Market Overview - Asian stocks declined, following Wall Street's downward trend, due to ongoing trade tensions, uncertainty over U.S. monetary policy, and heavy selling in precious metals [1] - Precious metals, including gold and silver, saw significant declines, with gold dropping over 5% and silver nearly 8% [2] - Oil prices fell nearly 5% amid reports of U.S. and Iran readiness to negotiate an agreement to ease tensions [2] Chinese Market - Chinese and Hong Kong markets experienced sharp declines, with China Vanke warning of an 11.8 billion net loss for 2025 and BYD reporting a 30.1% year-on-year drop in vehicle sales for January [3] - The Shanghai Composite index fell 2.48% to 4,015.75, while the Hang Seng index dropped 2.23% to 26,775.57 [3] - Both China Vanke and BYD shares fell more than 4% in Shanghai [3] Economic Data - China's official manufacturing purchasing managers' index (PMI) was reported at 49.3, below forecasts, indicating contraction, while the non-manufacturing PMI also fell into contraction [4] - A private gauge indicated that Chinese manufacturing activity continued to expand in January [4] Japanese Market - The Nikkei average decreased by 1.25% to 52,655.18, reversing early gains, while the broader Topix index settled 0.85% lower at 3,536.13 [5] - Major companies like SoftBank Group, Advantest, Disco Corp, and Lasertec saw declines ranging from 3.8% to 14% [5] - Investors overlooked a private-sector survey indicating Japan's manufacturing activity grew at the fastest pace in about three and a half years [6] South Korean Market - The Kospi average plunged 5.26% to 4,949.67, ending a four-session winning streak, with major companies like Hyundai Motor and Samsung Electronics falling between 4% and 9% [7] - The Korea Exchange issued a sell-side circuit breaker for 5 minutes during the trading session [7] Australian and New Zealand Markets - Australian markets closed lower, with the S&P/ASX 200 falling 1.02% to 8,778.60, driven down by financials and materials amid rate hike concerns [7] - New Zealand's S&P/NZX-50 index finished marginally lower at 13,412.44 [8] U.S. Market Influence - U.S. stocks ended lower, with the dollar index climbing and Treasury yields surging after President Trump nominated Kevin Warsh for Fed Chair, leading to a hawkish shift in U.S. monetary policy [8][9] - Warsh is perceived as skeptical of loose monetary policy and has previously criticized the Fed for underestimating inflation risks [9]

Core Viewpoint - The U.S. dollar is under pressure, leading to gains in the euro and pound, as the Federal Reserve's recent rate cut and comments from Fed Chair Jerome Powell were perceived as less hawkish than expected, reinforcing dollar selling momentum [1][6]. Group 1: Currency Movements - The euro was steady at $1.1741 after a 0.37% rise, while the pound was firmer at $1.33955, both poised for their third consecutive week of gains [1]. - The dollar index, measuring the U.S. currency against six major rivals, was at 98.34, set for a weekly drop of 0.7% and down over 9% this year, on track for its steepest annual drop since 2017 [6]. - The Japanese yen is expected to gain slightly, trading at 155.61 per dollar, while the Australian dollar remained steady at $0.6667 and the New Zealand dollar was 0.14% firmer at $0.5815 [7][9]. Group 2: Federal Reserve and Monetary Policy - The Federal Reserve cut rates as expected, but the comments from Powell were seen as less hawkish, which may help avoid negative surprises for investors [2][6]. - There is uncertainty regarding the U.S. monetary policy path next year, with traders pricing in two rate cuts in 2026, while policymakers anticipate only one cut next year and one in 2027 [6]. - Economic data lagging from the recent federal government shutdown will influence future monetary policy decisions, with the upcoming midterm elections likely focusing on economic performance [6]. Group 3: Economic Outlook - The Swiss National Bank maintained its policy rate at 0% and noted that a recent agreement to reduce U.S. tariffs on Swiss goods has improved the economic outlook, despite inflation being below expectations [8][9]. - Concerns regarding the U.S. labor market are expected to drive the Federal Open Market Committee (FOMC) to consider further interest rate cuts next year [6].

Core Insights - Digital asset investment products experienced significant outflows of $812 million last week, driven by cooling investor sentiment amid changing expectations for U.S. monetary policy [1] - Year-to-date inflows remain strong at $39.6 billion, indicating resilient overall demand for digital assets despite recent pullbacks [2] Regional Analysis - The U.S. market faced the majority of outflows, totaling $1 billion, while other regions like Switzerland, Canada, and Germany showed positive inflows, with Switzerland leading at $126.8 million [3][4] - This regional divergence highlights that U.S. macroeconomic uncertainty is impacting institutional flows, but global demand for digital assets remains robust [4] Asset Performance - Bitcoin suffered the most, with outflows of $719 million, while Ethereum experienced $409 million in outflows, bringing its year-to-date inflows to a near halt [5][6] - The data indicates a softening of near-term investor sentiment for both Bitcoin and Ethereum as markets adjust expectations around monetary easing [6] Emerging Trends - Solana and XRP emerged as exceptions to the outflow trend, attracting inflows of $291 million and $93.1 million respectively, driven by anticipation of upcoming U.S. ETF launches [7] - Solana's inflows reflect growing confidence in its blockchain capabilities, while XRP's demand signals renewed institutional interest ahead of potential regulatory clarity in the U.S. [8]

Group 1 - The U.S. tech sector may face challenges due to President Trump's announcement of a $100,000 fee for new H-1B worker visas, which could impact companies that rely on overseas talent [1][4] - Asian equities showed mixed performance, with Japan's Nikkei rising over 1% and Taiwan reaching a record high, while Indian shares declined following the H-1B visa fee announcement [2] - India's information technology sector, valued at $283 billion, will need to revise its strategy of rotating skilled talent into U.S. projects due to the new visa fee [4] Group 2 - The U.S. dollar experienced a slight decline, with markets focused on the potential for additional monetary easing, pricing in 44 basis points of cuts this year [2] - The upcoming release of the Personal Consumption Expenditures Index, the Fed's preferred inflation gauge, is anticipated to provide insights into future monetary policy [2]

Market Performance - Asian stocks exhibited mixed performance, with the Shanghai Composite index increasing by 0.22% to 3,828.58, while Hong Kong's Hang Seng index decreased by 0.76% to 26,344.14 [2] - Japanese stocks rebounded, with the Nikkei average rising by 0.99% to 45,493.66 and the broader Topix index up by 0.49% to 3,163.17 [3] - Seoul stocks reached a new record high, with the Kospi average increasing by 0.68% to 3,468.65, driven by tech shares [3] Company-Specific Developments - BYD Co. shares fell by 2.3% following reports that Warren Buffett's investment firm has sold its entire stake in the company [2] - Samsung Electronics' stock surged by 4.8% after receiving approval from Nvidia Corp. for its high-bandwidth memory chips [4] Economic Indicators - The Reserve Bank of Australia indicated that the economy is in a cyclical "upturn," contributing to a 0.43% rise in the S&P/ASX 200 to 8,810.90 [4] - Oil prices increased amid heightened geopolitical tensions in Europe and the Middle East, while gold prices reached a record high above $3,700 per ounce [5] U.S. Market Insights - U.S. stocks reached new record closing highs, with the Nasdaq Composite climbing by 0.7%, the S&P 500 adding 0.5%, and the Dow gaining 0.4% [6][7] - Positive sentiment around U.S.-China negotiations contributed to the rise, with President Trump describing a call with Xi Jinping as "very productive" [6]