UK's Starmer: We Won't Choose Between the US and China

Isaac Bennett

Remarks of Officials

Political

Economic

Daily News

China–U.S. Trade War

Summary:

Starmer eyes China economic ties, balancing US alliance and risking Washington's trade ire.

UK Prime Minister Keir Starmer has declared that his government will not be forced to pick a side between the United States and China, emphasizing a dual approach of maintaining close ties with Washington while actively engaging with Beijing. His comments signal a key foreign policy direction ahead of his planned visit to China.

Starmer confirmed that the UK will preserve its strong security, business, and defense relationship with the U.S. However, he argued that "sticking your head in the sand and ignoring China" is not a viable strategy.

A Push for Economic Ties with Beijing

The Prime Minister's planned state visit to China—the first by a UK leader in eight years—is framed as a move to unlock major economic benefits. Starmer stated the trip could create "significant opportunities" for British companies and is expected to include a delegation of UK business leaders for stops in Shanghai and Beijing.

Addressing potential security concerns, Starmer insisted that building a relationship with China "does not mean compromising on national security – quite the opposite."

This diplomatic outreach follows the UK government's recent and controversial approval for China to establish a new embassy in London. The decision proceeded despite opposition concerns that the facility could be used for espionage activities against the United Kingdom.

Navigating US Trade Friction

Starmer’s balanced approach comes amid a backdrop of global trade tensions, particularly involving the United States under President Trump. The Prime Minister's visit to China could risk friction with Washington, which has previously threatened allies over their economic ties with Beijing.

Trump's Tariff Threats on Allies

President Trump has shown a willingness to use tariffs to enforce his foreign and economic policy goals. In one instance, he threatened to impose tariffs on allied nations that opposed the U.S. acquisition of Greenland, stating, "we need Greenland for national security." While tensions later subsided after Trump clarified he would seek negotiations rather than use force, the episode highlighted his transactional approach.

More directly, Trump threatened Canada with a 100% tariff after the country reached a "strategic partnership" trade deal with the Chinese government. The threat emerged after Canadian Prime Minister Carney's speech in Davos was perceived as critical of the U.S. world order.

The Canada-China agreement included several key tariff reductions:

• China would lower levies on Canadian canola oil from 85% to 15%.

• Canada would cut taxes on Chinese electric vehicles from 100% to 6.1%.

Pressure on South Korea

The U.S. has also applied economic pressure on other key partners. Trump threatened to raise tariffs on South Korean goods from 15% to 25%, targeting products like automobiles, lumber, and pharmaceuticals. He accused South Korea of failing to honor a trade deal struck the previous year.

The announcement caused a sharp reaction in South Korea's stock market, particularly affecting carmakers. In response, Seoul urged Trump to reaffirm his commitment to their trade agreement, under which President Lee Jae Myung had agreed last July for South Korea to invest $350 billion in the United States.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Adam

Commodity

Where exactly is the expected supply glut in the global crude market?

The best answer is China, which saw storage flows surge in December, resulting in a surplus of more than 1 million barrels per day for 2025.

China's surplus of crude oil jumped to 2.67 million bpd in December, up from 1.88 million bpd in November and the most since the 2.27 million bpd seen in June 2020, when the world's largest crude buyer was gorging on cheap oil at the height of the COVID-19 pandemic.

For 2025 the volume of surplus crude was 1.13 million bpd, largely steady from the 1.15 million bpd seen in 2024, according to calculations based on official data.

China does not disclose the volumes of crude flowing into or out of its strategic and commercial stockpiles, but an estimate can be made by deducting the amount of oil processed from the total crude available from imports and domestic output.

It is worth noting that not all the surplus crude was likely to have been added to storage, with some being processed in plants not captured by the official data.

But even allowing for those gaps, it is clear that from March 2025 onwards, China was importing crude at a far higher rate than necessary to meet domestic fuel demand.

December's crude imports surged to a record 13.18 million bpd, up 17% from the same month in 2024, with the strong arrivals taking imports for the full year to 11.55 million bpd, another all-time peak and up 4.4% from the prior year.

Domestic crude production was 4.19 million bpd, while output for the full year was up 1.5% to 4.32 million bpd.

