Abstract:
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Trump revives Asia-Pacific commerce tensions by lifting tariffs on South Korean items to 25%, earlier than Seoul alerts fast-tracked legislative motion
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Japan service-sector inflation stays agency, reinforcing wage-driven value strain
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UK store value inflation jumps to a two-year excessive, difficult “inflation has peaked” narratives
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Australian enterprise circumstances enhance however capability constraints stay elevated
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China’s industrial earnings return to progress, although beneficial properties are uneven and pushed by overseas corporations
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Geopolitical threat lingers as experiences counsel Iran’s management is underneath rising inside pressure
US President Donald Trump mentioned he’ll increase tariffs on South Korean items to 25% from 15%, citing Seoul’s failure to ratify a 2025 commerce deal. The transfer targets autos, lumber and prescription drugs, reviving Asia-Pacific commerce tensions. Korean export-linked shares weakened, with Hyundai Motor shares initially down round 4%.
In a later replace, a South Korean ruling occasion official mentioned laws to enact US funding commitments has now been launched and can quickly be reviewed. Seoul’s commerce envoy can also be anticipated to go to Washington shortly to fulfill the USTR, suggesting efforts are underneath approach to forestall additional escalation.
In Japan, companies inflation alerts remained agency. The Financial institution of Japan mentioned the companies producer value index rose 2.6% y/y in December, underscoring ongoing price pass-through pushed by labour shortages. The information reinforces the BoJ’s view that wage-driven inflation pressures stay entrenched.
UK inflation pressures additionally resurfaced on the retail stage. Store value inflation rose to 1.5% y/y in January, its quickest tempo since early 2024, in keeping with the British Retail Consortium. The BRC mentioned increased power prices and elevated employer Nationwide Insurance coverage contributions proceed to feed by way of, difficult claims that inflation has peaked.
In Australia, enterprise exercise improved in December, with the Nationwide Australia Financial institution survey exhibiting enterprise circumstances rising two factors to +9 and confidence edging as much as +3. Gross sales and earnings strengthened, whereas employment remained round acceptable ranges however nicely beneath prior highs. Capability utilisation eased solely marginally to an elevated 83.2%, suggesting restricted spare capability. Wage, price and value indicators rose barely, although ultimate costs remained comparatively subdued in contrast with CPI, and retail value progress slowed to its weakest tempo since 2020.
China’s industrial sector confirmed tentative stabilisation. Industrial earnings rose 5.3% y/y in December, rebounding from November’s 13% hunch and delivering the primary full-year achieve since 2021, albeit a modest 0.6%. The advance was pushed solely by overseas corporations, which posted a 4.2% revenue rise in 2025. State-owned enterprises noticed earnings fall 3.9%, whereas private-sector earnings have been flat year-on-year.
On geopolitics, the The New York Occasions reported that President Trump has obtained a number of intelligence assessments suggesting Iran’s management is underneath rising pressure, probably at its weakest level because the 1979 Islamic Revolution. The report cited a number of individuals accustomed to the intelligence.
Main FX charges, even yen, traded in restricted ranges.
Asia-Pac
shares:
- Japan
(Nikkei 225) +0.4% - Hong
Kong (Hold Seng) +1.2% - Shanghai
Composite -0.01% - Australia
(S&P/ASX 200) +0.82%
