 a share.
• Netflix (NFLX) falls 7% after the streaming giant forecast first-quarter earnings below the average analyst estimate. The company also plans to pause its share buybacks in an effort to accumulate cash to fund the pending acquisition of Warner Bros.
• Progress Software (PRGS) rises 6% after the company’s 2026 revenue forecast exceeded Wall Street expectations.
• United Airlines (UAL) rises 3% after the carrier beat Wall Street estimates for the fourth quarter and anticipates a strong 2026, driven by demand from high-spending domestic passengers and international travelers.

In corporate news, Qatar’s sovereign wealth fund is said to have considered separating its overseas holdings from its domestic portfolio. Kraft Heinz is lower in premarket trading after registering up to 325 million shares held by Berkshire Hathaway for potential sale.

The market's mood remains extremely shaky (and even more illiquid with top of book collapsing 60% overnight according to Goldman) with gold continuing to hit new highs. JPMorgan AM CIO Bob Michele said Tuesday’s market selloff should be a message to Trump to take action to restore calm. Still, the moves weren’t nearly as dramatic as April’s selloff, leaving the TACO trade with a problem: If TACO means investors don’t need to panic, then there are no market collapses violent enough to spook Trump into backing down.

Meanwhile, Trump expressed confidence that the EU would continue to invest in the US even if he imposed new tariffs related to his quest to annex Greenland. He is due to speak in Davos at 8:30 a.m. New York time, though his travel was delayed after an electrical issue with Air Force One. His threat of tariffs in pursuit of Greenland, and refusal to rule out military options, are giving the equity bull run its biggest test since the trade turmoil of April, even as investor optimism remains elevated amid a broadening rally. Sill, selling pressure initially eased after Trump struck a more conciliatory tone ahead of his departure for the World Economic Forum, even as he continued to insist the US should take control of the Danish territory.

In other newsflow out of Davos, Bessent said Powell is “politicizing” the Fed and cautioning European nations against ramping up their military presence on Greenland. That followed news of France requesting that NATO carry out a military exercise. And there’s also drama over a Deutsche Bank analyst note that suggested European investors may dump US assets.

A sharp rebound in long-dated Japanese bonds offered a lift to global debt markets, with the yield on 30-year US Treasuries holding steady as shorter-term rates eased. Precious metals remained the haven of choice as gold closed in on $4,900 an ounce. The dollar’s slide extended to a fourth day.

“Despite all the geopolitical noise, we’re in a purely technical correction in equity markets, not a widespread risk-off episode,” said Roberto Scholtes, head of strategy at Singular Bank. “Conciliatory remarks by Trump would surely improve the mood in markets but, in my view, wouldn’t trigger a strong rally unless yield curves come down.”

Rotation continues, with the Russell 2000 now outperforming the Mag 7 by more than 10% year-to-date. Tesla closed below its 100-DMA for the first time since July, while Netflix’s disappointing guidance will do little to help tech in the short-term. Today’s Taking Stock highlights strategists seeing a buying opportunity — they reckon risk assets have long looked past geopolitics, except when unrest causes oil prices to spike.

While Trump earlier played down the likelihood that the standoff over Greenland would jeopardize his trade deal with the European Union, Treasury Secretary Scott Bessent kept up the administration’s offensive on Wednesday. Speaking in Davos, Bessent dismissed concerns about Denmark and other nations pulling out of Treasuries, saying Danish investment in US bonds was “irrelevant.” He also cautioned European nations against ramping up their military presence in Greenland.

JPMorgan Asset Management’s Bob Michele said the selloff in markets was a message to the White House to restore calm. “Things are a bit chaotic and the markets do feel a bit panicked,” Michele, chief investment officer and global head of fixed income, told Bloomberg TV. “The market had a fit in April and then they backed off of a lot of things and then calm ensued. We need to hear some of the same kinds of things.”

Investors will also follow arguments in the US Supreme Court over whether Trump can fire Federal Reserve Governor Lisa Cook. The hearing coincides with a Justice Department criminal investigation into Fed Chair Jerome Powell, together serving as tests of the central bank’s independence.

