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• Downbeat Asian session leads to weak European open
• US isolationism and expansionism continues
• Jobs focus continues after yesterday's weak ADP release

A largely downbeat start to trade in Europe follows on from a dour session in Asia, with the Nikkei 225 and Hang Seng both losing over 1%. However, one area of optimism came in Korea, where tech giant Samsung expect to see fourth quarter earnings well above estimates thanks to the AI-led surge in memory chips. Preliminary earnings saw operating profits more than triple the level seen just a year ago. This comes off the back of a US session that by and large saw tech provide the only area of strength, with gains for Microsoft, Nvidia, Intel, Alphabet, and Palantir helping to stabilise the indices that were dragged lower by essentially every other sector.

The headlines continue to come thick and fast from the Trump Administration, with the US withdrawing from 66 international organizations, including 31 United Nations entities. Many of them related to migration, climate, equality, education, and the protection of natural habitat. Notably, this continues a theme that sees the US essentially decouple from its global partners, becoming increasingly isolated and leaving the rest of their western allies to deal with these issues by themselves. The decision to push ahead with plans to take Greenland from their fellow Nato allies does highlight a disregard for the status quo. Instead, Trump pushes ahead with an approach that leverages the US’ economic and military might to grab land and assets from both friend and foe alike. For investors, it is notable that US businesses are not immune from Trump’s expansive mindset, with the President seemingly seeking to become the all-encompassing leader that controls both the public and private sector alike. The decision to halt crackdown on buybacks and dividends within defence firms does seek to raise military output but risks decision-making that is more aligned to the Presidents desires than the shareholders.

Today’s economic calendar continues to focus on US jobs, with traders waiting patiently for tomorrow’s jobs report. Yesterday saw the ADP payrolls release, with a weaker-than-expected figure of 41k coming amid a contraction in manufacturing, IT, and professional services jobs. Despite Trump’s efforts to spark a resurgence in US manufacturing, job creation appears to be almost entirely driven by health and education over recent months, with the ongoing contraction of jobs elsewhere in the economy likely to raise concerns at the Fed. With a March rate cut essentially priced in as a coin-toss, tomorrows jobs report does provide the basis for a potential market-moving event if we see any particularly strong deviation from expectations.

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