[MARKET ANALYSIS] Sentiment remains subdued, however Basic Resource stocks outperform on the back of stronger metal prices

• European markets are mostly trading lower as uncertainty over trade tensions, sparked by developments surrounding Greenland, continues to weigh on sentiment. One of the latest developments comes from a Politico report suggesting that France and Germany are considering putting the Anti-Coercion Instrument (ACI) on the table, though not necessarily moving toward immediate activation. Attention now turns to Davos, where US President Trump is scheduled to speak later today.
• 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. Elsewhere, macro-level news flow for the Auto and Chemicals sectors has been relatively light. That being said, gains in Aixtron (+4.4%) following a broker upgrade may be providing some marginal support to chemicals sentiment.
• Movers in the early morning trade include Burberry (+4.8%) after the Co. announced a strong Q3 trading update, with the CEO adding that Gen Z shoppers in China helped fuel growth in Q3. The uptick in Burberry has also lifted sentiment for the Consumer Products & Services sector (+0.5%). Another key mover is Rio Tinto (+4.8%) after the Co. reported Q4 Pilbara iron ore production of 89.7Mt (+4% Y/Y). The uptick has also contributed to the outperformance of the Basic Resource sector.
• US equity futures are firmer across the board, ES +0.1% & NQ +0.2%, though not much macro newsflow to explain the rebound seen in US equity futures. Like their European counterpart, all eyes will be on US President Trump's speech at Davos. Other highlights ahead include US SCOTUS, US Atlanta Fed GDP and earnings from Kinder Morgan, Johnson & Johnson, Ally Financial, Charles Schwab.

The subdued sentiment in European markets is being offset by a notable outperformance in Basic Resources, driven by stronger metal prices, especially with gold reaching record highs. This divergence suggests a selective risk appetite among investors favoring commodities amidst broader trade uncertainties—with attention shifting toward political developments and key speeches, such as Trump’s at Davos, that could influence market sentiment further.