EUROPEAN OPEN: VOW3 GY won’t proceed with US Audi plant unless auto tariffs are reduced; BN FP recall after spread from NESN SW products; RYA ID beats expectations, raises guidance; GLEN LN, RIO LN, SHEL LN downgraded

• EUROPEAN OPEN: European equities opened around neutral; overnight, APAC stocks were mostly subdued amid Japanese FX intervention concerns and trade jitters. Reports state that markets are pricing a rising geopolitical risk premium, driven by US-Iran tensions lifting oil prices, safe-haven flows into the JPY, and broader political frictions spanning US domestic instability, transatlantic trade disputes and shifting diplomatic alignments, driving macro caution. Meanwhile, risks of a US government shutdown are also increasing after Democrats said they will not support a funding package without changes to homeland security provisions; funding under the current continuing resolution is set to expire on 30th January, and if Congress doesn’t pass new appropriations by then, a partial or full shutdown could begin. Pressure on the USD intensified as investors debated possible joint US-Japan FX intervention to support the JPY; the currency weakened against most major peers, while the JPY strengthened and gold reached a record, compounding losses after the USD’s worst week since May. Japan FinMin Katayama said Japan is responding to JPY movements in line with a joint framework agreed with the US, and added that authorities are closely monitoring market conditions with urgency. Bitcoin fell sharply, sliding towards USD 86k before rebounding in APAC trade. Gold rose above USD 5,100/oz for the first time as fears of a US government shutdown, geopolitical tensions and equity market froth drove demand for safe-haven assets; the rally has also been supported by USD weakness, lower interest rates and increased purchases of gold reserves by central banks. Copper extended gains after jumping on Friday, as continued USD weakness buoyed base metals. Oil prices edged higher as winter storm Fern disrupted US output and geopolitical risks supported supply concerns; Brent rose above 65/bbl, while WTI was trading above USD 61/bbl, offsetting 2026 oversupply concerns, as outages in Bakken and Permian tightened physical flows. Trade concerns are also returning, after US President Trump threatened 100% tariffs on Canadian goods if Canada strikes a deal with China, citing concerns over trade diversion; Canada denied pursuing a free trade deal. Traders note that UK PM Starmer is set to visit China this week, the first such trip by a British leader since 2018, aiming to strengthen bilateral trade to support a sluggish domestic economy. Today’s docket is thin, with German Ifo and US surveys due, ahead of a packed week of macro updates (Fed, BoC, Riksbank, BCB) and corporate reporting updates (including UNH, RTX, BA, UNP, TXN, SBUX, DHR, GEV, T, MSFT, META, TSLA, IBM, NOW, HON, CAT, CMCSA, LMT, MA, V, AAPL, CVX, VZ, XOM, AXP, ASML).
• STOCK SPECIFICS: In consumer sectors, Volkswagen (VOW3 GY) will not proceed with a planned US Audi factory unless automotive tariffs are reduced, CEO said. Pirelli (PIRC IM) investor Camfin says it was not possible to find solutions with Sinochem to adapt Cos. governance to US regulatory requirements. Danone (BN FP) is recalling limited batches of infant formula after a contamination scare involving the toxin cereulide spread from Nestle (NESN SW) products; the recalled products were manufactured in Ireland using an ingredient made in China and exported mainly across Europe. In industrials, Rheinmetall (RHM GY) and OHB (OHB GY) are in early talks on a joint bid to build a military-grade LEO satellite network for the German armed forces, similar to Elon Musk’s Starlink internet service, targeting part of a EUR 35bn space budget. Ryanair (RYA ID) Q3 revenue topped expectations, and it raised guidance for FY26, citing improved Boeing (BA) aircraft deliveries and stronger demand, with passenger traffic expected to rise +4% Y/Y to almost 208mln (prev. saw 207mln), and fares set to exceed 7% growth. Airbus (AIR FP) CEO warned staff the company must adapt to new geopolitical risks after significant logistical and financial damage from US protectionism and US-China trade tensions. In energy, Baker Hughes (BKR) shares rose 3.9% in extended US trading after it reported an +11% Y/Y rise in Q4 adj. profit as strong demand for gas technology offset weakness in oilfield services. In materials, the Trump administration plans to invest USD 1.6bln in USA Rare Earth (USAR) for a 10% stake, alongside USD 1bln private financing, to boost US critical minerals supply; the deal includes equity, warrants and USD 1.3bln debt under the 2022 CHIPS Act. In financials, CVC (CVC NA) agreed to buy US credit manager Marathon in a cash and equity deal valued at up to USD 1.2bln, continuing consolidation among alternative asset managers. In communications, FCC Chair Carr sees legitimate competition concerns in Netflix’ (NFLX) proposed acquisition of Warner Bros. Discovery’s (WBD) studios and streaming businesses, concerns he does not share for a Paramount Skydance (PSKY) deal. In tech, Samsung (005930 KS) is reportedly nearing Nvidia (NVDA) certification for its HBM4 AI memory chip, entering the final qualification stage after supplying initial samples in September. SoftBank (SFTBY) has paused acquisition talks with US data centre operator Switch (SWCH), halting discussions around a potential USD 50bln deal that founder Masayoshi Son viewed as supporting the USD 500bln Stargate AI infrastructure effort to supply computing power for partner OpenAI. In healthcare, Merck (MRK) is no longer in discussions to acquire Revolution Medicines (RVMD), according to the WSJ; the companies had been discussing a potential deal valuing the cancer-drug biotech at about USD 30bln, but talks have ended without an agreement. In notable broker updates, HSBC downgraded Glencore (GLEN LN) and Rio Tinto (RIO LN); Shell (SHEL LN) was downgraded at RBC; Goldman Sachs downgraded OMV (OMV AV), upgraded Neste (NESTE FH); Heineken (HEIA NA) was downgraded at Oddo; Nestle (NESN SW) was upgraded at Morgan Stanley; Swatch Group (UHR SW) was initiated with an Underperform rating at Jefferies; Sandvik (SAND SS) and Segro (SGRO LN) were downgraded at Jefferies; Hermes (RMS FP) was upgraded at Jefferies.

TODAY’S AGENDA:

• DAY AHEAD: Today’s docket includes Germany’s Ifo survey for January, Chicago Fed’s National Activity Index for December and Dallas Fed’s manufacturing gauge for January, Durable goods orders for November. The Atlanta Fed will update its GDP tracking estimate, with its model currently projecting growth of 5.4% in Q4. In supply, the EU will auction EUR 7bln of 2030 and 2035 debt; US will sell USD 69bln of 2yr notes.
• WEEK AHEAD: This week’s data highlights include: policy announcements from the FOMC, BoC, BCB and the Riksbank; Eurozone GDP, Tokyo CPI. In earnings, Mag-7 companies are due this week, with MSFT kicking things off. Other notable corporates updating this week include: UNH, RTX, HCA, BA, NEE, UNP, TXN, SBUX, DHR, GEV, T, ADP, APH, PGR, MSFT, META, TSLA, LRCX, IBM, NOW, HON, TMO, CAT, CMCSA, MO, BX, LMT, PH, MA, V, KLAC, SYK, AAPL, CVX, VZ, XOM, AXP, ASML.
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