Zelenskyy Joins Cyprus to Kick Off EU Presidency

James Riley

Remarks of Officials

Russia-Ukraine Conflict

Political

Daily News

Summary:

Cyprus begins its EU presidency, hosting Zelenskyy to underscore Ukraine's EU path and its strategic pivot to the Middle East.

Cyprus began its rotating presidency of the European Union on Wednesday, launching its six-month term with a high-profile meeting attended by Ukrainian President Volodymyr Zelenskyy, European Commission chief Ursula von der Leyen, and European Council President Antonio Costa.

Zelenskyy's presence in Nicosia sends a strong political signal of the EU's continued backing for Kyiv as its war with Russia moves into its fifth year.

Ukrainian President Volodymyr Zelenskyy and Cypriot President Nikos Christodoulides meet in Nicosia, flanked by the flags of Ukraine, Cyprus, and the European Union.

Ukraine's EU Path and Security Guarantees

Upon his arrival at the presidential palace, Zelenskyy was welcomed by Cypriot President Nikos Christodoulides. During a brief exchange, the Ukrainian leader expressed his goals for the new presidency.

"We hope that during your presidency a lot of steps can be taken forward, closer to membership in the EU," Zelenskyy told Christodoulides.

He added that the meeting was also an opportunity to follow up on discussions from a Paris summit on Tuesday. At that gathering, the United States and a broad coalition of allies pledged to provide security guarantees to support Ukraine in the event of a ceasefire if Russia were to attack again.

Cyprus's Strategic Pivot and Regional Ambitions

The island nation, which is assuming the EU helm for the second time, aims to serve as a strategic bridge between Europe and the Middle East. A formal ceremony in Nicosia will include regional leaders such as Lebanese President Joseph Aoun, highlighting this ambition.

Ukrainian President Volodymyr Zelenskyy is welcomed by an official as he arrives for meetings in Cyprus.

While Cyprus traditionally maintained close cultural and political ties with Russia, it has fully supported sanctions against Moscow. Many on the island draw parallels between Russia's invasion of Ukraine and Turkey's 1974 invasion of northern Cyprus, which followed a coup engineered by the military junta then ruling Greece.

For his part, President Christodoulides stated that Cyprus's presidency will focus on boosting the EU's autonomy and deepening its integration to better address global challenges.

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George Anderson

Economic

Daily News

Remarks of Officials

Central Bank

Data Interpretation

Euro-area inflation has aligned with the European Central Bank's target, reinforcing the view among policymakers that interest rates can remain on hold barring any major shifts in the economic outlook.

Consumer prices in December rose 2% from the previous year, a slight decrease from the 2.1% recorded in the prior month. The figure matched economists' expectations.

Key Inflation Metrics Show Easing

A closer look at the data reveals a broader trend of moderating price pressures. Core inflation, which excludes volatile items like food and energy, slowed to 2.3%. Similarly, services inflation, a metric closely watched by the ECB, also showed signs of easing.

Price growth has now been hovering near the central bank's 2% objective for over six months. This stability has allowed the ECB to maintain its current borrowing costs since June, with both economists and investors anticipating no further policy moves in the foreseeable future.

Policymakers Remain Cautious Amid Uncertainty

While most ECB officials agree that inflation is largely under control, they have been circumspect about future steps, pointing to persistent uncertainty in the global economy.

At their final meeting of 2025, policymakers revised their forecasts, now expecting inflation to fall only slightly below its target this year. This upward adjustment reflects a slower-than-anticipated easing in the cost of services.

Divergent Inflation Rates Across the Bloc

Recent reports from member states show that while consumer price growth is easing across the Eurozone, the pace differs significantly from country to country.

• Spain: Inflation dropped to 3%.

• France: Inflation eased to 0.7%.

• Germany: Inflation registered at 2%.

Stubborn Services Costs and Wage Growth

Services inflation remains a primary point of concern for the ECB, driven partly by robust wage growth. The most comprehensive measure of pay increases held steady at 4% in the third quarter, a level considered above what is consistent with long-term price stability.

ECB President Christine Lagarde acknowledged last month that this is "a trend that we look at carefully." However, she also expressed confidence that wage pressures should moderate this year as salaries catch up to the post-pandemic price surge.

The ECB's Long-Term Inflation Outlook

Several other factors could potentially push inflation away from the 2% target, including the ongoing effects of US tariffs, the strength of the euro, and fiscal expansion in Germany.

Under its baseline scenario, the central bank projects that inflation will average 1.9% in 2026. Following a further decline, it is then expected to accelerate back toward the 2% target by 2028.

