Five things you need to know

• Netflix is surging 15% premarket after the streaming-video company announced that it finished 2024 with the biggest subscriber gain in its history, buoyed by its first major live sporting events and the return of Squid Game.
• China stocks missed out on the rally after President Donald Trump said his threat to impose 10% tariffs on the nation’s goods was still being considered and may take place next month.
• Trump would be open to Elon Musk or Oracle’s Larry Ellison buying TikTok in partnership with the US government. “So what I’m thinking about saying to somebody is buy it and give half to the United States of America, half, and we’ll give you the permit, and they’ll have a great partner,” he said.
• SoftBank, OpenAI and Oracle are forming a $100 billion venture to fund AI infrastructure, an effort unveiled with Trump aimed at speeding development of the technology. Softbank shares soared 11% while Oracle is up 10% in premarket trading.
• The AI plan is helping to lift stock-index futures in the US. The Stoxx Europe 600 Index is flirting with its first record close since September on the view that the region may spared from the harshest of threatened US tariffs. 

`Tougher from here’

The dash of optimism yesterday about Trump’s approach to China has been punctured by the latest comment that he’s still considering 10% tariffs. 

True, it’s not as bad as his previous talk about 60% tariffs. But it was enough to cause investors to sell Asian stocks. The CSI 300 Index sank for the first time in five days, while in Hong Kong, the Hang Seng China Enterprises Index lost 2% to be the worst performer in the region. The yuan led declines in emerging Asian currencies.

The backdrop for Chinese equities makes them more vulnerable to Trump comments on trade. The economy, and thus the CSI 300, has been weighed down for years by a seemingly endless property crisis.

Government measures to boost growth have triggered sporadic rallies, yet the index has returned less than 1% annually over the past five years, while an MSCI index of developed world stocks cranked out 12% annualized returns in dollar terms.

“It only gets tougher from here,” said Xin-Yao Ng, an investment director at Abrdn in Singapore. “It’s a reminder that Trump will do something, because the first day might have given some the false impression that he might not. More gradual tariffs might also delay or reduce the force of stimulus that the market wants.”

While there remains plenty of uncertainty about Trump’s plans for China tariffs, his comments suggest that any reprieve for the country may be short-lived. — Lin Zhu

On the move

• The rally in Netflix is getting added fuel from analysts. Canaccord and Barclays raised their ratings on the stock, with Barclays’ Kannan Venkateshwar noting that the new subscriber tally exceeded even the most optimistic expectations. 
• That AI venture involving Oracle is lifting Big Tech more broadly. Microsoft, Nvidia and Arm Holdings, which will provide technology for the project, are advancing.
• United Airlines shares jump 3.4% in premarket trading. The carrier’s fourth-quarter earnings and forecast came in ahead of estimates, lifting shares of American Air and Delta too. 

• Adidas shares jump 5.4% in Frankfurt, hitting their highest intraday level in three years. The sportswear company’s fourth-quarter revenue and gross margin topped analyst estimates. Puma, Nike, On Holding, and Under Armour also are rising.  —Subrat Patnaik

Nasdaq’s bullish signal 

Chart watchers are seeing further gains for the Nasdaq 100 Index, which has nearly doubled since the start of 2023. 

It’s has gone 467 sessions trading above its 200-day moving average — the second-longest streak since the index’s inception four decades ago, according to data compiled by Bloomberg. 

The gauge trades about 10% above that long-term support level, a signal of relative stability to technical analysts who monitor daily averages and other metrics to determine stock-market momentum.

For sure, there are bound to be contrarians out there willing to bet against the trend, egged on by Nicolai Tangen, the head of Norway’s $1.8 trillion sovereign wealth fund. 

“The best thing to do is always to do the opposite of everybody else,” Tangen said today in an interview with David Rubenstein at Bloomberg House during the World Economic Forum in Davos. “What will that be today? Well, if you were to do the opposite of everybody else, it would be to sell the US tech stocks, buy China, sell private credit, just buy stuff that is out of fashion.”

In the weeks ahead, earnings from Big Tech will show whether fundamentals support further gains, and the Fed’s next policy decision looms on Jan. 29.

“At the end of the day, technology remains in an outstanding position to continue to lead this market higher,” says Rich Ross, Evercore ISI’s head of technical analysis. —Jessica Menton

Word from Wall Street

What else we’re reading

• A $500 million ETF will be next big launch in tax-busting trend
• Fugitive banker may be helping Russian firms beat US sanctions
• Weakened Macron and Scholz seek common ground to handle Trump
• UK budget deficit soars on debt costs in setback for Reeves
• EU is set to cut back ESG reporting rules amid French demands

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