Forex - UBS Global Wealth Management's Chief Investment Office maintains a neutral outlook on Chinese equities following a policy-driven performance in 2024. According to Mark Haefele and Min Lan Tan from UBS GWM, while U.S. tariffs are expected to take effect in 2025, Chinese officials are awaiting greater clarity before implementing stimulus measures. Analysts state that the effective U.S. tariff rate on Chinese goods, raised to 30% with a less-than-anticipated increase, will lead to multi-year fiscal expansion to support both growth and market sentiment. They added, "A higher increase than this would require much larger incentives to keep China's growth on target and to prevent a market downturn." In light of anticipated volatility, UBS GWM favors sectors such as finance, utilities, energy, and telecommunications. They also recognize value in the internet sector, noting that future weaknesses offer entry opportunities, predicting an approximate 8.5% growth in earnings per share in 2025 before a slowdown in 2026.

Coffee prices surged to nearly a 50-year high yesterday as concerns over global supply shortages were compounded by market uncertainty regarding the impact of new EU laws on deforestation.

Futures tracking high-quality arabica beans rose by 4.7% in New York, reaching $3.23 per pound, marking the highest levels since 1977 and pushing the year's price rise to over 70%. Meanwhile, cheaper robusta beans used in instant coffee saw London futures increase by 7%, climbing to $5,507 per tonne, nearly double the price at the beginning of the year.

Traders indicated that this movement was aimed at securing supply ahead of uncertainties concerning coffee roasters, commercial buyers processing the beans for consumption, potential shortages, and the implications of the new EU law banning the use of deforested land for crops.

Tomas Araujo, a trading partner at StoneX, stated, "I've never seen anything like this before. This situation won't be resolved this year, and that's why roasters have started to panic."

According to knowledgeable sources, the Biden administration is reportedly contemplating additional restrictions on the sale of semiconductor equipment and artificial intelligence memory chips to China, aimed at increasing pressure on Beijing's technological ambitions, although these measures will fall short of some previously considered stringent actions.

Sources stated to Bloomberg News that the restrictions could be announced as soon as next week, emphasizing that the timing and specifics of the rules have changed multiple times, and nothing is final until published.

The measures follow months of negotiations by U.S. officials and discussions with allies in Japan and the Netherlands, as well as intense lobbying from American chip equipment manufacturers warning that harsher measures could bring devastating harm to their businesses.

These individuals noted that the latest proposal contains significant differences from previous drafts. One of the main points is which Chinese companies will be added to the trade restriction list. Officials revealed that the U.S. had previously contemplated sanctions on six suppliers to Huawei Technologies Co., the telecommunications giant at the center of China's tech industry, and that they were aware of at least half a dozen more suppliers. However, they are now planning to add only some of these Huawei suppliers to the asset list, specifically targeting ChangXin Memory Technologies Inc., which is attempting to develop artificial intelligence memory chip technology.

Foreks - JPMorgan (NYSE:JPM) has set a price target of 6,500 for the S&P 500 index for 2025, indicating an 8% upside potential from current levels. This target is driven by a projected 10% earnings growth for the index and a target earnings per share (EPS) of $270 next year. JPMorgan highlights key catalysts for the expected growth, including easing monetary policy, strong capital expenditures focused on artificial intelligence, and expanding market breadth.

Particularly, it is anticipated that smaller companies in the Russell 2000 will also rebound robustly, projecting a 40% increase in earnings following consecutive years of decline. According to JPMorgan's note on Wednesday, the U.S. economy remains crucial for this outlook.

The Wall Street firm emphasizes the theme of "American Exceptionalism," expecting the country to continue its role as a "global growth engine." Strategists led by Dubravko Lakos-Bujas noted, "The story of American exceptionalism may face turbulence and increased volatility due to policy changes in 2025, but opportunities will likely outweigh the risks."

They added, "The benefits of deregulation and a more business-friendly environment are likely being underestimated, with the potential to unlock efficiency gains and capital allocation."

The ongoing increase in artificial intelligence investments, led by tech giants, is also expected to support earnings across sectors. Additionally, JPMorgan underscores the Federal Reserve's recent policy shift, expecting the central bank to cut interest rates by another 100 basis points.

Foreks - Former President Donald Trump dined with Meta CEO Mark Zuckerberg at his Mar-a-Lago club in Florida yesterday. Stephen Miller, who was appointed as Deputy Chief of Staff for Trump's second term, stated that Zuckerberg, like other business leaders, wants to support Trump's economic plans. The technology CEO is trying to shift his company's perception on the right after a tumultuous relationship with Trump. Miller commented in an interview with Fox News, "Mark certainly has his own interests, his own company, and his own agenda. However, he clearly stated that he wants to support the national renewal of America under Trump's leadership." A spokesperson for Meta confirmed that Zuckerberg and Trump met on Wednesday and mentioned that the elected president and other members of his team were invited to dinner to discuss the new administration.