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

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Gerik

Economic

Commodity

Festive Demand and Premium Gold Drive Revenue Growth

Indian jewellery stocks soared on Wednesday as investors responded positively to strong quarterly sales data, indicating solid consumer demand during the country's peak festive season. The sector’s strong performance was amplified by elevated average selling prices for gold, reflecting both global price movements and a consumer shift toward higher-end, premium designs.

Titan Company a leading player in the industry rose 4.2% to become the top performer on the Nifty 50 index, while Kalyan Jewellers gained 5%. The revenue uptick for both companies was attributed not only to Diwali and other festival-linked sales but also to increased demand for larger-ticket items and a broader mix of premium jewellery offerings.

Sector Sentiment Buoyed by Structural and Seasonal Factors

Analysts noted that seasonal buying behavior during Q3 (which spans the October–December period) typically benefits jewellers in India, but this year’s results suggest a deeper structural strength as well. In particular, rising gold prices did not deter consumer interest but instead increased the overall value of sales, helping improve topline performance without relying on volume alone.

The rally in stock prices suggests that investors are responding to a combination of favorable commodity pricing, margin protection via product mix, and renewed consumer confidence particularly in urban markets where discretionary spending has recovered post-pandemic.

With third-quarter results confirming strong seasonal sales and favorable pricing dynamics, Indian jewellery firms are gaining investor favor. The rally in Titan and Kalyan Jewellers underscores market confidence in continued consumption resilience and the industry's ability to navigate volatility in gold prices through strategic product positioning and premiumization. As the earnings season unfolds, further guidance from these companies may determine whether the momentum can carry into 2026.

Source: Reuters

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Gerik

Economic

Commodity

Persistent State-Sector Demand Defies U.S. Tariff Pressure

India’s state-run oil refiners have maintained and even expanded their purchases of Russian crude despite escalating trade tensions with the United States. This resilience comes amid Washington’s imposition of a 25% secondary tariff on Indian exports last August, aimed at penalizing New Delhi’s continued energy trade with Moscow. Although private refiners, particularly Reliance Industries, have scaled back due to sanctions on Russian oil giants Lukoil and Rosneft, state-owned firms like Indian Oil Corporation (IOC) and Bharat Petroleum (BPCL) have stepped in to fill part of the gap.

This trend suggests not a collapse but a strategic redistribution of procurement within India’s energy sector. According to Rystad Energy, the shift underscores how public sector undertakings (PSUs) have adapted to geopolitical constraints by sourcing through non-sanctioned intermediaries while optimizing for price and supply security.

Data Reveals Decline Led by Private Sector Cutbacks

Kpler’s tracking data shows India’s Russian oil imports fell to 1.24 million barrels per day in December the lowest since December 2022 marking a 595,000 bpd decline month-on-month. However, much of this drop is attributed to private refiners stepping away from Russian supplies. Reliance Industries, once a major importer, has sharply reduced intake since late November, following U.S. sanctions on its key Russian partners.

Yet the downward trend is not uniform. Rystad estimates a partial recovery to 1.8 million barrels per day in January, largely driven by continued and slightly rising purchases by state-owned entities. This suggests that India's domestic energy strategy is recalibrating rather than retreating from Russian supply channels.

Strategic Flexibility Over Geopolitical Concessions

India’s energy leadership remains firm on sourcing oil based on favorable commercial terms. Energy Minister Hardeep Singh Puri reaffirmed that India would continue buying from any source that meets national energy security and pricing requirements. This stance underscores New Delhi’s reluctance to compromise strategic autonomy in exchange for trade leniency.

The Indian government is simultaneously seeking relief from punitive U.S. tariffs. According to U.S. Senator Lindsay Graham, India’s ambassador has requested that the Trump administration reconsider its position, citing an overall decline in Russian oil imports. However, President Trump has publicly stated that further tariff hikes remain on the table if India fails to curb Russian purchases.

Economic and Diplomatic Implications

The ongoing divergence between U.S. expectations and Indian procurement behavior illustrates the complex balancing act New Delhi must perform. While the Biden and now Trump administrations view Russian oil revenues as a key pillar sustaining Moscow’s war effort in Ukraine, India continues to prioritize affordability and supply diversity over political alignment.

Public sector refiners’ continued reliance on Russian crude reflects both market-driven logic and a subtle assertion of India’s non-aligned foreign policy tradition. Meanwhile, the pressure to reduce dependence on sanctioned suppliers may encourage Indian refiners to gradually expand procurement from alternative sources such as the Middle East, Africa, or even the Americas but only if economic terms are competitive.

