Trump’s Surprise India Trade Deal Fuels Market Uncertainty

King Ten

Economic

Remarks of Officials

Political

Summary:

India grapples with farmer backlash and market confusion from a surprise US trade deal lacking concrete terms.

Indian officials are scrambling to manage the fallout from a surprise trade deal announced by U.S. President Donald Trump, as a lack of concrete details fuels anxiety among farmers and investors. While Trump hailed the agreement as a major win for the United. States, the Indian government is now working to reassure its domestic audience that it has not conceded too much.

Commerce Minister Piyush Goyal has made public statements twice in two days, insisting that India’s sensitive agricultural sector, particularly dairy, was adequately protected during negotiations. Officials also clarified that a reported commitment to purchase $500 billion in U.S. goods over five years includes projects already planned.

The initial market reaction was positive, with Indian financial markets and the currency rallying on Tuesday. However, stocks leveled off by Wednesday as investors paused to await the fine print of the deal.

New Delhi Defends Pact Amid Farmer Backlash

The core of the controversy lies in agriculture. Farmers are a powerful political constituency in India, where millions of smallholders cultivate less than five acres of land. The deal has sparked fears that they will be unable to compete with an influx of American agricultural products.

During the lengthy trade talks, Washington consistently pushed New Delhi to open its heavily protected farm sector. Key U.S. demands included greater access for genetically modified crops, which dominate American corn and soybean production, and entry for its dairy products—an industry India carefully guards.

In a bid to calm rising tensions, Goyal told parliament on Wednesday that "the Indian side has been successful in safeguarding its sensitive sectors," specifically citing agriculture and dairy.

Opposition and Farmer Groups Vow Protests

Despite government assurances, farmer organizations and opposition parties have fiercely criticized the agreement. The Samyukt Kisan Morcha, an agricultural group, has promised nationwide protests, including a potential strike on February 12.

"We won't allow US farmers to enter India," declared Mohini Mishra, general secretary of the Bharatiya Kisan Sangh, another farmers' group with ties to Prime Minister Narendra Modi's parent organization.

The opposition has seized on the issue, disrupting parliamentary proceedings and preventing Modi from speaking on Wednesday. Rahul Gandhi, a leader of the opposition Indian National Congress, claimed that "the hard work, sweat and blood of Indian farmers has been sold by Narendra Modi in this deal."

Unpacking the Terms of the Agreement

According to President Trump’s announcement, the deal involves significant tariff adjustments:

• India will reportedly reduce its tariffs on American goods to zero.

• The U.S. will lower its tariff on Indian shipments from 50% to 18%.

• A punitive 25% U.S. duty imposed on India for purchasing Russian oil will be lifted.

U.S. Trade Representative Jamieson Greer celebrated the agreement as a "big win," stating that India would eliminate tariffs on a range of American products, from tree nuts and fruits to wine and spirits. U.S. Agriculture Secretary Brooke Rollins added that the deal would inject "cash into rural America."

However, Modi’s government has not confirmed many of these details, and neither side has released official documentation. Indian officials, many of whom were reportedly surprised by Trump’s announcement, have stated that a joint statement with more information will be released in the coming days.

Widespread Confusion Clouds Economic Outlook

The information vacuum has left multiple sectors uncertain about the future.

"The US-India trade deal can be considered as a positive from macro and market standpoint. However, one should wait for the fine print for more clarity," noted analysts at Mirae Asset Mutual Fund.

This pattern is not new for the Trump administration. In July, the president announced a tariff reduction for Vietnam on social media, but the framework agreement was only released in October and still lacked crucial specifics.

Beyond agriculture, other Indian industries are seeking clarity:

• Oil Refiners: Indian oil refiners are unclear about the future of Russian crude purchases after Trump claimed India would stop buying from Moscow. The Kremlin stated it had not been informed of any such plans.

• Gems and Jewelry: Companies in labor-intensive sectors like gems and jewelry do not know which specific products will benefit from zero tariffs.

