Powell to Attend Supreme Court Hearing in Fed Standoff

A major trade agreement between Malaysia and the United States remains on hold, nearly three months after it was signed, Prime Minister Datuk Seri Anwar Ibrahim confirmed in Parliament on Tuesday.

Anwar explained that Malaysia is seeking further clarification and adjustments to several clauses before the Agreement on Reciprocal Trade (ART) can officially come into force.

Why the Agreement Is on Hold

According to the Prime Minister, discussions between the United States Trade Representative (USTR) and Malaysia's Minister of Investment, Trade and Industry are ongoing. While verbal assurances have been received on certain points, the Malaysian government insists these commitments must be put in writing.

"We believe it would be better for these assurances to be put in writing before we finalise the agreement," Anwar stated during Minister's Question Time. He was responding to a query from Ahmad Tarmizi Sulaiman (PN–Sik) about the status of the deal's ratification.

Anwar also noted that any proposed changes to the ART will be discussed by the Cabinet. He confirmed there is currently no fixed schedule for completing the formal notifications required to activate the pact.

Background of the US-Malaysia Trade Pact

The ART was originally signed on October 26 of last year during an official visit by US President Donald Trump, on the sidelines of the 47th Asean Summit in Kuala Lumpur.

The agreement was designed as a strategic tool to lower US tariffs on Malaysian products, with rates on some goods set to decrease from 25% to 19%. It also aimed to address non-tariff barriers faced by US exporters in Malaysia.

However, the deal has faced criticism. Former prime minister Tun Dr Mahathir Mohamad warned that the agreement could risk Malaysia's economic sovereignty by forcing the country to align with Washington's trade and investment regulations.

Legal Safeguards and Activation Rules

Malaysia’s Attorney General's Chambers (AGC) previously addressed concerns about the agreement on November 3. The AGC clarified several key points regarding Malaysia's rights under the deal:

• Right to Terminate: Citing Article 7.5, the AGC affirmed that Malaysia can terminate the ART at any time with a written notice, without needing US consent.

• Sovereignty Protections: The agreement contains explicit protections intended to safeguard Malaysia's sovereignty and national interests.

• Activation Process: According to Article 7.2, the ART will only take effect 60 days after both countries have formally notified each other that their respective domestic legal procedures are complete.

Navigating Geopolitical Tensions with Iran

In a separate matter, the Prime Minister commented on Malaysia's strategy for managing international relations, particularly in light of an announcement by US President Donald Trump to impose a 25% tariff on countries conducting business with Iran.

Anwar stated that Malaysia will continue to act with prudence. He revealed that he has personally engaged with Iranian leadership twice and that several Malaysian ministers have also visited the country.

While emphasizing that Malaysia cannot afford actions that might harm its national interests, he reaffirmed the country's diplomatic stance.

"As far as relations with Iran are concerned, we will continue to maintain ties and defend Iran's rights and sovereignty," Anwar said. "That is also a principle we uphold."

Oil steadied as traders tracked the fallout from the US push to take control of Greenland and concerns about a global surplus.

Brent held near US$64 (RM259.36) a barrel while West Texas Intermediate was below US$60. US President Donald Trump's push to annex Greenland has rocked markets, bruised the dollar and raised fears of a damaging US-EU trade war. The US leader is set to address the World Economic Forum in Davos, Switzerland, on Wednesday (Jan 21).

"The market is not pricing a full retaliation between the US and the EU, and it's likely that a compromise will be found," said Mukesh Sahdev, CEO at XAnalysts Pty Ltd. Still, in the event of an escalating spat, the US may prevail given its economic and energy-supply advantage, he said.

Crude remains under pressure from signs supply is outpacing demand, with prices of some physical grades in the Middle East declining as Opec+ producers raise output. The International Energy Agency, which publishes its next market analysis on Wednesday, has consistently warned of a glut this year.

"A weaker US dollar and firm timespreads have provided some relative support to oil despite the broader risk-off move," said Warren Patterson, the head of commodities strategy at ING Groep NV, referring to crude's pricing differentials between months.