Elsewhere, as earnings season kicks into full swing, strategists said a sustained upswing in stocks will depend on strong forecasts and signs that capital investments in big tech are starting to pay off. “We’ve overstretched in many different assets over the past two weeks, which meant that you’ve got to overbought territories and so you had to have a bit of a healthy correction,” said Georges Debbas, head of European equity and derivatives strategy at BNP Paribas.

European stocks have also drifted lower throughout the morning with markets tentative ahead of President Donald Trump’s Davos appearance. The Stoxx 600 falls 0.6%, weighed down by financials and tech. Materials and luxury names outperform.  Here are the biggest movers Wednesday:

• European mining stocks are leading gains on the Stoxx 600 benchmark
• Rio Tinto rallied as much as 5.2% in London, to its highest intraday level since May 2021 after copper and iron ore production topped analyst estimates
• Burberry shares jump as much as 6.6%, after a third-quarter sales update that was perceived positively by analysts who see it as another sign that the UK fashion brand’s turnaround strategy is paying off
• Barry Callebaut shares surge as much as 7.9%, the most in a month, after the Swiss bulk chocolate maker reported sales that beat estimates and replaced its chief executive officer
• Quilter shares rise as much as 4.9%, the most in three months, as the UK wealth manager reports a record quarter for net inflows
• JD Sports shares climb as much as 3.2% after the sportswear retailer’s results reveal
• Danone falls as much as 12% before trimming the decline. Traders point to broker commentary around an announcement by the Singapore Food Agency recalling additional infant formula products
• DocMorris shares drop as much as 8.3% in Zurich, after the online pharmacy provided a trading update, with Barclays analysts noting “some disappointment” around the limited prescription growth in Germany in 4Q
• JD Wetherspoon shares fall as much as 8.5%, marking the biggest drop since March, as the pub chain tempered profit expectations for this year after warning costs have increased more than anticipated
• Apotea falls as much as 18%, the most since its 2024 IPO, after the Swedish online pharmacy issued a profit warning for the fourth quarter on Friday evening

Earlier in the session, Asian stocks dropped but were off the worst level of the session: mainland China indexes gain ground, while those in Japan move off worst levels and Kospi flips to a modest advance. The ChiNext index outshines regional peers with an almost 1% rally.

In FX, the Bloomberg Dollar Spot Index is down 0.1% with the greenback mixed versus peers. The kiwi and krone are top of the leaderboard, while the franc and pound are at the bottom. The latter saw little immediate reaction to a larger-than-expected uptick in headline inflation, with the increase expected to be temporary.

In rates, treasuries are up a few ticks with yields across the curve down 1-2bps as the yield curve continuing to steepen. The initial bid in bunds that was triggered by a recovery in JGBs overnight has fizzled out. A sharp rebound in long-dated Japanese bonds during Asia session provided support, however S&P 500 futures have erased their rebound following 2.1% cash-market slump. US front-end yields are about 2bp richer on the day with 5s30s spread steeper by about 2bp. 10-year near 4.28% is about 1bp lower, outperforming German counterpart by about 2bp. UK 10-year yield is also marginally lower on the day following December inflation data. JGB market saw calmness restored after political leader Tamaki suggested debt buybacks and reducing 40-year bond issuance as next steps.Treasury auctions resume Wednesday with $13 billion 20-year bond reopening. WI 20-year yield near 4.875% is ~8bp cheaper than last month’s auction, which stopped through by 0.1bp. A $21 billion 10-year TIPS auction follows on Thursday. Focal points of Wednesday’s US session include a 20-year bond auction and US President Trump speech in Davos at 2:30pm local time (8:30am in New York). 

In commodities, the rally in precious metals has continued with spot gold and silver higher by 2.2% and 0.2% respectively - the former hit another all-time-high and is just over $100 away from the $5,000/oz mark. Crude has turned positive. Bitcoin is down 0.7%. Natural gas futures surged as much as 27% as weather forecasts call for a deep freeze to grip much of the country during the weeks ahead. The IEA increased its forecast for global oil demand growth in 2026 for a third consecutive month, trimming a projected supply glut.