• Steel and Auto: It remains unclear if separate U.S. tariffs on steel and auto components, imposed under Section 232, will be phased out as part of this agreement.

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Devin

Commodity

Economic

Remarks of Officials

Political

South Korea's government has launched a comprehensive national strategy to reinforce its supply chain for rare earth elements, addressing the country's heavy dependence on China for materials critical to advanced industries.

The Ministry of Trade, Industry and Resources announced the first-of-its-kind plan, highlighting the essential role rare earths play in strategic sectors like semiconductors, electric vehicles (EVs), and defense. The strategy aims to build national capacity across every stage of the supply chain, from raw material extraction to final product manufacturing.

Vice Industry Minister Moon Shin-hak outlines the government's new rare earth strategy at a joint public-private meeting in Seoul on October 16, 2025.

A Full-Spectrum Approach to the Supply Chain

The core of the strategy is to develop capabilities throughout the entire rare earth value chain. This includes:

• Upstream: Supporting resource development and mining.

• Midstream: Enhancing the separation and purification of rare earth elements.

• Downstream: Turning refined elements into usable materials, such as permanent magnets for industrial use.

Balancing Global Partnerships and Diversification

To ensure stability, the government will pursue a multi-pronged international approach. In the short term, it plans to expand cooperation with China, the dominant global supplier, alongside resource-rich nations like Vietnam and Laos to prevent immediate supply chain disruptions.

Simultaneously, Korea will seek deeper collaboration with major economies, including the United States, Japan, and Australia. The government also plans to participate in global supply chain initiatives like the Indo-Pacific Economic Framework for Prosperity (IPEF) to build a more resilient network.

Boosting Domestic Production and Investment

A key pillar of the plan is to foster domestic capabilities and reduce foreign reliance. The government will actively support private companies leading overseas resource development projects.

To fuel this growth, the government is implementing several financial measures:

• The loan program for overseas resource development will be increased to 67.5 billion won ($46.2 million) this year, a significant rise from 39 billion won in 2025.

• Policy finance will also be expanded to support key projects.

• Companies investing in domestic production facilities will receive government support.

• To stimulate local demand, the government will prioritize stockpiling rare earths produced within Korea.

The strategy also includes establishing a robust resource recycling ecosystem to recover rare earth elements from used EVs and home appliances.

Developing Independent Technology and Expertise

Finally, the plan outlines a roadmap for developing independent technologies for the separation and purification of rare earths. This focus on technological sovereignty extends to creating advanced resource recycling methods, aiming to build a self-sufficient and circular economy for these vital materials.

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Owen Li

Remarks of Officials

Data Interpretation

Stocks

Economic

Central Bank

Forex

Daily News

Bond

Indonesia's economy posted its strongest growth in three years during the final quarter, fueled by government stimulus that successfully boosted domestic demand. The performance provides a potential lift to market sentiment following recent pressure on the rupiah and local stocks.

Gross domestic product (GDP) expanded 5.39% in the three months ending in December compared to the same period a year earlier, according to the national statistics agency. This figure surpassed the median forecast of 5.1% and represents the fastest growth since the third quarter of 2022, when the economy grew by 5.73%.

For the full year, GDP growth accelerated to 5.11% from 5.03% in 2024.

Key Drivers of the Economic Surge

Government Stimulus Fuels Consumption

A key factor behind the stronger-than-expected growth was a significant injection of state funds. The government disbursed an additional US$1.8 billion in social assistance during the fourth quarter, directly supporting a rebound in household consumption.

Investment and Manufacturing Gain Momentum

The economy also benefited from faster expansion in investment. This was supported by a notable uptick in manufacturing activity between October and December.

Data from the statistics agency showed that nearly all industries expanded in the fourth quarter, with manufacturing, trade, and agriculture providing the largest contributions to growth. The only exception was the mining sector, which did not post an expansion.

Market Reaction and Fiscal Outlook

Following the data release, stocks registered a modest gain of 0.1%, while the rupiah continued a 0.3% decline amid a strengthening U.S. dollar. The yield on the benchmark 10-year government bond remained unchanged.

