Markets Rally on US-India Trade Deal as Tech and Commodities See Major Shifts
Market Snapshot
- 📈 S&P 500: 6,985 (▲ 0.54%)
- 📈 NASDAQ 100: 25,959 (▲ 0.42%)
- 📉 FTSE 100: £10,301 (▼ 0.31%)
- 📈 Gold: $4,902 (▲ 5.20%)
- 📈 Silver: $85.88 (▲ 8.33%)
- 📉 Bitcoin (BTC): $75,000 (▼ 14.00% YTD)
- 📉 Ethereum (ETH): $2,271 (▼ 3.13%)
Global Markets Surge on US-India Trade Pact
Global equities saw a significant boost following the announcement of a major trade agreement between the United States and India. In separate social media posts, the leaders of both nations confirmed the deal, sparking a strong recovery in Asian markets from previous losses, with India’s Nifty 50 index rising by as much as 5%.
Details of the Agreement
The deal involves the U.S. lowering its reciprocal tariff on Indian goods from 25% to 18%. In return, India has reportedly committed to increasing its purchases of American goods—including over $500 billion in energy, technology, and agricultural products—and halting crude oil imports from Russia, favouring suppliers from the U.S. instead. The US President also suggested that India might purchase oil from Venezuela as part of its diversification strategy. This move is seen as a strong external growth stimulus for the Indian economy, especially when combined with the recently concluded India-EU trade agreement.
The positive sentiment spread across markets, with South Korea’s Kospi soaring 6.7% and major U.S. indices also closing higher. The Dow Jones Industrial Average gained 1.05%, while the S&P 500 added 0.54%.
Other Economic News
- Australia Rate Hike: The Reserve Bank of Australia raised its benchmark interest rate by 25 basis points to 3.85%, its first increase since November 2023, citing persistent inflation.
- US Government Shutdown: A partial U.S. government shutdown has commenced after Congress failed to agree on a new spending deal. The Bureau of Labor Statistics has confirmed this will delay the release of the January jobs report. This shutdown could also potentially slow the real estate market by making it more difficult to secure mortgages.
Major Shifts in the Technology Sector
The technology and artificial intelligence sectors are undergoing significant consolidation and strategic realignment, highlighted by a major merger, strong corporate earnings from key players, and shifts in the crucial semiconductor market.
Musk Merges SpaceX and xAI
Elon Musk has announced the merger of his rocket company, SpaceX, with his artificial intelligence start-up, xAI, through a share exchange. Nevada public records confirm the deal has been completed. In a statement, Musk described the new entity as "the most ambitious, vertically-integrated innovation engine on (and off) Earth." The newly combined entity is reportedly valued at $1.25 trillion and is preparing for a public offering.
This strategic move aims to provide xAI with a stable source of funding from SpaceX's profitable Starlink satellite business. xAI has faced substantial costs related to infrastructure and high-performance GPUs. The long-term vision includes developing orbital data centres that leverage solar power and the natural cooling of space, a plan contingent on reducing satellite launch costs.
The AI Infrastructure Race Intensifies
Competition to build the backbone of the AI economy is heating up, with software companies and chipmakers making significant strategic moves.
OpenAI Explores Nvidia Alternatives
OpenAI is actively seeking alternatives to Nvidia's hardware for AI 'inference'—the process of generating real-time responses. The company has expressed concerns about latency issues with Nvidia's current GPU architecture for specialised tasks. This has prompted OpenAI to explore deals with other chipmakers like Cerebras to improve performance and reduce costs, challenging Nvidia's market dominance. Further complicating the relationship, Nvidia's shares slipped by nearly 3% following a report that its proposed $100 billion investment in OpenAI was now uncertain.
Oracle's Major AI Infrastructure Investment
Oracle plans to raise between $45 billion and $50 billion this year through debt and equity to fund a massive expansion of its Oracle Cloud Infrastructure business. The capital will be used to build additional data centre capacity to meet contracted demand from major AI customers including OpenAI, Meta, and xAI. However, the heavy borrowing has raised concerns, with credit ratings agencies issuing negative outlooks due to the impact on its free cash flow.
Corporate Performance and Leadership Changes
Palantir Defies AI Disruption Fears
Data analytics firm Palantir delivered exceptionally strong fourth-quarter results, easing fears that AI could disrupt established software companies. Revenue jumped 70% year-over-year to $1.4 billion, far exceeding analyst expectations. CEO Alex Karp described the results as "indisputably the best results that I’m aware of in tech in the last decade." Growth was particularly strong in its US commercial business, which surged 137%. The company provided a confident outlook for 2026, forecasting full-year revenue of around $7.2 billion. Despite the performance, some analysts remain cautious about the stock's high valuation.
Disney Eyes Theme Park Chief for CEO Role
Disney's board is reportedly close to selecting Josh D’Amaro, the head of its highly profitable theme parks, cruises, and resorts division, as its next CEO. The news comes as current CEO Bob Iger prepares for his final departure. However, the company's shares fell by more than 7% after reporting a softness in international visitor numbers at its theme parks.
PayPal Forecast Sparks Sell-off
Shares in the payments company PayPal plunged by more than 16% in pre-market trading after it issued a weak profit forecast for 2026. The company also announced that Enrique Lores, currently CEO of HP, will take over as its new president and CEO next month.
Pharmaceutical Giants See Shares Dip
In the pharmaceutical sector, both Pfizer and Merck saw their share prices decline despite reporting quarterly results that beat analyst expectations for both revenue and profit.
