The morning bid: Are they aware that Stargate is a science fiction show?

 

On the second day of his second term, Donald Trump announced that OpenAI, SoftBank (TYO:9984) Group, and Oracle (NYSE:ORCL) would invest $500 billion in AI infrastructure across the United States through a venture called Stargate. It's unclear how much of that was pre-planned.


It is named after a 1994 science fiction film and a popular television show in which Stargate is a gadget that allows instantaneous travel between far-off planets.

The effort could assist strengthen America's edge over China in the battle to build artificial intelligence, even though its objectives are probably more modest than intergalactic teleportation. The Nikkei rose 1.7% as a result of investors' unreserved agreement, which drove SoftBank shares up 10% in Asia. Stocks in Taiwan increased 1.3%. (T)

China and Hong Kong were the region's worst performers, with the Hang Seng plunging 1.6% and the blue-chip index in the former dropping 1%.

Indeed, Trump's announcement that a 10% tax on Chinese goods will go into effect on February 1 contributed to that.

However, that is still far less than the 60% he promised throughout his campaign. And now that Trump needs to negotiate with Beijing to sell a portion of TikTok to either Oracle Chairman Larry Ellison or Tesla (NASDAQ:TSLA) CEO Elon Musk, it is unclear if the 10% tariff will ever be implemented.

With UK FTSE futures up 0.1% and pan-European STOXX 50 futures up 0.2%, stock markets in Europe are expected to open little higher.

Christine Lagarde, president of the European Central Bank, will attend the World Economic Forum in Davos, Switzerland. Francois Villeroy de Galhau, a member of the Governing Council, will be among the other ECB officials who will be speaking about interest rates.


The bank is expected to cut its policy interest rate by 25 basis points next week, according to market participants. However, many are unsure of how low it may go. It will be difficult to forecast the terminal rate because inflation is still higher than the ECB's target, but the economic headwind is getting stronger as a result of Trump's America-first policy, which targets both allies and enemies.

Swaps currently suggest four rate cuts to 2% this year.

The 14% increase in Netflix (NASDAQ:NFLX), which reported a record growth in subscribers the previous quarter, helped Nasdaq futures on Wall Street rise 0.7%.

However, there may be less of a need to stream science fiction in the years to come if Stargate becomes a reality in one way or another.

The following significant events could affect markets on Wednesday: * ECB President Christine Lagarde will participate in a dialogue at the World Economic Forum in Davos; * ECB Governing Council member and Bank of France governor Francois Villeroy de Galhau will discuss interest rates on a panel in Davos; ECB policymaker Klaas Knot will also speak; * Johnson & Johnson (NYSE:JNJ) and Halliburton (NYSE:HAL) will report their earnings.

(Edited by Christopher Cushing; written by Stella Qiu)