Combining December's imports and domestic production yields 17.37 million bpd of crude available to refiners.

December refinery throughput was 14.7 million bpd, meaning that the monthly surplus was 2.67 million bpd.

For 2025 China's refiners processed 14.75 million bpd, a record high exceeding the 14.7 million bpd from 2023.

Despite the increase in refinery throughput, the surplus for the year amounted to 1.13 million bpd as the total volume of available crude of 15.88 million bpd outweighed refinery processing of 14.75 million bpd.

The volume of surplus crude flowing into China largely answers the question as to where the global surplus of crude oil is.

China soaks up the crude oil glut, but only if the price is right_1

China total crude available vs refinery throughput

WILL CHINA BUYING LAST?

Amin Nasser, the chief executive of the world's largest oil exporter Saudi Aramco (2222.SE) , told the Davos forum last week that "oil glut predictions are seriously exaggerated."

That statement really only holds true for as long as China keeps buying way more oil than it needs to meet domestic demand and exports of refined products.

What would happen to the crude price if China pared back its imports by around 1 million bpd in 2026 from 2025 levels?

This would act as a drag on the crude price and make it challenging to outline a bullish case in the absence of a major supply interruption caused by geopolitical conflict.

The question is whether China is likely to continue boosting its crude stockpiles in 2026.

China has long aimed to build its strategic reserves by as much as 500 million barrels, meaning there is plenty of scope for it to continue to buy more than it needs to meet demand.

But the key factor will be price.

China has shown in the past that it tends to pull back on imports when oil prices rise too high or too quickly.

China made a rare draw on stockpiles in the first two months of 2025, a period after a rise in global benchmark Brent futures to a six-month high above $80 a barrel.

Similarly, China tends to boost imports when crude prices fall, with the recent strength in imports coming after Brent entered a sustained downtrend from July last year to an eight-month low of $58.72 a barrel by December 16.

It's likely that China will continue to buy extra crude for as long as prices remain at levels deemed reasonable.

Source: reuters

Risk Warnings and Disclaimers

Add to Favorites

Adam

Stocks

OPENING CALL

Stocks were gaining premarket Tuesday with trade relations and big-name earnings competing for the spotlight on the eve of the Federal Reserve's interest-rates decision .

Trump said the U.S. would increase tariffs on South Korea , accusing Seoul of not implementing a trade pact quickly enough.

Meanwhile, India and the EU finalized a free-trade agreement that the latter said would eliminate or reduce tariffs for more than 90% of its goods.

Boeing and RTX Corp are among the companies reporting earnings today, with results from four members of the Magnificent Seven megacap tech group due out later this week.

UnitedHealth reported earnings before the bell.

"This week is pivotal in setting the market's near--term tone as 2026 progresses," SWBC said. "History shows that a strong January often frames the narrative for the rest of the year, with investor psychology playing an outsized role."

Investors are looking out for any government moves to shift the dollar-yen exchange rate. The possibility of a government shutdown also looms large.

Stocks to Watch

Humana and CVS Health fell in offhours trading after The Wall Street Journal reported that the Trump administration had proposed roughly flat rates for Medicare insurers next year. Shares of UnitedHealth slid nearly 10% premarket ahead of earnings.

Nike is laying off about 775 workers, or around 1% of its overall workforce, as it ramps up automation.

The chairman of the Senate's antitrust subcommittee raised concerns over Netflix's proposed deal with Warner Bros. Discovery.

Chip stocks rose ahead of the open, with Micron among the bigger gainers. The company said it plans to invest roughly $24 billion in Singapore to meet surging memory-chip demand.

Anta agreed to acquire a stake in Puma for $1.8 billion, making it the biggest shareholder. Puma shares jumped.

Tesla's new-car registrations in Europe dropped 20% on the year in December, according to an industry body.

The U.S. Army signed a $5.6 billion, 10-year contract with Salesforce, part of a drive to adopt commercial software tools. Shares rose 2% premarket.

Economic Insight

Navellier expects a big debate about inflation

surrounding Trump's upcoming Fed chair nomination, which requires Senate confirmation.

"Due to falling rental and home prices, low crude oil prices, plus all the deflation imported from China and weak economies around the world, a serious deflation risk is brewing that would require the Fed to slash key interest rates by at least 1%."