India’s state-owned refiners are showing resilience and adaptability in the face of geopolitical headwinds. Rather than abandoning Russian oil, they are repositioning supply strategies to maintain stable fuel flows and support domestic energy demand. While this approach challenges U.S. diplomatic expectations, it also reinforces India’s commitment to energy pragmatism and sovereign decision-making in a rapidly shifting global oil landscape. Whether Washington intensifies economic pressure or seeks compromise remains a pivotal factor for future bilateral ties.

Source: Reuters

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Michael Ross

Remarks of Officials

Energy

Economic

Political

Experts are advising Malaysia to adopt a cautious and pragmatic approach to its upcoming carbon tax, recommending a starting rate similar to Singapore's initial S$5 per tonne to avoid stifling business activity while still curbing emissions.

The guidance comes as the country finalizes the details of a policy first announced in Budget 2025 and reiterated in Budget 2026. The critical challenge lies in setting a price that is both effective and economically sustainable.

The Singapore Benchmark: A 'Sweet Spot'?

CGS International Securities Malaysia's head of research, Prem Jearajasingam, suggested that Malaysia should benchmark its initial carbon tax against Singapore's starting price of S$5 per tonne of carbon dioxide equivalent (tCO₂e).

Singapore introduced its tax at this level before embarking on a clear and aggressive escalation path:

• 2024: Raised to S$25/tCO₂e

• 2026-2027: Set to increase to S$45/tCO₂e

• 2030: A target range of S$50 to S$80/tCO₂e

This model provides a template for a gradual, predictable ramp-up that allows industries to adapt over time.

A High-Stakes Balancing Act for Businesses

PwC Malaysia director Richard Baker emphasized the "very fine balancing act" the government must perform. Speaking at CGS International's 18th Annual Malaysia Corporate Day 2026, he outlined the two key risks of a miscalibrated tax rate.

"If you set the tax too high, it becomes a burden and businesses may relocate, as we have seen happen in Singapore," Baker warned. Conversely, a rate that is too low would fail to achieve its primary goal of reducing greenhouse gas emissions.

A carbon tax requires companies to pay a levy based on their emissions. To comply, firms must measure, report, and verify their output. The policy is designed to incentivize investment in cleaner technologies and energy efficiency over high-emission processes.

Strategy Over Cost: Preparing for the New Tax

Baker urged companies to view the carbon tax not as a simple cost but as a catalyst for strategic investment. He recommended that businesses proactively adopt emissions-reduction measures, such as:

• Transitioning to renewable energy sources.

• Implementing energy efficiency upgrades.

• Upskilling employees for sustainability-focused roles.

To ease this transition, various government incentives are already available. These include capital allowances, tax deductions for green assets, and grants for sustainability training and compliance-related consultancy.

Legal Framework and Sector Rollout

While key details like pricing and implementation timelines are still pending, the foundational legal framework is expected in the upcoming Climate Change Bill. The bill, set to be tabled during the first parliamentary session of 2026, will provide the legal basis for Malaysia's low-carbon transition, including provisions for emissions monitoring and reporting.

The legislation is expected to be introduced by the newly appointed Natural Resources and Environmental Sustainability Minister, Datuk Seri Arthur Joseph Kurup.

The government has indicated that the carbon tax will initially target the iron, steel, and energy sectors starting from the 2026 assessment year. Baker noted that the scope could later expand to include other emissions-intensive industries like fertilisers, cement, and aluminium.

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

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Gerik

Political

Washington’s Unexpected Endorsement Signals Strategic Continuity

In a stunning geopolitical development, Delcy Rodríguez a staunch Maduro loyalist and Venezuela’s current oil minister has been sworn in as acting president with the tacit endorsement of the Trump administration. Despite her deep roots in the socialist government, Rodríguez is now seen by U.S. officials and oil executives as the most viable figure to stabilize the country’s oil industry and facilitate cooperation with American energy interests.

Sources close to the administration reveal that Rodríguez’s selection was less about ideology and more about operational continuity. U.S. officials, wary of post-conflict chaos akin to the Iraq aftermath, prioritized a leader capable of managing complex state infrastructure particularly oil over dissident figure María Corina Machado, who lacked business ties and was considered politically volatile. The CIA reportedly backed this approach in a succession report commissioned prior to the intervention.

