Asia Market Quick Take – January 20, 2026

Key points:

• Macro: Japanese PM plans to call for snap election on Jan 23^rd and voting on Feb 8th
• Equities: EU luxury and auto stocks down, defense firms gained on Trump tariff threat
• FX: USD volatile due to tariff threats; CHF strengthens as a safe haven
• Commodities: Silver hits fresh record; gold near all-time high
• Fixed income: US Treasury and gilts curve bear-steepened

------------------------------------------------------------------

Disclaimer: Past performance does not indicate future performance.

Macro:

• Canada's headline inflation rate rose to 2.4% in December 2025, up from 2.2%, exceeding expectations. This increase, driven by a GST and HST break, affected food, alcohol, and toy prices. Inflation slowed for shelter and transportation costs decreased. Core inflation fell to a one-year low of 2.5%.
• The IMF raised its global growth forecast to 3.3%, driven by resilient activity and AI investments, but warned of risks like market corrections and geopolitical concerns. Growth projections include 2.6% for the US, 1.3% for the Euro Area, and 4.5% for China.
• Japanese PM Takaichi will call for a snap election on January 23, 2025, for voting on February 8. She plans to end overly restrictive fiscal policy and pursue strategic fiscal spending.
• Eurozone inflation fell to 1.9% in December 2025, below the ECB's 2% target, likely keeping interest rates steady. Energy prices dropped sharply, while core inflation hit a four-month low at 2.3%. Inflation decreased in Germany, France, and Spain but rose slightly in Italy. Core inflation dropped to a four-month low of 2.3% in December 2025, down from 2.4% in November. The core CPI rose 0.3% month-on-month. EU core inflation also fell to 2.5%.
• China's Q4 2025 growth slowed to 4.5%, the weakest in three years, with annual growth at 5%, meeting targets. A record trade surplus helped offset retail and property sector weaknesses. 2026 outlook faces risks from rising protectionism and uncertain U.S. policies.

Equities: 

• US – US markets were closed yesterday. US stock futures slipped Tuesday as markets reopened after the long weekend, pressured by President Trump’s threat of new tariffs on European nations rejecting his proposal to buy Greenland. European leaders condemned the remarks and considered retaliation. On Monday, shares of European automakers and luxury brands fell, while some defense stocks gained.
• EU - European stocks fell sharply on Monday, retreating from last week’s record highs after US President Trump threatened new tariffs on major European economies. The Eurozone’s STOXX 50 dropped 1.7% and the STOXX 600 fell 1.2%. Trump warned of 10% tariffs by month‑end—rising to 25% by June—if Europe continues to reject a proposed US purchase of Greenland. The EU is considering retaliatory tariffs on €93 billion of US goods. Luxury and auto stocks were hit hardest, with LVMH, Adidas, Hermes, BMW, and Volkswagen all declining. Defense firms benefited instead, with Rheinmetall, Dassault, SAAB, and Leonardo advancing.
• HK - Hang Seng Index fell 1.0% to 26,564 on Monday, its third straight decline as broad sector weakness dragged sentiment. Markets were pressured after US futures slid following President Trump’s threat of tariffs on several European countries—starting at 10% on February 1 and rising to 25% by June 1—over opposition to his Greenland purchase bid. In China, Q4 GDP growth eased to a three‑year low of 4.5% amid soft domestic demand. Tech and pharma stocks led losses, including SMIC, Kuaishou, Xiaomi, Sino Biopharma, and Hansoh.