Markets expect the next chair to push a few more rate cuts over the summer, but an extended pause seems more likely if growth stays strong and labor demand recovers, Russell Investments said.

Watch For:

S&P Cotality Case-Shiller Home Price Index for November; New Home Sales for December; Conference Board - Consumer Confidence for January; Federal Open Market Committee meeting; earnings from Boeing, General Motors, RTX Corp, United Parcel Service, UnitedHealth Group

Today's Top Headlines/Must Reads:

- Fed Set to Pause Rate Cuts, With No Clear Path to Resuming

- Stung by Trump, America's Top Trading Partners Shift Gaze to China

- Wall Street Is Fixated on a Possible Yen Intervention

MARKET WRAPS

Forex:

The yen turned higher against the dollar, briefly reaching an 11-week high against the dollar before trimming gains.

ING said the dollar could find some stability after two days of heavy selling, noting that resilient U.S. economic data and the upcoming FOMC meeting are mildly positive for the greenback.

Barclays said the sharp drop in USD/JPY following the intervention signals could translate into a bigger and broader dollar depreciation trend .

MUFG said the yen had started to give back some of its recent gains and would likely resume weakening without more signs of intervention .

Bonds:

Treasury yields rose as markets priced in an interest-rate hold .

Although standing pat won't appeal to the White House, it is consistent with market expectations and, more importantly, with the healthy U.S. economic cycle observed to date, Natixis IM Solutions said.

ING said increased government expenditure comes with fiscal risks and Japan last week reminded markets that these shouldn't be ignored, especially not by Treasury investors.

HSBC said a sudden pickup in U.S. rates volatility is the biggest risk facing bond markets .

Energy:

Oil prices fell as traders monitored global supplies and the impact of a massive storm on U.S. production.

"Despite recent rallies, sentiment has been weighed by expectations that global oil output will continue to outpace demand ," MUFG said.

Still, losses are capped by freezing conditions in the U.S. boosting demand for heating fuels and straining energy infrastructure.

Gas

U.S. natural-gas prices eased after hitting their highest in three years due to the impact of the storm on heating demand and refinery operations.

Metals:

Gold prices slipped in early trade but continued to hold above $5,000 .

Investors now await U.S. consumer confidence data later on Tuesday and Federal Reserve Chair Jerome Powell's speech on Wednesday.

Silver futures were down. The precious metal entered 2026 in a structural bull market , thanks to factors including resilient industrial demand, OCBC Group Research said.

China's decision to allow foreigners to invest in domestic nickel and lithium futures contracts is a highly significant move, according to BANDS Financial.

Copper

Prices fell on a firmer dollar but remained above the $13,000 mark .

"Stockpiles of copper in Shanghai Futures Exchange warehouses rose last week to their highest seasonal level on record, suggesting demand has been soft," ANZ Research said.

TODAY'S TOP HEADLINES

EU to Provide Google with Data-Sharing Compliance Guidance

The European Union has launched a new legal process to help Alphabet's Google comply with the bloc's digital-competition rulebook.

The European Commission said Tuesday that it had opened so-called specification proceedings into Google's compliance with the Digital Markets Act, a law designed to level the playing field for companies that rely on search engines and app stores to reach customers.

Tesla Ends 2025 With Lower Sales in Europe, While China's BYD Powers On

Tesla closed the year with lower sales in Europe as Chinese auto giant BYD continued to outpace Elon Musk's electric-vehicle maker.

New-car registrations for Tesla models, a reflection of sales, slumped 20% on year to 35,280 units in December across the European Union, the U.K., Iceland, Liechtenstein, Norway and Switzerland, according to the European Automobile Manufacturers' Association, an industry body also known as ACEA. On an annual basis, Tesla sales contracted 27% to 238,656 units.

Micron to Invest $24 Billion in Singapore to Boost Chip Production

Micron Technology plans to invest about US$24 billion in Singapore over the next 10 years as it expands its manufacturing facility to meet surging demand for memory chips amid the artificial-intelligence boom.