The US economic calendar includes October construction spending and December pending home sales (10am). Fed officials are in communications blackout ahead of the Jan. 28 policy decision

Market Snapshot

• S&P 500 mini +0.2%
• Nasdaq 100 mini +0.2%
• Russell 2000 mini +0.3%
• Stoxx Europe 600 -0.4%
• DAX -0.7%
• CAC 40 -0.2%
• 10-year Treasury yield -2 basis points at 4.28%
• VIX -0.5 points at 19.62
• Bloomberg Dollar Index little changed at 1205.65
• euro -0.2% at $1.1705
• WTI crude -0.6% at $60.01/barrel

Top Overnight News

• President Donald Trump arrived in Switzerland to attend the World Economic Forum and is set to deliver his speech at its scheduled time despite his flight being delayed by a mechanical issue.Trump arrived on a smaller Boeing 757 plane typically used by the US vice president and other Cabinet members, in lieu of the 747 aircraft he initially planned to use for the transatlantic trip. Among other things, Trump's speech will touch on Venezuela and Greenland: BBG
• A Supreme Court hearing starts today over Trump’s effort to oust Lisa Cook from the Fed over mortgage-fraud allegations that she denies. BI gives her a 60% chance of winning given the justices’ previous signal of a higher bar for removing Fed governors. BBG
• After pulling back from strikes on Iran last week, President Trump is still pressing aides for what he terms “decisive” military options, U.S. officials said, as Iran appears to have tightened its control of the country and targets protesters through a crackdown that has killed thousands. WSJ
• Japanese bonds rebounded after Finance Minister Satsuki Katayama called for calm after a rout had pushed super-long yields to record highs. BBG
• Germany has joined France in saying it will ask the Commission to explore unleashing the Anti-Coercion Instrument at the emergency EU leaders' summit in Brussels on Thursday evening if Trump doesn’t walk back his Greenland threats. Politico
• Japanese Prime Minister Sanae Takaichi may struggle to calm a bond market jolted by her vow to cut the consumption tax rate. The BOJ could intervene in markets and adjust its taper or conduct buying operations, but the central bank “has a very high bar” for such actions. RTRS
• China is expanding its lead over the US in power generation, adding 7x more new capacity in 2025 to help keep electricity costs down as Beijing seeks to overcome the American lead in AI based on chip performance. Nikkei
• Nvidia CEO Jensen Huang said the infrastructure around AI will need trillions of dollars in additional investment over the coming years on a global basis, and the industry will create jobs. BBG
• Inflation in the U.K. rose a little more than expected in December, as BoE policymakers mull when next to cut their key interest rate. Britain’s annual rate of consumer-price inflation was 3.4% in December, up from 3.2% in November in the first increase since July. WSJ
• US natural gas futures jumped more than 22% on a freezing weather outlook. The IEA raised its 2026 oil demand growth forecast for a third month. Oil fell. BBG
• Air Force One carrying US President Trump has turned back to Joint Base Andrews due to a 'minor electrical issue' on the aircraft, Axios reported; Trump will board another plane and continue towards Davos.
• The White House releases President Trump's executive order to restrict Wall Street firms from buying single-family homes.

Trade/Tariffs

• USTR Greer said EU trade agreement focuses on trade rather than national security; however, relationship with EU negotiator remains great. Are in a good spot with China. It is important to talk with Congress on export controls.
• US Treasury Secretary Bessent said there are no US-UK talks scheduled at the moment.
• US Treasury Secretary Bessent speaking at Davos said free trade should be fair trade.
• US President Trump said tariff revenue replacing income tax is an option.
• South Korean President Lee said he is not worried about the current talks on US chip tariffs, could accelerate US inflation.
• USTR Greer and US Treasury Secretary Bessent are highly likely to meet their Chinese counterparts before April, Fox News reported.

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks traded mixed, with initial downside paring back as the session continued. ASX 200 held onto earlier losses, with downside in IT and Financials counteracting the gains seen in miners following the rise in metals. Nikkei 225 continued its recent weakness for a fifth straight session, weighed on by banks and exporters, as worries over Japan’s fiscal sustainability hit Japanese markets. KOSPI chopped throughout the session, as the South Korean market traded on either side of the unchanged mark. Hang Seng and Shanghai Comp. traded with slight gains, albeit very modestly, but limited with a lack of catalysts

Top Asian News

• New Zealand's PM Luxon called for the General Election to be held on November 7th.

