Investing.com-- The Bank of Korea cut interest rates as expected on Tuesday, as some clearing political turmoil in the country granted the central bank enough headroom to resume its easing cycle.

The BOK cut its benchmark rate by 25 basis points to 2.75%, in line with market expectations. The cut is the BOK’s third such move since it kicked off an easing cycle in late-2024.

Markets had largely anticipated the cut, given that the BOK provided a dovish outlook on rates amid cooling inflation, softening economic growth and weak business activity in South Korea. 

The central bank had unexpectedly kept rates steady in January amid heightened political tensions in the country, after a failed attempt to impose martial law by President Yoon Suk Yeol.

But these tensions now appeared to have eased, after Yeol was impeached, arrested, and put on trial over his actions. 

South Korea’s economy is heavily dependent on technology exports- which have weakened in recent years, despite some support from artificial intelligence demand.

This has translated into weaker overall economic conditions in the country, necessitating more rate cuts from the BOK. South Korea also faces headwinds from increased U.S. trade tariffs under President Donald Trump. 

Investing.com-- Shares of Japan’s five biggest trading houses rose sharply on Tuesday after billionaire investor Warren Buffett signaled that Berkshire Hathaway (NYSE:BRKa) will likely increase its holdings in the companies.

Itochu Corp. (TYO:8001), Mitsui & Co., Ltd. (TYO:8031), Sumitomo, Mitsubishi Corp. (TYO:8058) and Marubeni Corp. (TYO:8002) rose between 2% and 7% in Tokyo trade, outperforming a 1.5% slide in the Nikkei 225 benchmark. 

Buffett told Berkshire shareholders last week that the hedge fund will increase its holdings in the five, especially after their boards agreed to “moderately relax” limits that curbed Berkshire’s ownership to below 10%. Berkshire owned about $23 billion in the five companies by end-2024, the company’s annual report showed last week. 

Buffett said the hedge fund was investing for the “very long term” in the five companies, lauding their capital spending, their management, and their attitude towards investors. 

Buffett had begun investing in the trading houses in 2019, drawn by their finances, accessible stock prices and a softer yen. Buffett has at least 5% ownership in each company.

His investments paid off in 2023 and 2024 following a stellar rally in Japanese stocks, as the Nikkei scaled a series of record highs. 

Berkshire has spent about $13.8 billion on its stakes in the trading houses, and expects $812 million of dividend income from them in 2025. The Omaha-based hedge fund clocked a record operating profit in 2024.

Japanese trading houses are among the largest companies in the country, and invest in a wide range of sectors, including commodities, food, and logistics. They are also closely tied to economically relevant sectors such as shipping, steel, and real estate. 

By Sinéad Carew and Johann M Cherian

(Reuters) - The Nasdaq Composite fell more than 1% on Monday, with big technology stocks creating the biggest drag as investors worried about demand for technology supporting artificial intelligence while they waited for results from market heavyweight Nvidia (NASDAQ:NVDA).

The S&P 500 closed slightly lower, marking its third straight day of declines, while the Dow managed to eke out a tiny gain. It was also Nasdaq's third consecutive loss and its fourth daily drop of more than 1% so far in February.

Investors were concerned about future demand for Nvidia's pricey AI chips as they awaited its quarterly results on Wednesday. Worries about hefty spending on the technology have mounted since low-cost AI models from China's DeepSeek rattled the industry in January.

Adding to uncertainty, a TD Cowen analyst note published late on Friday reported that Microsoft Corp (NASDAQ:MSFT) has scrapped leases for sizeable data center capacity in the U.S., suggesting a potential oversupply of AI infrastructure.

Microsoft said its plan to invest over $80 billion in AI and cloud capacity this fiscal year was intact but that it "may strategically pace or adjust" infrastructure in some areas.

"Markets are already jittery and looking for a reason to take profits," said Gene Goldman, chief investment officer at Cetera Investment Management, noting that any question about AI is seen as a reason to take profits since the technology has driven market growth for the last few years.

Along with worries about tariffs and inflation, investors are getting more anxious about economic growth after last week's batch of weak economic data and a disappointing forecast from Walmart (NYSE:WMT).

"Volatility is being driven by market uncertainty about whether we're facing a growth scare or an inflation scare," said Goldman.

The Dow Jones Industrial Average rose 33.19 points, or 0.08%, to 43,461.21, the S&P 500 lost 29.88 points, or 0.50%, to 5,983.25 and the Nasdaq lost 237.08 points, or 1.21%, to 19,286.93.

The more defensive healthcare index led percentage gains, closing up 0.75% while technology was the biggest laggard, ending down 1.43%.