"The outlook for a large surplus suggests prices should trend lower while the potential for a further escalation in US-EU tensions poses further downside risk," Patterson added.

Still, beyond overarching glut concerns, pockets of tightness remain in some parts of the market, with issues in the Caspian Pipeline Consortium port in the Black Sea and, now, Kazakhstan's giant Tengiz oil field contributing to a near-term shortfall of crude from the Mediterranean region.

Prices:

Source: Theedgemarkets

Risk Sentiment Weakens Across Asian Markets

Dollar Pressure And Rising Treasury Yields

Trade War Fears And European Market Reassessment

Japan In Focus As Political And Fiscal Risks Surface

Safe Havens Hold Firm Amid Volatility

Source: Reuters

Just months into her tenure, Japanese Prime Minister Sanae Takaichi has called a snap election, dissolving the Lower House on January 23 and setting the vote for February 8. The move comes despite her term running until October 2028, sparking questions about the strategy behind the early poll.

"I am putting my future as prime minister on this election," Takaichi stated at a press conference, adding, "I would like the people to make a direct decision on whether they can entrust the management of the nation to Sanae Takaichi."

Japanese Prime Minister Sanae Takaichi announces a snap election during a press conference in Tokyo on January 19, 2026.

The Numbers Behind the Gamble

Analysts believe the decision is a calculated effort to leverage Takaichi's immense personal popularity to secure a stronger majority for the ruling Liberal Democratic Party (LDP) and its coalition.

There is a stark contrast between support for the prime minister and her party. Since taking office, Takaichi has enjoyed historically high approval ratings, with a recent NHK survey pegging her support at 62%. Other polls show even higher numbers, including 75% reported by Nikkei and 78.1% from a Japan News Network poll.

The LDP, however, has an approval rating of just 29.7%. Currently, the party and its junior partner, the Japan Innovation Party, hold a combined 230 seats in the 456-seat Lower House. With the support of three independents, their coalition commands a razor-thin majority of just one seat.

Strategic Timing: Foreign Policy and Politics

A stronger majority would provide Takaichi with a firmer political mandate, a crucial asset in international relations. Sam Jochim, an economist at Swiss private bank EFG, noted this would be particularly important ahead of a potential meeting with U.S. President Donald Trump as early as March.

Jochim also suggested that Takaichi is aiming to capitalize on her popularity before escalating tensions with China begin to erode public sentiment. Diplomatic relations have cooled since Takaichi's statement on November 8 that Japan's Self-Defense Forces could intervene if China attempted to take Taiwan by force. In response, Beijing has imposed export controls on dual-use items to Japan and issued travel advisories for its citizens.

A Calculated Risk or a Reckless Move?

Despite Takaichi's high approval ratings, analysts warn that her popularity may not automatically translate into electoral gains for the LDP.

A Newly United Opposition

Jochim describes the move as "taking a risk," highlighting a key challenge: "while she is an extremely popular Prime Minister, her party is less popular and faces a united opposition following a surprise partnership between the main opposition party and the former LDP coalition partner."

On January 16, the Constitutional Democratic Party of Japan, the largest opposition force, joined with Komeito—the LDP's coalition partner for 26 years—to form the "Centrist Reform Alliance." Together, they control 172 seats in the Lower House. Norihiro Yamaguchi, lead Japan Economist at Oxford Economics, cautioned that without Komeito's organizational backing, many LDP candidates could face significant struggles at the ballot box.

The Power of Personal Appeal

Other observers are more optimistic. Jesper Koll, expert director at Monex Group, believes Takaichi's personal story could be the decisive factor. He described her as an "inspiration" to both older and younger Japanese voters, suggesting her appeal could drive a landslide victory.

"Takaichi is the living example of a self-made woman rising to the top against all the odds," Koll said, noting her working-class background and rise through "hard work, dedication, passion, and willingness to do what is right." The election will reveal whether this personal brand is enough to overcome her party's weakness and a newly unified opposition.

China is preparing a major policy overhaul for the 2026-2030 period designed to tackle a fundamental imbalance in its economy: factory output is strong, but domestic demand is lagging. The country's state planner announced the new strategy will pivot toward boosting the services sector to supercharge household consumption.