European bourses (STOXX 600 -0.2%) are mostly trading lower as uncertainty over trade tensions, sparked by developments surrounding Greenland, continues to weigh on sentiment. European sectors are mixed. Leading are Basic Resources (+3.1%), Automobiles & Parts (+0.9%) and Chemicals (+0.9%). Basic Resources is the clear outperformer, supported by stronger metal prices, with gold hitting a fresh all-time high during the APAC session and copper rebounding. Movers in the early morning trade include Burberry (+4.8%) after the Co. announced a strong Q3 trading update.

Top European News

• UK CPI YoY (Dec) Y/Y 3.4% vs. Exp. 3.3% (Prev. 3.2%); All Services 4.5% (prev. 4.4%). ONS. "Inflation ticked up a little in December, driven partly by higher tobacco prices, following recently introduced excise duty increases.". "Airfares also contributed to the increase with prices rising more than a year ago, likely because of the timing of return flights over the Christmas and New Year period.". "... partially offset by a fall in rents inflation and lower prices for a range of recreational and cultural purchases.".

FX

• DXY is essentially flat this morning, with the Dollar attempting to stabilise following selling pressure in the prior session; currently holding within a narrow 98.45 to 98.64 range, sitting below its 100 DMA at 98.69. Focus remains centred on President Trump and his speeches in Davos. The Greenland situation remains tense, with EU leaders pushing back on the recently imposed US tariffs. As it stands, the subject matter of Trump’s speech is unknown, but could touch on a multitude of different factors, including Ukraine/Russia, Greenland, trade/tariffs, Fed independence, defence spending and credit card caps. Trump is pencilled in to speak at 13:30 GMT, but could be subject to change as Trump’s plane to Davos was delayed by around 3 hours.
• G10s broadly are mixed vs the Dollar, with mild outperformance in the Antipodeans (AUD +0.3%, NZD +0.3%), whilst the CHF (-0.3%) lags vs peers. Nothing behind the pressure in the Swiss Franc, but perhaps some paring of the outperformance seen in the prior session as the risk tone attempts to improve today. That aside, SNB's Schlegel said they could have negative inflation this year, though it is not a problem in the short-term. Elsewhere, attention this week has been on the JPY – which is currently posting very mild gains vs the USD. Stabilisation in the JPY comes as the recent JGB weakness subsided overnight.
• GBP is currently flat vs the USD. Earlier, a mixed inflation report will do little to shift the dial at the BoE in the near-term. Headline topped expectations, but was subject to caveats, whilst the Core Y/Y metrics printed either in line or cooler-than-expected. ING opines that despite the uptick in the headline figure, UK inflation should still fall to 2% in April, and see cuts in both March and June. Cable currently trades within a 1.3414 to 1.3456 range.

Fixed Income

• A firmer start for fixed benchmarks. A move that is largely a rebound from the significant selling pressure seen on Tuesday. Once again, JGBs in focus with overnight commentary helping the benchmark pare yesterday's downside and is back to the 131.45 region. However, in recent trade global paper dipped off best levels, but lacked a clear driver.
• USTs in the green, posting gains of six ticks at most, but have slipped off best levels in recent trade. The docket for the US is firmly focused on Davos, where President Trump will be speaking. However, due to a flight issue, he is around three hours delayed; the original schedule had him down for 13:30GMT/08:30ET. Hit 111-19 at best, firmer but well within yesterday's 111-09 to 111-30+ band. Trump aside, today's docket also turns to the SCOTUS, where arguments in Fed Governor Cook's case will be heard. Furthermore, we could get an opinion on the tariff matter, though, as usual, this is not known in advance.
• Bunds following suit, as high as 128.25, which marginally took the benchmark above Tuesday's 128.19 peak, but unsurprisingly still someway shy of the week's 128.32 opening level. Though the broader complex took a hit, which took Bunds to a session low of 127.94. The German auction thereafter, was mixed, but ultimately spurred little action in the benchmark.
• Gilts gapped higher by 26 ticks before extending to just above the 92.00 mark, hitting a 92.03 peak with gains of 45 ticks at most. Though, as above, this is still shy of Monday's 92.50 opening mark. A move driven by Gilts catching up to the relative recovery seen in benchmarks overnight. Additionally, impetus may have been derived from the morning's CPI series as, while the headline was above consensus, that is caveated by fiscal/one-off related impacts, while the Services and Core figures were in-line or cooler-than-expected, depending on the provider. Overall the report will not shift much for the BoE in the near term.
• Japan's SMFG (8316 JT) plans big JGB purchases after selloff, Bloomberg reported.