The Boise, Idaho-based chip giant on Tuesday said it broke ground on an advanced wafer fabrication facility located within the company's existing NAND manufacturing complex in Singapore. The plant represents a planned investment of 31 billion Singapore dollars, equivalent to US$24.41 billion, over the next decade, with wafer output scheduled to begin in the second half of 2028, it said in a statement.

Global Markets Mixed as Japanese Yen Eases After Rally

Investors remained on alert for any signs of possible yen intervention even as the currency eased back from Monday's sharp gains and the dollar recovered. Gold and silver remained close to the fresh highs reached at the start of the week, boosted by continued demand for safe-havens. President Trump said on Saturday he would put 100% tariffs on Canada if Prime Minister Mark Carney struck a trade deal with China and on Monday he said the U.S. will increase tariffs on South Korea from 15% to 25% as it hadn't moved quickly enough to implement last year's trade pact. In a sign of shifting alliances as a result of Trump's tariffs, India and the European Union said Tuesday they reached a free-trade agreement.

Elsewhere, U.S. natural gas futures eased a touch after big gains due to the weekend's winter storm across much of the U.S. Investors also looked ahead to Wednesday's rate decision from the Federal Reserve and accompanying comments from chair Jerome Powell.

A Year After the DeepSeek Crash, Markets Face a New Chinese AI Threat

It's a year on from the "DeepSeek moment" that sparked a $1 trillion market panic.

The artificial-intelligence trade has proved resilient since then because a stream of more capable models continues to justify vast spending by U.S. companies. But Chinese AI models are threatening to capture more of the market in 2026, making it harder for U.S. leaders such as Alphabet's Google, OpenAI, and Anthropic to cash in.

Trump Administration Proposes Keeping Steady the Rates Medicare Pays Insurers

The Trump administration is proposing roughly flat rates for Medicare insurers next year, an update that falls well short of Wall Street expectations.

Payments to the plans would increase by an estimated .09% on average in 2027, the Centers for Medicare and Medicaid Services proposed Monday.

Deep Freeze Sends U.S. Natural-Gas Prices Soaring

U.S. natural-gas futures topped $7 for the first time since 2022 as a massive winter storm swept across the country, driving up heating demand and threatening supply.

Source: morningstar

Risk Warnings and Disclaimers

Add to Favorites

King Ten

Energy

Remarks of Officials

Commodity

Political

Russia-Ukraine Conflict

Economic

The European Union’s competition chief has issued a sharp warning against becoming overly dependent on liquefied natural gas (LNG) from the United States as the bloc works to secure its energy future.

"We know that we cannot rely on Russian gas, and that we should pay attention not to rely too much on American gas," Teresa Ribera said in a radio interview on Tuesday.

This cautionary stance comes as Europe rapidly pivots away from its former primary supplier, Russia, following the invasion of Ukraine.

The Scale of the Shift to US Energy

To replace lost volumes of Russian gas, European nations have increasingly turned to US LNG. This shift is solidified by a major trade agreement with Washington, which includes a commitment to purchase $750 billion in American energy by 2028.

The momentum is significant. A recent report from the Institute for Energy Economics and Financial Analysis (IEEFA) projected that if current supply deals are fulfilled and gas demand reduction efforts lag, the US could account for as much as 80% of Europe's gas imports by 2030. This would be a substantial increase from a projected 57% in 2025.

Even as the EU diversifies, Russia remains a key player, currently providing about 15% of the bloc's LNG supplies and standing as its second-largest provider after the United States.

Concerns Over a New Dependency

Top officials are openly cautioning that trading one dependency for another is not a sustainable long-term strategy.

"One of the reasons why we need to produce much more of our own energy is that it is not good to be reliant on any country in the world fundamentally for our energy supply," EU energy chief Dan Jorgensen told reporters. He added, "we need to be very careful that now we're moving out of Russian energy, that we're not replacing that dependency with other dependencies."

These concerns are amplified by geopolitical uncertainties. Past actions by former US President Donald Trump, including his interest in Greenland's mining rights and threats of tariffs against European nations, serve as a reminder of the political risks associated with over-reliance on a single partner.

Europe's Broader Energy Strategy

The EU's overarching goal remains a complete phaseout of Russian gas. To achieve true energy security, the bloc is focused on a two-pronged approach: seeking a diverse range of alternative suppliers while simultaneously accelerating its own transition to renewable energy.