Oil Markets Shift Amid Consolidation and New Trade Routes
Oil markets are displaying mixed signals, caught between easing geopolitical tensions and persistent oversupply concerns. While prices have fallen, the sector is undergoing significant consolidation and a geographic pivot in global demand.
US Shale Consolidation
In a sign that scale is becoming paramount for profitability, Devon Energy and Coterra Energy have agreed to a $58 billion all-stock merger. The combined company will be a major producer in the Delaware Basin, aiming for $1 billion in cost savings by 2027. This move reflects a broader industry trend where large operators merge to improve efficiency rather than pursuing expensive exploration projects, especially with West Texas Intermediate (WTI) crude prices near $61 a barrel.
Canada Ramps Up Exports to Asia
There has been a notable pivot in oil trade flows. Canada quadrupled its oil sales to China in 2025, reaching a record 5.19 million barrels per day in the first half of the year after the Trans Mountain Extension pipeline opened new export routes. Over the same period, U.S. exports to China fell by 61%, as Canadian heavy crude proved more attractive to Asian refineries.
Major Producers Cautious on Venezuela
Despite a push for increased production, major oil companies like Exxon and Chevron are delaying new investments in Venezuela. Executives from both firms cited the need for greater stability, clearer fiscal terms, and regulatory predictability before committing significant capital, indicating that Venezuela must compete with more attractive opportunities elsewhere.
Commodities Experience Extreme Volatility
Commodity markets have been turbulent, with precious metals experiencing a dramatic crash and recovery, while the long-term outlook for industrial metals like copper points to a significant supply shortage.
Precious Metals Rebound After Sharp Fall
Gold and silver prices recovered strongly after a violent sell-off. Gold had fallen 21% from its peak to around $4,400, while silver plunged 40%. The initial crash was triggered by the nomination of Kevin Warsh as the next U.S. Federal Reserve Chair, which strengthened the dollar and led to widespread liquidations. The decline in silver was reportedly worsened when the ProShares Ultra Silver fund was forced to sell an estimated $4 billion in futures contracts. However, dip-buyers quickly entered the market, pushing prices back up.
Copper's Looming Supply Crisis
An emerging structural deficit in the copper market poses a significant challenge to the global energy transition. Demand for copper is projected to increase by 50% by 2040, driven by its critical role in AI data centres, electric vehicles, and power grid upgrades.
Supply is unable to keep pace due to several factors:
- Long Lead Times: It takes an average of 17.9 years to bring a new copper mine from discovery to production.
- Declining Ore Quality: The grade of mined copper ore has fallen by nearly half over the last 30 years.
- Underinvestment: Exploration for new large-scale deposits is at a historic low.
US Launches 'Project Vault' for Critical Minerals
In a related development, the U.S. administration has launched 'Project Vault', a $12 billion initiative to create a stockpile of critical minerals. The plan, which includes a $10 billion loan and $1.7 billion in private capital, aims to reduce American reliance on China for rare earth elements and other strategic resources. Key industrial partners include GE Vernova, Western Digital, and Boeing, with trading firms like Hartree Partners and Mercuria also involved. The announcement had a positive effect on the stocks of related companies, with rare earth miners such as MP Materials and USA Rare Earth seeing their shares advance.
Economic Indicators and Consumer Sentiment
Chinese Consumer Sentiment Falters
Consumer sentiment in China appears to be weakening amid concerns over deflation and a slowing economy. This mood is captured by the unexpected popularity of a 'frowning horse' plush toy. The toy, whose sad expression was the result of a manufacturing error, has reportedly become a symbol for the downcast feelings of many Chinese consumers.
US Retail Sector Shows Resilience
In contrast, the US retail sector is demonstrating signs of a solid recovery. The number of store closures across the country is projected to fall to a three-year low, suggesting the industry is moving past a recent wave of bankruptcies and is on a more stable footing.
Cryptocurrency Market Faces Downturn and Regulatory Scrutiny
The digital asset space is navigating a significant market downturn, alongside increased scrutiny from regulators and strategic shifts from key organisations within the ecosystem.
Bitcoin Leads Broader Market Decline
Cryptocurrency prices have fallen sharply, with Bitcoin dropping to $75,000, contributing to a 14% year-to-date decline and erasing over $200 billion in market value. The sell-off triggered over $2 billion in forced liquidations. Investor sentiment has soured, reflected in digital asset funds seeing $1.7 billion in net outflows in a single week. As is typical, the broader crypto market has moved in lockstep with Bitcoin, offering little diversification. Bucking the trend, business intelligence firm Strategy announced it had purchased an additional 855 BTC for approximately $75.3 million.
Ethereum Foundation Shifts Strategy
The Ethereum Foundation is implementing austerity measures to ensure long-term financial sustainability. This strategic shift involves narrowing its focus to core protocol development, such as censorship resistance, while deprioritising broader enterprise adoption initiatives. Co-founder Vitalik Buterin has personally withdrawn funds to support infrastructure projects no longer covered by the foundation.
White House Hosts Crypto Banking Summit
The Trump administration convened a meeting with executives from Coinbase and major banking associations to address a legislative impasse over the CLARITY Act. The central dispute is over high-yield rewards offered on stablecoins, which traditional banks argue will drain their customer deposits.
Chinese Networks Laundered $16 Billion
A report from blockchain analysis firm Chainalysis revealed that Chinese-language money laundering networks moved an estimated $16.1 billion in illicit funds through cryptocurrencies in 2025. These networks accounted for approximately one-fifth of all illicit crypto transactions during the year.
NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).