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By Mike Dolan
Jan 21 -
What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
World markets took a sharp intake of breath first thing Wednesday as a heavy selloff in stocks, bonds and the dollar abated while investors waited to hear from President Trump in Davos later in the day.
What will Trump do next regarding his tariff threats against Europe over Greenland? That is hard to gauge, even
though the President insists he won't back down and European leaders are standing firm on their pledge to retaliate if February 1 tariffs take effect.
I’ll get into all that and more below.
But first, check out my latest column on why the prospect of rising Treasury yields may make the Trump administration think twice about initiating a Transatlantic trade war.
And listen to the latest episode of the Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.
Today's Market Minute
* U.S. President Donald Trump arrives in Davos on Wednesday and is likely to use the WEF to escalate his push to acquire Greenland despite European protests.
* Britain and China aim to revive a "golden era" business dialogue when Prime Minister Keir Starmer makes a planned Beijing visit next week, said three sources familiar with the initiative.
* Netflix has switched to an all-cash offer for Warner Bros Discovery's studio and streaming assets without increasing the $82.7 billion price in a bid to shut the door on Paramount's rival efforts to snag the Hollywood giant.
* Europe's dependence on U.S. energy could become a bargaining chip for President Trump in the standoff over Greenland, writes ROI Energy Columnist Ron Bousso.
* How exactly does an investor price global regime change? ROI Markets Columnist Jamie McGeever considers this question in his latest column.
TRUMP LANDS, MARKETS WAIT
After their biggest one-day selloff in three months on Tuesday, Wall Street stock futures, the dollar and Treasuries stabilised somewhat on Wednesday, but the simmering tension was clear in gold's renewed climb to record highs just shy of $4,900 per ounce early in the session.
Despite delays in his flight to Switzerland, Trump's set-piece speech is still scheduled to start just before Wall Street reopens. The president is expected to focus on his election year 'affordability' push - something a new spike in Treasury yields over Transatlantic trade tensions could hurt.
But everyone's main focus will be what Trump signals on the Greenland row and whether recent turbulence will leave lasting damage or give way to another ‘TACO’ trade.
Meantime, Trump's political pressure on the Federal Reserve comes back into focus in Washington later in the day as the Supreme Court begins hearing arguments in Fed Governor Lisa Cook's legal challenge to Trump's attempt to fire her. Embattled Fed Chair Jerome Powell is due to attend those hearings, a move Treasury Secretary Scott Bessent said was a mistake.
Elsewhere, bond markets around the world calmed somewhat as the blistering surge in Japanese debt yields on election concerns abated on Wednesday. U.S. Treasuries staged a similar recovery. Japan’s bond market may prove more intransigent in the long term, however, as some voices noted investors’ alarm at Prime Minister Sanae Takaichi’s plan to cut a consumption tax rate long regarded as untouchable.
The dollar index rose for the first time this week after a 0.5% overnight drop, while the euro and safe-haven Swiss franc both weakened slightly. The yen strengthened modestly ahead of Friday’s Bank of Japan policy meeting, where no rate hike is expected at this time, though policymakers may signal a rise as soon as April.
In earnings news, Netflix stock fell more than 4% overnight after the streaming giant's earnings outlook and new all-cash offer for Warner Brothers Discovery jarred investors that fretted about the impact it will have on the company’s margins and stock buybacks.
Chart of the day
Netflix beat Wall Street's revenue and earnings estimates for its holiday quarter on Tuesday but its shares tumbled more than 4% in after-hours trading, as the streaming giant remains locked in a fierce bidding war for Warner Bros Discovery. Netflix reported earnings on the same day it announced an all-cash offer of $82.7 billion deal for WBD, a transaction that all but eclipsed its fourth-quarter results. Its full-year outlook was at the lower end of forecasts and Netflix told investors it would pause share buybacks to accumulate cash for the Warner deal.
Today's events to watch
* U.S. President Donald Trump speaks at the WEF in Davos
* U.S. Supreme Court hears arguments in Federal Reserve Governor Lisa Cook's legal challenge to her attempted dismissal
* U.S. corporate earnings: Citizens Financial Group, Halliburton, Johnson & Johnson, Kinder Morgan
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(By Mike Dolan)