This strategy is designed not only to secure its energy supply chain but also to meet the continent's ambitious climate target of achieving zero emissions by 2050.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Michael Ross

Data Interpretation

Central Bank

Remarks of Officials

Economic

Traders' Opinions

Forex

The National Bank of Hungary has held its benchmark interest rate at 6.5%, opting for a wait-and-see approach as it looks for more conclusive evidence that slowing inflation is sustainable.

This marks the 16th consecutive month the rate has remained unchanged, tying with Romania for the highest in the European Union. The decision, announced on Tuesday, was in line with the forecasts of 22 out of 23 economists surveyed by Bloomberg.

A Cautious Shift in Monetary Policy

Hungary's central bank recently adjusted its policy guidance. After previously ruling out rate cuts, policymakers now state that decisions will be made on a meeting-by-meeting basis, driven entirely by incoming economic data. The bank's projections indicate that inflation is expected to return to its 3% target, plus or minus a one percentage point tolerance band, over the monetary policy horizon.

However, despite headline inflation slowing in December and moving closer to the target, officials remain cautious. Deputy Governor Zoltan Kurali highlighted a key concern on January 14, pointing to "stubborn" price increases in the services sector, a critical indicator of underlying inflation expectations.

At an annual rate of 6.8%, services inflation was more than double the headline figure last month. Kurali noted that policymakers would need "a lot of conviction" before they could begin cutting rates.

All Eyes on February Inflation Data

With the central bank holding firm for now, market focus is shifting to the next policy meeting in February. A crucial factor in that decision will be the January inflation report, scheduled for release by the statistics office on February 12.

This data will provide the first clear picture of how businesses, particularly in the services industry, have repriced their offerings at the start of the new year.

Market Expectations and Currency Headwinds

Money market traders are already positioning for a change in policy. According to forward rate agreements, investors are anticipating one or two quarter-point rate cuts within the next three months, with the first potentially coming as soon as February.

Adding another layer to the bank's decision-making is the strength of the Hungarian forint. The currency is trading near a two-year high against the euro, buoyed by a broader emerging-market rally and a weaker U.S. dollar. A stronger forint helps to lower the cost of imported goods, including energy, which eases inflationary pressures and gives the central bank more room to consider rate cuts.

This economic maneuvering occurs ahead of parliamentary elections scheduled for April 12, where Prime Minister Viktor Orban's party is reportedly trailing in most polls after 16 years in power.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Isaac Bennett

Palestinian-Israeli conflict

Energy

Middle East Situation

Political

Economic

Recent headlines about Iran’s internal turmoil and potential military confrontations obscure a more fundamental shift in the Middle East. Tehran is no longer the primary force shaping the region’s strategic direction. Instead, a new era is dawning, defined by competition between two emerging coalitions: an Abrahamic bloc and an Islamic bloc. The evolution of this rivalry—not Iran's next move—will determine the future of the region and America's role within it.

The Rise of the Abrahamic Coalition

Though not yet a formal alliance, the first bloc is becoming increasingly coherent. Centered on Israel and the United Arab Emirates, this group extends to include Morocco, Greece, and even India. This coalition aims to reconfigure the region through a combination of military power, technological partnership, and economic integration.

Core members believe the existing Middle Eastern order has failed to stop militant Islam, whether the Shiite version backed by Iran or the Sunni variant supported by Turkey and Qatar. They argue that true stability can only be achieved by intervening in regional conflicts to support more secular forces. Capitalizing on President Donald Trump's push to broaden the Abraham Accords, these nations are prioritizing the expansion of Arab-Israeli normalization, regardless of progress on Palestinian self-determination or a two-state solution.

This Abrahamic coalition is gaining momentum. Israel's military operations following the Oct. 7, 2023, Hamas attack have bolstered its deterrence and power projection capabilities. The UAE, known as "Little Sparta," continues to use its economic might and diplomatic agility to expand its influence far beyond the Gulf. United Nations experts and international NGOs suspect the UAE of supplying weapons to the Rapid Support Forces in Sudan, the Southern Transitional Council in Yemen, and Libyan strongman Khalifa Haftar.