The strong growth figures align with the government's efforts to lift Indonesia's economic trajectory from its two-decade average of 5% toward President Prabowo Subianto's ambitious 8% target. However, this aggressive growth strategy has sparked concerns that the fiscal deficit could breach the country's mandated cap, potentially undermining its reputation for fiscal discipline.

A Regional Economic Snapshot

Indonesia's robust performance shows it is gaining ground on its regional peers. While the Philippines reported a growth slump to just 3% in the fourth quarter, both Malaysia and Singapore recorded a 5.7% expansion. Vietnam's economy grew at an impressive pace of 8.46% during the same period.

Policy and Projections for the Year Ahead

Finance Minister Purbaya Yudhi Sadewa recently affirmed that Indonesia's growth momentum remains strong, defending the nation's economic fundamentals amid stock market volatility linked to an MSCI warning about local stock investability. He projected that the economy could expand by 6% this year, driven by a combination of fiscal, monetary, and private-sector initiatives.

Looking ahead, the government plans to accelerate spending in early 2026 to further support consumer purchasing power, partly through additional fiscal aid. Bank Indonesia is also widely expected to ease its monetary policy this year. To foster long-term growth, the government aims to attract more investment through its new sovereign wealth fund, Danantara.

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Kevin Morgan

Economic

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Central Bank

Political

Trump Sets Clear Condition for Fed Chair Nominee

President Donald Trump has stated he would have refused to nominate Kevin Warsh to lead the Federal Reserve if Warsh had expressed any desire to raise interest rates.

"If he came in and said, 'I want to raise it,' he would not have gotten the job, no," Trump said during an NBC News interview on Wednesday.

The president added there was "not much" doubt that the Fed would ultimately lower rates. He argued that rates are "way high" even though the U.S. is "a rich country again." When asked if Warsh understood the president's preference for lower rates, Trump responded, "I think he does, but I think he wants to anyway."

A Challenge to Federal Reserve Independence

Trump's comments are poised to become a central issue during any potential confirmation process for Warsh, bringing the Federal Reserve's political independence under intense scrutiny.

While the president said he believed "in theory" that the central bank is an independent body, he also asserted that his own economic predictions should be considered because he is a "smart guy."

These remarks follow a months-long pressure campaign from Trump aimed at outgoing Fed Chair Jerome Powell, urging him to cut interest rates. Although administration officials have denied any intention to undermine the Fed's autonomy, Powell has described a related probe into the bank as a thinly veiled attack on its ability to set monetary policy independently.

Confirmation Battle Complicated by Senate Blockade

The nomination process faces additional political obstacles. Republican Senator Thom Tillis, a member of the Banking Committee, has pledged to block any of Trump’s nominees to the central bank.

Tillis’s blockade will remain until the Justice Department concludes an investigation into the Federal Reserve's renovation project. Trump, however, dismissed this threat on Wednesday, saying "a lot of people say a lot of things." He also repeated his own criticism of the construction project, stating, "This guy has spent so much money."

Who is Kevin Warsh?

Kevin Warsh is a former Fed governor who previously developed a reputation as an inflation hawk. More recently, however, he has voiced support for lower interest rates, a policy stance that appears to align with the president’s demands.

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Gerik

Economic

Stocks

Regional Market Overview And Wall Street Spillover

Asia-Pacific equities mostly traded lower as negative sentiment from U.S. markets continued to weigh on risk appetite. The S&P 500 fell 0.51% overnight, marking its second consecutive loss, while the Nasdaq Composite slid 1.51%, reinforcing concerns around technology valuations. This backdrop set the tone for Asian trading hours, where selling pressure concentrated on technology, energy, and materials-linked stocks, reflecting a strong correlation with U.S. sector performance rather than purely domestic fundamentals.

