January FOMC preview: Fed seen on hold with little new guidanceMorgan Stanley sees gold at $5,700 as banks turn even more bullishJapan service inflation holds near highs as wage pressures persistChina industrial profits rebound in December as price pressures easeChina to roll out policy to manage AI job impact and boost employmentMicron to expand memory chip production in Singapore amid global shortageChina Dec 2025 Industrial Profits +5.3% y/y (prior -13.1%)Financial Times says “EU to announce ‘mother of all’ Indian trade deals”PBOC sets USD/ CNY reference rate today at 6.9858 (vs. estimate 6.9548)Australian December Business confidence 3 (prior 1) & Conditions 9 (prior 7)UK PM Starmer heads to China to reset UK ties amid growing US tensionsUK shop price inflation hits two-year high as food costs accelerateJapan Services PPI (December 2025) 2.6% y/y (prior +2.7%)TD Securities: Dollar weakness overdone, only modest downside seen in 2026Brazil set to dominate China soybean imports in early 2026 as prices undercut U.S.ExSAFE official: China RMB faces domestic reform test as cracks emerge in dollar dominanceTrump hikes South Korea tariffs to 25%, citing stalled trade dealMedicare rate proposal shocks insurers, US health stocks slide after hoursinvestingLive Americas market news wrap: Silver squeezes to $117 then fades
Summary:
Trump revives Asia-Pacific trade tensions by lifting tariffs on South Korean goods to 25%, before Seoul signals fast-tracked legislative action
Japan service-sector inflation remains firm, reinforcing wage-driven price pressure
UK shop price inflation jumps to a two-year high, challenging “inflation has peaked” narratives
Australian business conditions improve but capacity constraints remain elevated
China’s industrial profits return to growth, though gains are uneven and driven by foreign firms
Geopolitical risk lingers as reports suggest Iran’s leadership is under growing internal strain
US President Donald Trump said he will raise tariffs on South Korean goods to 25% from 15%, citing Seoul’s failure to ratify a 2025 trade deal. The move targets autos, lumber and pharmaceuticals, reviving Asia-Pacific trade tensions. Korean export-linked stocks weakened, with Hyundai Motor shares initially down around 4%.
In a later update, a South Korean ruling party official said legislation to enact US investment commitments has now been introduced and will soon be reviewed. Seoul’s trade envoy is also expected to visit Washington shortly to meet the USTR, suggesting efforts are under way to prevent further escalation.
In Japan, services inflation signals remained firm. The Bank of Japan said the services producer price index rose 2.6% y/y in December, underscoring ongoing cost pass-through driven by labour shortages. The data reinforces the BoJ’s view that wage-driven inflation pressures remain entrenched.
UK inflation pressures also resurfaced at the retail level. Shop price inflation rose to 1.5% y/y in January, its fastest pace since early 2024, according to the British Retail Consortium. The BRC said higher energy costs and increased employer National Insurance contributions continue to feed through, challenging claims that inflation has peaked.
In Australia, business activity improved in December, with the National Australia Bank survey showing business conditions rising two points to +9 and confidence edging up to +3. Sales and profits strengthened, while employment remained around acceptable levels but well below prior highs. Capacity utilisation eased only marginally to an elevated 83.2%, suggesting limited spare capacity. Wage, cost and price indicators rose slightly, though final prices remained relatively subdued compared with CPI, and retail price growth slowed to its weakest pace since 2020.
China’s industrial sector showed tentative stabilisation. Industrial profits rose 5.3% y/y in December, rebounding from November’s 13% slump and delivering the first full-year gain since 2021, albeit a modest 0.6%. The improvement was driven entirely by foreign firms, which posted a 4.2% profit rise in 2025. State-owned enterprises saw profits fall 3.9%, while private-sector profits were flat year-on-year.
On geopolitics, the The New York Times reported that President Trump has received multiple intelligence assessments suggesting Iran’s leadership is under increasing strain, potentially at its weakest point since the 1979 Islamic Revolution. The report cited several people familiar with the intelligence.
Major FX rates, even yen, traded in limited ranges.
Asia-Pac
stocks:
Japan
(Nikkei 225) +0.4%Hong
Kong (Hang Seng) +1.2%
Shanghai
Composite -0.01%Australia
(S&P/ASX 200) +0.82%
This article was written by Eamonn Sheridan at investinglive.com.