Greece has become a vital partner in the Eastern Mediterranean, collaborating with Israel on military drills and energy projects to counter their shared competitor, Turkey. Further east, India’s growing ties with both Israel and the UAE—through bilateral agreements and multilateral platforms like I2U2 and the India-Middle East-Europe Economic Corridor—give the bloc strategic depth far beyond the region itself.

The Islamic Bloc Forms a Counterweight

Opposing the Abrahamic axis is the Islamic coalition, a counterbalancing effort led by Saudi Arabia and including Turkey, Pakistan, Qatar, and a more cautious Egypt. These nations view the Israel-UAE axis as a source of instability, arguing that its support for separatist groups worsens fragmentation in conflict zones. They see the narrative of pushing back against Islamists as a self-serving excuse to project power.

This group prefers to preserve and operate within existing structures, however flawed. In Yemen, Sudan, and elsewhere, they are backing weak states struggling to maintain sovereignty and territorial integrity.

Over the past year, Saudi Arabia has bolstered its defense relationship with Pakistan, creating a mutual security pact after an Israeli airstrike on Qatar. Its military cooperation with Turkey has also grown, with a more formal defense agreement seemingly on the horizon. Egypt, concerned by Israeli and Emirati activities in the Horn of Africa, is also discussing closer coordination with Riyadh on Sudan and Somalia. Together, these states are forming a loose but expanding counterweight across the region.

The Saudi-UAE Rivalry at the Center

At the heart of this realignment is the most critical bilateral rift in the Middle East today: the escalating rivalry between Saudi Arabia and the UAE. Once close partners, the two Gulf powers are now strategic competitors. This divergence was highlighted in Yemen, where Saudi Arabia struck the Port of Mukalla to stop Emirati arms shipments, ultimately forcing a UAE withdrawal.

If left unchecked, this competition could escalate from proxy conflicts to direct confrontation. Threats of airspace restrictions, border closures, and even a UAE withdrawal from Saudi-led institutions like OPEC+ have already been voiced by senior officials. Such moves, once unthinkable, would disrupt energy markets, regional travel, and cross-border business. While Gulf diplomacy has contained the friction so far, the underlying divide is structural, not merely personal.

U.S. Strategy in a New Regional Order

This new competition complicates a key U.S. foreign policy goal: Saudi-Israeli normalization. Riyadh still sees the value in a deal that would grant it a U.S. security treaty in exchange for integrating Israel into the region. However, without significant changes in Israeli policy, especially regarding Gaza and the West Bank, the kingdom is more likely to align with Turkey and Pakistan than with Israel.

For the United States, the primary challenge is no longer countering an Iranian regime that appears critically weakened. The new task is managing the damaging rivalries among its own partners to prevent further fragmentation. This is made more difficult by divisions within Washington, where officials reportedly have diverging views and independent business interests in the region, leading to a hands-off approach.

To achieve a breakthrough, the Trump administration must take two steps. First, it needs to actively manage the rivalries among its partners and its own aides, perhaps by appointing a special envoy to coordinate a unified regional strategy. Second, it must preserve a viable path to Saudi-Israeli normalization by influencing political outcomes in Jerusalem after upcoming elections. The next Israeli government cannot be beholden to radical elements opposed to Palestinian self-determination.

Saudi Arabia is the Middle East's crucial swing state. A senior Saudi official described the kingdom's policy as pragmatic, guided by "maximum flexibility at a time of maximum uncertainty." If President Trump can secure Saudi-Israeli normalization, he could steer Riyadh and the wider region away from its current path of rivalry. This would fold both coalitions into a broader American-led framework, stabilizing the post-Iran Middle East for decades to come.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Economic

EU/India Reach Trade Deal

goods. The goal is to increase trade between the two regions and rely less on the United States.

Key points of the deal:

Benefits for the EU: The deal removes or lowers taxes on almost 97% of European goods sold to India. This is expected to double EU exports to India by 2032 and save European companies about €4 billion ($4.75 billion).

Benefits for India: Over the next seven years, the EU will cut import taxes on 99.5% of goods coming from India. Taxes will drop to zero for Indian seafood, leather, clothes, chemicals, rubber, metals, and jewelry.

What is excluded: Farming products such as soy, beef, sugar, rice, and dairy are not included in this agreement.