Australia’s S&P/ASX 200 closed at 8,882.80, down 45 points or 0.50%, as energy stocks dragged the index lower. Hong Kong’s Hang Seng Index declined 1.27% to 26,506.33, while mainland China’s Shanghai Composite fell 1.03% to 4,059.91. India’s Nifty 50 also weakened, slipping 0.55% to 25,634.70. These moves suggest a region-wide reassessment of risk exposure following Wall Street’s tech-led losses, showing a strong correlation rather than a direct causal impact from local economic data.

Technology Stocks As The Epicenter Of Volatility

The technology sector remained at the center of market stress. In the U.S., Advanced Micro Devices plunged 17% after its first-quarter forecast disappointed analysts, triggering a broader reassessment of growth expectations across the semiconductor space. Broadcom fell about 3.8%, while Micron Technology dropped 9.5%, reinforcing fears that earnings momentum in the chip sector may be peaking.

This sentiment transmitted directly to Asia, particularly South Korea, where the KOSPI Index dropped 4.10% to 5,150.73. Chip heavyweights Samsung Electronics and SK Hynix declined 4.14% and 4% respectively, highlighting how closely regional semiconductor valuations track U.S. peers. Defense manufacturer Hanwha Aerospace also fell 4.61%, suggesting that the sell-off extended beyond pure tech into broader industrial names with high growth expectations.

Japan’s Mixed Picture And The Topix Exception

Japan presented a more nuanced market picture. The Nikkei 225 slipped 0.25% to 53,709.61, pressured by declines in growth-oriented stocks such as SoftBank Group, which dropped as much as 5.8% after chip designer Arm reported weaker-than-expected fiscal third-quarter licensing sales. This decline reflected investor sensitivity to global semiconductor demand rather than domestic macroeconomic concerns.

In contrast, the broader Topix index rose 0.23% to a record high, standing out as the only major Asian index in positive territory. This divergence points to a structural difference within Japan’s equity market, where Topix benefits from heavier exposure to value-oriented and domestically focused firms, reducing its correlation with global tech volatility.

Adding to this divergence, Panasonic Holdings Corp surged as much as 15.26% despite reporting weaker revenue and net profit for its fiscal third quarter ended December. The market reaction was driven by adjusted operating profit rising to 159.1 billion yen, equivalent to $1.03 billion, up 5.59% year on year. This figure excluded restructuring costs of 129.3 billion yen, indicating improved operational efficiency rather than headline earnings strength, a factor that investors appeared to reward.

Cryptocurrencies And Risk Sentiment

Risk aversion was also evident in digital assets. Bitcoin fell more than 3%, hovering just above $73,000 after briefly dropping below that level earlier in the session. The decline mirrored equity market weakness and underscored the high correlation between cryptocurrencies and technology stocks during periods of tightening financial conditions, rather than signaling crypto-specific negative developments.

Overall, Asia’s market retreat reflects a strong correlation with Wall Street’s technology-driven losses rather than new region-specific shocks. The sharp divergence between Japan’s Topix and tech-heavy indices elsewhere suggests that sector composition remains critical in navigating periods of heightened volatility. As long as U.S. technology earnings expectations remain under pressure, Asian markets with heavy semiconductor exposure are likely to stay vulnerable, while broader, more diversified indices may continue to show relative resilience.

Source: CNBC

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Samantha Luan

Traders' Opinions

Remarks of Officials

Economic

Commodity

China–U.S. Trade War

Chicago soybean futures surged Thursday, driven by comments from U.S. President Donald Trump indicating that China is ramping up its purchases of U.S. agricultural products.

The most-active soybean contract on the Chicago Board of Trade (CBOT) gained 0.8% to trade at $11.01-1/2 a bushel as of 0412 GMT. In contrast, other major grains softened, with CBOT wheat falling 0.2% to $5.25-1/2 a bushel and corn dropping 0.2% to $4.28-1/2 a bushel.

Trump's Comments Trigger Market Optimism

The rally in soybeans gained momentum after the commodity hit a two-month high on Wednesday. The move followed a post on President Trump's Truth Social platform stating that China is "lifting the soybean count to 20 million tons for the current season." He added, "They have committed to 25 million tons for next season!"

