Written Commentary
ADM Reports Q4 and Full-year 2025 Results
February 3, 2026
Digesting US State of the Union, Australia CPI, French and German Consumer Confidence, waiting final Eurozone CPI; Nvidia earnings and slew of central bank speakers the focal points.
- U.S.A.: little for markets to garner from State of the Union address bravado on economy
- Japan: BoJ board nominations reinforce Takaichi reflationist agenda, but heighten JPY risks
- UK: Sharp reduction in Q2 household utility price cap to exaggerate slide in CPI, underlines that fluctuations have been mostly about administered prices over which BoE has no influence
EVENTS PREVIEW
Risk appetite above all for tech / AI stocks remains volatile, and faces a key test with today’s Nvidia earnings report, on a day which is a little short on major data, though the central bank speaker schedule is once again busy, including RBA governor Bullock, and the US State of the Union address to mull over.
There are higher than expected Australian CPI, better than forecast French Consumer Confidence, and by contrast an unexpected dip in German GfK Consumer Sentiment to digest, ahead of final Eurozone CPI and little else.
Outside of Nvidia, there are also earnings from HSBC, Iberdrola, Agilent Technologies, Salesforce, and a further rash of Canadian banks: BMO, National Bank of Canada and RBC.
The US administration opted to talk up the US economy, though a good number of the statistics cited in the State of the Union address were inaccurate, such as a 1.7% y/y inflation rate (Jan CPI 2.4% y/y, Dec PCE Deflator 2.9%), and some claims of agency rather debatable. Given current public approval ratings showing 56% disapprove of US administration’s handling of the economy, as against 36% approving, some voters may well take umbrage at the effective dismissal of cost of living and affordability issues in the speech. But much of the content offered little in the way of insights into further policy initiatives, or restated positions on key issues such as Iran’s nuclear programme, per se, giving markets little to react to.
Elsewhere, the nomination of two reflationists to the BoJ board reinforce the point that we made yesterday about the Takaichi government pursuing a seemingly risky strategy vis-à-vis the JPY.
Last but not least, the 7.0% cut in the UK household utility price cap for Q2 2026 reinforces our view that CPI is headed sharply below 2.0% y/y in a very short period of time. But just as the BoE’s MPC should have looked through last year’s rise in CPI, which was primarily due to administered prices, it will also need to look through much of this year’s fall, particularly as base effects from last year’s will exaggerate the pace of the drop.
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