The trade negotiations between the EU and India, which had dragged on for twenty years, finally sped up after the United States imposed a 50% tax on certain Indian goods. This urgency was further driven by US allies reacting to President Trump’s tariff threats and his controversial attempt to buy Greenland.

In response to this global tension, Canadian Prime Minister Mark Carney recently gave a popular speech urging medium-sized countries to band together for protection. He now plans to visit India to sign new agreements on uranium, energy, and minerals.

Economically, the EU has established itself as India’s top partner. Last year, trade between the two reached $136.5 billion, surpassing India’s trade with both the United States ($132 billion) and China ($128 billion).

According to an Indian government official, lawyers will spend the next five to six months reviewing the final details of the agreement. Once that legal check is complete, the deal will be formally signed and is expected to be fully in action within a year.

European Session - Puma Soars 19%

European stock markets rose on Tuesday, driven by good news from major companies that helped calm fears about global trade tensions.

The main European index, the STOXX 600, increased by 0.34% early in the day. This rise highlights how investors are currently relying more on specific company updates rather than general economic news to guide their decisions during these uncertain times.

Several companies saw significant gains. Puma’s stock soared 19%, its highest level since last March after the Chinese company Anta Sports bought a 29% stake in the business for €1.5 billion ($1.8 billion).

This deal is expected to boost Puma's sales in the massive Chinese market. Additionally, shares in the Swiss pharmaceutical company Roche rose nearly 1% after it announced successful trial results for a new weekly weight-loss drug.

On the political front, markets remain worried about the long-term stability of global trade. These concerns persist because US President Donald Trump has threatened to raise taxes on cars from South Korea and other imports, citing delays in a trade deal signed last year.

On the FX front, the US dollar rose slightly on Tuesday but struggled to build significant momentum as traders remained cautious. Markets are on high alert for potential government intervention from the US and Japan to stabilize currency rates, and investors are waiting for the Federal Reserve's interest rate decision on Wednesday.

This caution has helped the yen steady in the 153 to 154 range, a solid recovery from its recent low of 159.23. By the end of trading, the dollar was up about 0.4% against the yen at 154.75.

Broader measures of the dollar showed a 0.2% increase, marking its first gain in four days, though it is still down about 1% since the start of the year. Other major currencies pulled back slightly from recent highs.

The euro dropped 0.2% to $1.1855, and the British pound dipped marginally to $1.3668, though both remain close to their four-month peaks.

Similarly, the Australian dollar slipped slightly but stayed near its highest level in 16 months.

Currency Power Balance

Gold prices rose on Tuesday, hovering just below the $5,100 milestone that was reached for the first time yesterday. Market participants are flocking to the metal as a safety net due to growing uncertainty surrounding US President Donald Trump’s policies.

As of late morning, the spot price of gold had climbed 1.6% to $5,092.09 per ounce, staying close to the all-time high of $5,110.50 set on Monday. US gold futures for February also posted a small gain.

It was also a volatile day for other precious metals. Silver jumped 8.4% to trade at $112.57 per ounce. This follows a record high of $117.69 on Monday, meaning silver has already surged by over 50% just since the start of the year.

Meanwhile, platinum fell 2.5% to $2,689.12 per ounce after hitting a record high yesterday, whereas palladium saw a gain of 3.3%, rising to $2,048.28.

Oil prices rose slightly on Tuesday after a massive winter storm struck the US Gulf Coast, disrupting oil production and refineries.

However, the price increase was limited because oil supply from Kazakhstan has started flowing again. Brent crude increased by 23 cents to $65.82 a barrel, while US West Texas Intermediate rose by 29 cents to $60.92. The severe weather has strained power grids and energy infrastructure across the US.

Experts estimate that over the weekend, American oil producers lost about 2 million barrels per day, which is roughly 15% of the country's total output.

Economic Calendar and Final Thoughts

Data is largely thin today with Geopolitical developments likely to remain key. Greenland, tariffs, US-Iran among other discussions may be key drivers today.

There is also a host of US companies reporting earnings today which could also stoke volatility. The only US data of note is the weekly ADP jobs numbers. Barring a negative print here, the DXY can work its way higher and potentially fill Monday's gap to 97.42.