Rodríguez: A Trusted Liaison to the Oil Sector

Rodríguez’s tenure in Venezuela’s oil sector has earned her credibility among global energy executives, despite international sanctions and internal mismanagement. Appointed oil minister in 2024, she took charge of the state-run Petróleos de Venezuela SA (PDVSA), overseeing transparency efforts and managing production in an increasingly isolated industry.

Her long-standing relationships with companies across Houston, Moscow, and Beijing have made her a trusted point of contact for stakeholders operating in or eyeing a return to the Venezuelan market. These ties, combined with her reputation for accessibility and discipline, have reassured both U.S. policymakers and creditors looking to restructure $60 billion in sovereign debt.

Market Stakeholders See Path to Sanction Relief

With Rodríguez now installed, the oil sector is pressing the White House to ease sanctions swiftly to prevent further damage to Venezuela’s fragile production system. The country had already begun shutting down wells in December due to storage limitations exacerbated by the blockade, and more shut-ins risk irreversible harm to infrastructure.

Chevron, the only U.S. oil major still operating in Venezuela under current authorization, stated it had no advance warning of Maduro’s capture and is now seeking clarity on regulatory and commercial frameworks. Other global players including Shell, Repsol, Eni, and Maurel et Prom are also watching closely for signs of normalization and market re-entry.

Balancing Pragmatism and Controversy

Rodríguez’s rise is not without controversy. While she maintains no U.S. indictment unlike Maduro she remains deeply associated with a regime accused of systemic human rights violations. Critics argue that her appointment represents a transactional compromise rather than a democratic solution. Nonetheless, her combination of technocratic competence and regime loyalty presents a short-term stabilizing option as Washington seeks to reopen oil flows and contain further regional disruption.

Rodríguez’s initial public posture has also been dual-track: while condemning Maduro’s capture as a “kidnapping,” she has simultaneously invited the U.S. to pursue a cooperative development agenda. Analysts interpret this rhetorical split as a strategic hedge appeasing domestic power centers while signaling openness to foreign investment and diplomatic normalization.

Political Legacy and Global Energy Stakes

A lawyer by training and daughter of a prominent Marxist dissident who died in custody, Rodríguez’s political identity is steeped in the revolutionary history of the Chávez era. Her familial ties including her brother Jorge Rodríguez, a key regime figure underscore the enduring influence of socialist elites in Venezuela’s political structure.

Still, her practical orientation has distinguished her in high-level discussions with financial and energy stakeholders. As Hans Humes of Greylock Capital noted, Rodríguez’s experience operating under “the worst conditions” may equip her to manage a complex transition and re-engage with creditors and companies that had long written off Venezuela.

The Trump administration’s backing of Delcy Rodríguez reflects a calculated bet on stability over disruption. While politically contentious, her leadership offers the fastest route to restoring Venezuela’s vital oil sector and unlocking economic opportunities for global energy firms. Yet whether Rodríguez can deliver lasting reform or merely reinforce old structures under a new guise remains an open question one with far-reaching implications for global energy markets and Latin American geopolitics.

Source: Bloomberg

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Winkelmann

Forex

Economic

French construction activity continued its steep decline in December, extending the sector's downturn to over three-and-a-half years, according to the latest HCOB PMI survey.

The headline HCOB France Construction PMI Total Activity Index registered 43.4 in December, slightly below November's 43.6, indicating a marginally sharper contraction. Any reading below 50 signals a decline in activity.

Unlike November, when housing and commercial activity drove the overall contraction, December's downturn was primarily fueled by the civil engineering sub-sector, which saw its steepest decline since February. Residential building work fell at its softest rate since August 2022, while commercial construction posted its slowest drop in four months.

New orders decreased rapidly as companies reported weak demand conditions and fewer calls for tender. This slump in new business led French constructors to become increasingly pessimistic about the future, with sentiment reaching its lowest level since October 2014.

Approximately 35% of surveyed firms expect activity levels to be lower by the end of 2026, while only 6% anticipate growth.

In response to weak conditions, construction companies continued to reduce purchasing activity, though the pace of decline was the slowest in seven months. Employment in the sector has fallen continuously since May 2024, with December showing the weakest drop in seven months.

Cost pressures intensified for the third consecutive month, with input price inflation reaching its highest level in almost a year, though still below the survey's historical average.

Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, noted that the construction recession, which began alongside the ECB's rate-hiking cycle in summer 2022, remains deep and persistent. He added that while there are "tentative signs of recovery in residential construction," civil engineering activity "collapsed in December."

Feldhusen pointed to several factors weighing on the sector's outlook, including weak order books, limited room for further ECB rate cuts, France's ongoing fiscal concerns, and political uncertainty.