This development is significant as China had largely withdrawn from the U.S. soybean market during the prolonged trade war between the two nations. Traders are now closely monitoring for any further signs of renewed buying interest.

"Typically Chinese purchases of U.S. soybeans taper off from January," noted Sean Hickey, an analyst at Bendigo Bank Agribusiness. "Regardless, the lift to 20 million metric tons of U.S. soybean purchases will add some much-needed boost to the soy complex."

By late January, China had already purchased approximately 12 million tons of U.S. soybeans, fulfilling a commitment announced after a trade truce in late October began to thaw relations.

Record Brazilian Supply Limits Price Gains

Despite the bullish news, gains in the soybean market were capped by the prospect of ample global supply, primarily from South America.

Brazil, the world's top soybean producer and exporter, is in the process of a rapid harvest of what is projected to be a record-breaking crop. "An all-time record Brazillian crop, which is being quickly harvested, will soon begin to capture Chinese demand," Hickey explained.

This supply pressure is expected to continue. On Monday, consultancy firm StoneX raised its forecast for Brazil's 2025/26 soybean production by 2.3% from its January projection, now anticipating a crop of 181.6 million tons.

Looking ahead, China is expected to rely heavily on Brazilian soybeans through the first half of 2026. Record production levels and competitive pricing are set to drive shipments from Brazil, even as U.S. supplies become available. This pattern was evident last year when China's soybean imports from May to October hit record highs, with buyers favoring South American cargoes to avoid the elevated tariffs on U.S. products.

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Gerik

Economic

Commodity

Diplomatic Signals And Immediate Market Reaction

Crude prices moved lower after confirmation that Washington and Tehran will hold talks in Oman, prompting traders to scale back some de escalation premiums that had built into the market. U.S. crude slipped about 1.4% to roughly $64.3 a barrel in Asian trading, while Brent fell a similar margin to near $68.5. The price move suggests that markets are responding primarily to expectations of dialogue rather than concrete outcomes, reflecting a correlation between diplomatic headlines and near term oil pricing rather than a clear causal shift in supply fundamentals.

Despite the scheduled negotiations, both sides remain far apart on substance. Iran is seeking to narrow discussions to its nuclear program, whereas the United States is pushing for a broader agenda that includes ballistic missiles, regional security issues and domestic human rights. This gap reduces confidence that talks will deliver rapid or durable outcomes. As a result, the market response has been cautious rather than decisive, with prices easing but not collapsing.

Trump’s Rhetoric And The Volatility Channel

Price action earlier in the week highlighted how sensitive oil remains to political messaging from Donald Trump. His warning that Iran’s Supreme Leader should be “very worried” briefly pushed oil nearly 3% higher, underlining how quickly risk premiums can return. This pattern shows that volatility is being driven less by physical supply disruptions and more by shifting expectations about military escalation or restraint.

Analysts caution that the pullback should not be read as a meaningful easing of underlying risk. The U.S. and its allies continue to build military assets in the region, which keeps escalation scenarios firmly on the table. While direct strikes on Iranian oil infrastructure are widely seen as unlikely, indirect risks remain significant. Iran retains the ability to threaten tanker traffic through the Strait of Hormuz, a chokepoint that handles roughly one fifth of global oil flows. Any disruption there would have an immediate and outsized impact on prices, creating asymmetric upside risk rather than balanced two way movement.

Market Structure Signals Ongoing Supply Anxiety

Beyond headlines, market positioning continues to point to supply concerns. Near term crude contracts are trading at a premium to later deliveries, indicating tightness expectations rather than surplus. Options markets also reflect persistent hedging demand, with traders paying up for protection against higher prices. These signals suggest that while diplomacy has temporarily eased sentiment, the market still assigns a meaningful probability to renewed shocks.

Overall, the current oil price behavior reflects correlation between diplomatic news and short term sentiment rather than a structural change in supply risk. As long as talks remain fragile and geopolitical tensions unresolved, oil is likely to continue oscillating sharply, with limited downside and pronounced upside sensitivity to any signs of renewed confrontation.