Nvidia was the S&P 500's biggest index point drag, ending the session down 3.1%, and it was followed by chip maker Broadcom (NASDAQ:AVGO) Inc, down 4.9%, Amazon.com (NASDAQ:AMZN), down 1.8%. Microsoft shares ended down 1%.

The tech sector's biggest percentage decliner with, a 10.5% drop, was another popular AI stock, Palantir Technologies (NASDAQ:PLTR).

"The dominance of the AI tech trade has run its course, not that these companies aren't great stocks. We're headed for a major digestion phase," said Peter Boockvar, CIO at Bleakley Financial Group.

On the data front, the Personal Consumption Expenditure index - the Federal Reserve's preferred inflation gauge - is expected on Friday and could help markets gauge the timing of the central bank's first rate cut this year.

Interest rate futures indicate trader expectations that the Fed will leave borrowing costs unchanged until June, according to CME Group's (NASDAQ:CME) FedWatch tool.

In individual stocks, Apple (NASDAQ:AAPL) finished up 0.7% after the iPhone maker unveiled plans to spend $500 billion in U.S. investments in the next four years, including setting up a factory in Texas for AI servers.

"Volatility is being driven by market uncertainty about whether we're facing a growth scare or an inflation scare," said Goldman.

The Dow Jones Industrial Average rose 33.19 points, or 0.08%, to 43,461.21, the S&P 500 lost 29.88 points, or 0.50%, to 5,983.25 and the Nasdaq lost 237.08 points, or 1.21%, to 19,286.93.

The more defensive healthcare index led percentage gains, closing up 0.75% while technology was the biggest laggard, ending down 1.43%.

Nvidia was the S&P 500's biggest index point drag, ending the session down 3.1%, and it was followed by chip maker Broadcom (NASDAQ:AVGO) Inc, down 4.9%, Amazon.com (NASDAQ:AMZN), down 1.8%. Microsoft shares ended down 1%.

The tech sector's biggest percentage decliner with, a 10.5% drop, was another popular AI stock, Palantir Technologies (NASDAQ:PLTR).

"The dominance of the AI tech trade has run its course, not that these companies aren't great stocks. We're headed for a major digestion phase," said Peter Boockvar, CIO at Bleakley Financial Group.

On the data front, the Personal Consumption Expenditure index - the Federal Reserve's preferred inflation gauge - is expected on Friday and could help markets gauge the timing of the central bank's first rate cut this year.

Interest rate futures indicate trader expectations that the Fed will leave borrowing costs unchanged until June, according to CME Group's (NASDAQ:CME) FedWatch tool.

In individual stocks, Apple (NASDAQ:AAPL) finished up 0.7% after the iPhone maker unveiled plans to spend $500 billion in U.S. investments in the next four years, including setting up a factory in Texas for AI servers.

By Bing Hong Lok

SINGAPORE (Reuters) - Singapore's key consumer price gauge rose 0.8% in January from a year earlier, lower than economist forecasts, official data showed on Monday.

The core inflation rate, which excludes private road transport and accommodation costs, compared with a 1.5% forecast by a Reuters poll of economists.

Headline inflation was 1.2% in annual terms in January, lower than economists' forecast of 2.15%.

Statistics Singapore said the CPI had been rebased to a base year of 2024 from 2019. The annual change in the headline inflation rate in December was revised to 1.5% from 1.6%

By Alexander Marrow and Darya Korsunskaya

LONDON (Reuters) - Russia's overheating economy is on the cusp of serious cooling, as huge fiscal stimulus, soaring interest rates, stubbornly high inflation and Western sanctions take their toll, but after three years of war, Washington may just have thrown Moscow a lifeline.

U.S. President Donald Trump is pushing for a quick deal to end the war in Ukraine, alarming Washington's European allies by leaving them and Ukraine out of initial talks with Russia and blaming Ukraine for Russia's 2022 invasion, political gifts for Moscow that could also bring strong economic benefits. 

Washington's push comes as Moscow faces two undesirable options, according to Oleg Vyugin, former deputy chairman of Russia's central bank.

Russia can either stop inflating military spending as it presses to gain territory in Ukraine, he said, or maintain it and pay the price with years of slow growth, high inflation and falling living standards, all of which carry political risks.

Though government spending usually stimulates growth, non-regenerative spending on missiles at the expense of civilian sectors has caused overheating to the extent that interest rates at 21% are slowing corporate investment and inflation cannot be tamed. 

"For economic reasons, Russia is interested in negotiating a diplomatic end to the conflict," Vyugin said. "(This) will avoid further increasing the redistribution of limited resources for unproductive purposes. It's the only way to avoid stagflation." 