According to the National Development and Reform Commission (NDRC), this shift is a direct response to a "prominent problem" facing the economy.

Diagnosing the Demand Deficit

While China’s economy hit its 5% growth target last year, the headline number masked a growing internal gap. The core issue lies in the mismatch between production and spending.

In 2025, industrial output expanded by 5.9%, but retail sales only grew by 3.7%. This divergence highlights an economy that is producing more than its citizens are consuming, a dynamic that has been propped up by a boom in exports—a strategy seen as increasingly difficult to sustain.

"The issue of having strong supply, but weak demand in the current economic operation is indeed a prominent problem," said Wang Changlin, vice head of the NDRC, at a recent press conference.

A Strategic Pivot to the Services Sector

To address this, Chinese leaders have pledged to "significantly" increase household consumption's share of the economy. The new strategy moves the spotlight from goods to services.

NDRC official Zhou Chen stated that the "services sector has now become a key focus in efforts to expand domestic demand." The government sees substantial room for growth in several key areas, including:

• Elderly care

• Healthcare

• Leisure and recreation

This marks a strategic shift in how Beijing plans to stimulate its domestic market over the next five years.

Continuity in Consumer Goods Subsidies

The new focus on services does not mean existing support for goods consumption will disappear. The government will continue to use policies like trade-in subsidies to encourage purchases of items such as electric vehicles (EVs) and home appliances.

For instance, in December, China deployed 62.5 billion yuan ($8.98 billion) from special treasury bond funds to support its 2026 consumer trade-in programs, demonstrating an ongoing commitment to stimulating spending on big-ticket goods alongside the new services-oriented push.

The United Kingdom and China have quietly established a new high-level forum for security officials to discuss cyberattacks, a significant development as relations remain strained by persistent hacking allegations.

According to sources familiar with the private agreement, the new "Cyber Dialogue" is designed to create a direct channel for managing national security threats, improving communication, and preventing miscalculations from escalating.

This marks the first time a single, dedicated mechanism exists for senior officials from both nations to address cyber incidents. Previously, establishing clear lines of communication on these sensitive issues was often a difficult process.

A New Channel for High-Stakes Talks

The primary goal of the dialogue is to allow for private discussions on deterrence measures and to help manage the fallout from cyber activities. The forum provides a structured way for London and Beijing to engage directly on security matters that have soured their relationship.

This initiative comes at a critical juncture. The UK government is expected to decide by January 20 on China's request to build a new super-embassy in London. Following that, Prime Minister Keir Starmer is scheduled to meet with President Xi Jinping in Beijing at the end of the month.

The UK government declined to comment on the matter, citing policy on security issues. China's embassy in London stated it was unaware of the agreement, and the Foreign Ministry in Beijing did not immediately respond to a request for comment.

Navigating Tense Diplomatic Waters

Since being elected 18 months ago, the Labour government has attempted to improve ties with Beijing. However, these efforts have been consistently undermined by British allegations of a near-constant Chinese cyber campaign targeting the UK's national infrastructure and government systems. Diplomatic relations were already under pressure due to the COVID-19 pandemic and China’s support for Russia's war in Ukraine.

Sources believe this new cyber forum is the first of its kind between China and any other country, highlighting it as a crucial step toward improving diplomatic engagement.

In November, China's top diplomat Wang Yi met with British National Security Adviser Jonathan Powell in Beijing. While the official statement from China did not mention cyber activities, it noted that the two had agreed to "confront and resolve issues" and "further enhance regular dialogues."

A Cautious Step Toward De-escalation

The creation of the forum follows reports that underscore the severity of the cyber threat. In October, Bloomberg reported that British officials believe Chinese hackers have been spying on UK government computer systems for over a decade. Officials have also indicated that state-backed actors from China have compromised critical infrastructure to a greater extent than has been publicly disclosed.

While the new dialogue is unlikely to halt these cyber operations entirely, insiders suggest it offers a valuable opportunity to mitigate the risk of a dangerous miscalculation between the two powers.