Commodities

• Crude curtailed by a pickup in the USD and after the geopolitical remarks re. Ukraine on Tuesday. US Envoy Witkoff, on Tuesday, said that discussions with Russian counterpart Dmitriev were "very positive". A remark that seemingly sparked a bout of pressure in Crude, causing the benchmarks to drift into the early APAC session before stabilising and then dipping once again to troughs of USD 59.22/bbl and USD 63.61/bbl for WTI and Brent, respectively. Currently, the complex holds around USD 0.60/bbl off those lows, but remains in the red by around USD 0.50/bbl on the session.
• A familiar story for spot gold, at another ATH of USD 4888/oz. The narrative for the yellow metal is much the same as in recent sessions.
• Base peers in the green, 3M LME Copper firmer by over 1%. Action spurred by the stabilisation of the risk tone seen in some regions overnight and amid gains in China, though the region's strength lacked a specific fundamental driver.
• Chevron (CVX) aims to finalise the sale of its oil assets in Singapore in Q1.
• IEA OMR: raises 2026 average oil demand growth forecast to 930k bpd (prev. forecast 860k bpd). Sees total world oil supply 3.69mln bpd higher than demand in 2026 in monthly report (prev. report 3.84mln bpd). Estimates OPEC+ supply growth at 1.3 mln b/d in 2025. Further decline in global oil supply in December continued to narrow surplus.
• Thai's Central Bank Chief said they will introduce a daily cap on gold trading at 50mln or 100mln Baht from the 29th of January.
• US Southern Command announced and published footage of its seventh boarding and seizure of a sanctioned crude oil tanker, reportedly the Liberian-flagged, in the Caribbean Sea.

Geopolitics: Ukraine

• A planned announcement of an USD 800bln 'prosperity plan' between Ukraine, Europe and the US has been delayed due to Europe's opposition from President Trump to acquire Greenland, the FT reported citing officials.
• US special envoy Witkoff reports significance progress on Ukraine and Russia in recent weeks. Adds that land deal remains the sticking point. Scheduled to meet Putin on Thursday. On the Middle East: Hamas is receptive to the idea of demilitarisation. Not negotiating with Iran right now but says its hard to tell if Iran is still killing protestors.

Geopolitics: Middle East

• Iran's Foreign Minister warns Washington that any all-out confrontation with Iran would be fierce and engulf the entire region, Sky News Arabia reported.
• US President Trump said Iran will be "wiped off the face of the Earth" if Iran attempts to carry out an assassination threat against him, NewsNation reported.
• US President Trump is still pressing aides for "decisive" military options on Iran, WSJ reported citing officials.

Geopolitics: Other

• NATO's Rutte said the allies must defend the Arctic region amid rising Chinese and Russian activity.
• EU's von der Leyen said the EU is fully prepared to act over Greenland if necessary.
• France and Germany reportedly appear to agree on placing the ACI on the table, though not necessarily activating it, Politico reported citing sources; a shift as Germany is now reportedly willing to at least explore the concept of using the ACI.
• The French Presidency announces it has requested NATO exercise in Greenland and said it is ready to participate.
• US President Trump said having Greenland makes a much more effective golden dome, will probably be able to work something out with Europe at Davos.
• The US is to pull 200 military personnel from NATO and its advisory groups amid escalating EU-US tensions, the FT reported citing sources.
• US Interior Secretary Burgum said that markets have it wrong today about Greenland; the US would build up Greenland in a similar fashion to Alaska if it was owned.
• US reportedly plans to reduce involvement in some NATO advisory groups, WaPo reported.

US Event Calendar

• 7:00 am: United States Jan 16 MBA Mortgage Applications, prior 28.5%
• 10:00 am: United States Oct Construction Spending MoM, est. 0.1%
• 10:00 am: United States Dec Pending Home Sales MoM, est. -0.25%, prior 3.3%