While Russia is unlikely to swiftly reduce defence spending, which accounts for about a third of all budget expenditure, the prospect of a deal should ease other economic pressures, could bring sanctions relief and eventually the return of Western firms.

"The Russians will be reluctant to stop spending on arms production overnight, afraid of causing a recession, and because they need to restore the army," said Alexander Kolyandr, researcher at the Center for European Policy Analysis (CEPA).

"But by letting some soldiers go, that would take a bit of pressure off the labour market."

War-related recruitment and emigration have caused widespread labour shortages, pushing Russian unemployment to a record low 2.3%.   

Inflation pressure could also ease, Kolyandr added, as peace prospects may make Washington less likely to enforce secondary sanctions on companies from countries like China, making imports more straightforward and, therefore, cheaper.

NATURAL SLOWDOWN

Russian markets have already seen a boost. The rouble surged to a near six-month high against the dollar on Friday, buoyed by prospects for sanctions relief.

Russia's economy has grown strongly since a small contraction in 2022, but authorities expect 2024's 4.1% growth to slow to around 1-2% this year and the central bank is not yet seeing sustainable grounds to cut rates.

When holding rates at 21% on February 14, Central Bank Governor Elvira Nabiullina said demand growth has long been faster than production capacity, hence the natural slowdown in growth.

The bank's challenge in finding a balance between growing the economy and lowering inflation is complicated by rampant fiscal stimulus. Russia's fiscal deficit ballooned to 1.7 trillion roubles ($19.21 billion) in January alone, a 14-fold increase year on year as Moscow frontloads 2025 spending. 

"...it is very important for us that the budget deficit...remains as the government is currently planning," Nabiullina said. 

The finance ministry, which expects a 1.2-trillion-rouble deficit for 2025 as a whole, rejigged its budget plans three times last year.  

CARROT & STICK

The war has brought economic advantages for some Russians but pain for others.

For workers in sectors linked to the military, fiscal stimulus has sharply raised wages, while others in civilian sectors struggle with soaring prices for basic goods. 

Some businesses have seized opportunities presented by huge shifts in trade flows and reduced competition. For example, Melon Fashion Group's revenues have steadily risen as it has ridden the consumer demand wave.

Melon's brands have significantly expanded over the last two years, the company told Reuters, and since 2023, the average size of stores it opens has doubled. 

But for many others, high rates pose a serious challenge. 

"At current lending rates, it is difficult for developments to launch new projects," said Elena Bondarchuk, founder of warehouse developer Orientir. "The once-wide circle of investors has narrowed and those who remain are also dependent on banks' terms." 

Lower oil prices, budget constraints and a rise in bad corporate debt are among the top economic risks facing Russia, internal documents seen by Reuters show. And Trump, though dangling the carrot of concessions over Ukraine, has threatened additional sanctions if no deal is forthcoming.

"The United States has significant leverage in terms of the economy and it's why the Russians are happy to meet," Chris Weafer, chief executive of Macro-Advisory Ltd, told Reuters. 

"The United States is saying: 'We can ease sanctions if you cooperate, but if you don't we can make it a hell of a lot worse'." 

($1 = 88.5000 roubles)

Investing.com-- Most Asian stocks fell on Monday, tracking steep declines on Wall Street amid persistent concerns over a cooling U.S. economy and increased trade tariffs under President Donald Trump.

A tech-fueled rally in Hong Kong paused, with investors turning averse towards the broader tech sector before hotly anticipated earnings from market darling NVIDIA Corporation (NASDAQ:NVDA) this week. 

Weakness in Asian markets came largely tracking steep losses on Wall Street on Friday, where a mix of soft economic data and persistent tariff tensions battered markets. Wall Street futures advanced in Asian trade on Monday, signaling some signs of a recovery. 

Asia tech skittish with Nvidia in focus 

Tech-heavy Asian bourses led declines on Monday, with Japan’s Nikkei 225 index losing 1.2%, while South Korea’s KOSPI shed 0.6%.

Hong Kong’s Hang Seng index was flat on some gains in locally listed Chinese stocks. But tech shares- which drove a stellar rally in the Hang Seng over the past month- mostly retreated. 

Alibaba Group Holding Ltd (HK:9988) (NYSE:BABA) was an exception, curbing a bulk of its initial losses after the ecommerce giant said it will invest about 380 million yuan ($52 billion) in AI over the next three years. 

Regional tech shares largely tracked Friday declines in their U.S. peers, as investors dumped AI-linked shares ahead of key earnings from Nvidia this week. Nvidia had fallen more than 4%. 

The company’s earnings- which are due on Wednesday- will be closely watched to see whether the AI trade remained feasible, especially after the release of China’s DeepSeek in January sparked doubts over AI investment. 

By Wayne Cole

SYDNEY (Reuters) - European shares steadied on Monday as Germany's election produced no nasty surprise, while Wall Street futures firmed on hopes results from AI diva Nvidia (NASDAQ:NVDA) this week would justify the tech sector's sky-high valuations.

DAX futures firmed 0.2%, while EUROSTOXX 50 futures were flat. The euro edged 0.3% higher to $1.0493 after the CDU/CSU won as polls predicted.

German's new conservative leader Friedrich Merz has to form a coalition government and it is not yet clear whether that will include one or two partners, with the latter likely to take more time and horse trading.

The uncertainty comes as European Union leaders are set to hold an extraordinary summit on March 6 to discuss additional support for Ukraine and how to pay for European defence needs.

Liquidity was thinned by a holiday in Tokyo markets and MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.15%. Nikkei futures traded at 38,300, under the cash close of 38,776.

S&P 500 futures added 0.4% and Nasdaq futures 0.5%. The Nasdaq had fallen 2.5%, its worst week in three months, with losses led by the Magnificent Seven. [.N]

That pullback raises the stakes for Nvidia's results on Wednesday where investors are looking for fourth-quarter sales around $38.5 billion and first-quarter guidance around $42.5 billion.

As usual, options point to a share price move of around 8% in either direction should the results surprise.

Wall Street had taken a hit on Friday when a survey on services showed a shock slide in activity amid concerns about tariffs and cost pressures. There were even reports the White House was pressuring Mexico to put its own tariffs on Chinese imports as part of a deal.

By Jonathan Landay

WASHINGTON (Reuters) - President Donald Trump’s administration on Sunday said it was placing all but a handful of USAID personnel around the world on paid administrative leave and eliminating some 2,000 of those positions in the U.S., according to a notice sent to agency workers reviewed by Reuters.

Just before midnight on Sunday U.S. Eastern Time, all United States Agency for International Development direct hire personnel with the exception of workers essential for critical functions, will be placed on leave. At the same time the agency is "beginning to implement a Reduction-in-Force" affecting about 2,000 USAID personnel in the U.S., the notice said.

The White House did not immediately respond to request for comment.

Billionaire Elon Musk’s Department of Government Efficiency has led an effort to gut USAID, the main delivery mechanism for American foreign assistance, a critical tool of U.S. "soft power" for winning influence abroad.

On Friday, a federal judge cleared the way for the Trump administration to put thousands of USAID workers on leave, a setback for government employee unions that are suing over what they have called an effort to dismantle it.

Two former senior USAID officials estimated that a majority of some 4,600 USAID personnel, career U.S. Civil Service and Foreign Service staffers, would be placed on administrative leave.

"This administration and Secretary (of State Marco) Rubio are shortsighted in cutting into the expertise and unique crisis response capacity of the U.S.," said Marcia Wong, one of the former officials. "When disease outbreaks occur, populations displaced, these USAID experts are on the ground and first deployed to help stabilize and provide aid?"

"Unsigned notices like this are not self-implementing. They must be followed up by an individual personnel action or at least an approved leave slip, properly executed by someone with that authority," said the second former official, who asked not to be further identified.

Trump ordered a 90-day pause on foreign aid shortly after taking office, halting funding for everything from programs that fight starvation and deadly diseases to providing shelters for millions of displaced people across the globe.

The administration has approved exceptions to the freeze totaling $5.3 billion, mostly for security and counter-narcotics programs, according to a list of exemptions reviewed by Reuters that included limited humanitarian relief.

USAID programs received less than $100 million in exemptions, according to the list. That compares to roughly $40 billion in USAID programs administered annually before the freeze.

By David Milliken

LONDON (Reuters) - Britain's government ran a record budget surplus of 15.4 billion pounds ($19.5 billion) last month, official figures showed on Friday, but in a setback for finance minister Rachel Reeves it was well below economists' and officials' expectations.

Britain's public finances typically show a surplus in January when annual income tax bills for the previous financial year fall due for many taxpayers.

However, cumulative borrowing for the first 10 months of the financial year totalled 118.2 billion pounds, the Office for National Statistics said.

That is 11.6 billion pounds more than at the same point of the 2023-24 year and above the 105.4 billion pounds which the Office for Budget Responsibility forecast in October for this point in the financial year.

The OBR expected a 20.5 billion-pound surplus for January.

The figures come after a number of economists estimated that Reeves risks missing her debt reduction goals when the government's forecasters publish updated borrowing estimates on March 26.

Reeves' first budget last year left her with only 9.9 billion pounds of headroom to meet a target of balancing day-to-day spending and tax revenues by the 2029-30 financial year, despite announcing Britain's biggest tax rises in decades.

Since the budget, government borrowing costs have risen globally and British business sentiment and growth prospects have weakened, reflecting Reeves' 40 billion-pound tax rise and uncertainty created by trade tariffs announced by U.S. President Donald Trump.

Public sector net debt excluding public sector banks totalled 95.3% of annual gross domestic product in January, 0.1 percentage points higher than a year earlier and around levels last seen in the early 1960s, the ONS said.

Public sector net financial liabilities - a measure targeted by Reeves which includes illiquid assets - stood at 82.7% of GDP in January, up 2.0 percentage points on the year.

($1 = 0.7891 pounds)

By Rae Wee

SINGAPORE (Reuters) - Asian shares rose on Friday, reversing Wall Street's negative lead as the U.S. exceptionalism narrative continued to lose its shine, while once unloved Chinese stocks found themselves more buyers thanks to optimism over artificial intelligence (AI).

Gold hovered near a record high and was set to extend its gains for an eighth consecutive week, helped by safe-haven flows due to concerns over Donald Trump's tariff threats and amid contentious talks as the U.S. President pushes for a quick deal to end the Russia-Ukraine war.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8% in the early Asian session, boosted by a jump in Hong Kong-listed stocks.

Hong Kong's Hang Seng Index advanced 1.8% shortly after the open, while tech shares surged 2.5%. [.SS]

Similarly, China's CSI300 blue-chip index gained 0.2%, with the CSI big data index rising 2%.

Chinese stocks have been on a tear in recent days, driven by DeepSeek's AI breakthrough that reignited investor interest in China's technology capabilities.

While the Hang Seng Tech Index has gained 26% for the year thus far, the S&P 500 is up just 4% over the same period.

"DeepSeek has been a catalyst for sentiment changing," said Brian Arcese, portfolio manager at Foord Asset Management.

Earlier this week, Chinese President Xi Jinping held a rare meeting with some of the biggest names in China's technology sector, urging them to "show their talent" and be confident in the power of China's model and market.

"I think that is a shift in China. These things are done for a reason, nothing's really coming out of the meeting other than the fact that we're showing that we've met... but that is a big signal, you don't do that lightly," said Arcese.

Elsewhere, Nasdaq futures ticked 0.02% higher while S&P 500 futures fell 0.03%, both struggling to recoup Wall Street's losses from the previous session. [.N]

Thursday's downbeat forecast from Walmart (NYSE:WMT), the world's largest retailer, dampened investor sentiment and stoked concerns about the outlook for the world's largest economy.

"The Walmart report, it's such a bellwether for the U.S. economy, and usually probably in isolation you could look through it ... but following the weak retail sales data, suddenly there's some concerns out there," said Tony Sycamore, a market analyst at IG.

EUROSTOXX 50 futures were down 0.05%, while FTSE futures lost 0.08%.

Japan's Nikkei edged up 0.05%, with its gains capped by a stronger yen. (T)

DOLLAR EASES

While the threat of further import duties from Trump continued to cast a pall over markets, traders are also sobering up to the fact that the start of his second term has been mostly bluster on the tariff front.

The dollar was headed for a third straight weekly loss, as bulls who had built up big long positions in anticipation of a trade war have backed off while Trump equivocates about tariffs.

Several Federal Reserve officials on Thursday said they are taking note of what they see as rising inflation risks and the uncertain impact of Trump's trade, immigration and other policies.

The weaker dollar left sterling at a two-month high of $1.2674, while the euro steadied at $1.0490 ahead of a weekend election in Germany.

The yen, meanwhile, fell more than 0.4% to 150.28 per dollar, after having jumped on Thursday on heightened bets of further Bank of Japan (BOJ) rate hikes this year.

Data on Friday showed Japan's core consumer inflation hit 3.2% in January, its fastest pace in 19 months.

"The data supports the growing market conviction of a BOJ rate hike by July, and a possible third hike by year-end," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

U.S. Treasury yields steadied on Friday, after falling in the previous session following comments from Treasury Secretary Scott Bessent who said any move to increase the share of longer-term Treasuries in government debt issuance is some way off.

The two-year yield was last little changed at 4.2635%, while the benchmark 10-year yield stood at 4.4975%. [US/]

In commodities, oil prices dipped but were headed for a weekly gain. [O/R]

Brent crude oil futures eased 0.1% to $76.40 a barrel, but were set to rise more than 2% for the week. U.S. West Texas Intermediate crude eased 0.07% to $72.43, but was also on track for a weekly gain of over 2%.