By Makiko Yamazaki

TOKYO (Reuters) - Japan's current account surplus jumped to a record last year, data from the finance ministry showed on Monday, as a weaker yen boosted returns on foreign investments that helped to comfortably offset a trade deficit.

The surplus in the current account stood at 29.3 trillion yen ($192.67 billion) in 2024, the largest since comparable data became available in 1985. It represented a 29.5% increase from the previous year.

Primary income from securities and direct investment overseas remained the biggest driver with a record 40.2 trillion yen in surplus, as Japanese companies pursue growth abroad, including acquisitions of foreign firms.

The trade deficit narrowed by 40% to 3.9 trillion yen on brisk exports of automobiles and chipmaking equipment as well as lower costs of energy imports.

The surplus from travel rose to 5.9 trillion yen, reflecting thriving inbound tourism.

For December, Japan's current account surplus stood at 1.08 trillion yen, down from the previous month's 3.35 trillion yen.

The country's current account surplus was once considered a sign of export might and a source of confidence in the safe-haven yen.

But the composition has changed over the last decade with trade no longer generating a surplus due to a surge in the cost of energy imports and an increase in offshore manufacturing by Japanese companies.

Japan now offsets the trade deficit with the robust primary income surplus, which includes interest payments and dividends from past investments overseas.

But the bulk of such income earned overseas is re-invested abroad instead of being converted into yen and repatriated home, which analysts say may be keeping the Japanese currency weak.

"There is no reason to repatriate because overseas investments yield higher returns than at home," said Norinchukin Research Institute chief economist Takeshi Minami.

Japan is now facing pressure from the United States, its largest export destination, to close its $68.5 billion annual trade surplus, a call that President Donald Trump made during Prime Minister Shigeru Ishiba's first White House visit on Friday.

($1 = 151.5700 yen)

BEIJING (Reuters) -China's consumer inflation accelerated to its fastest in five months in January while producer price deflation persisted, reflecting mixed consumer spending and weak factory activity.

Deflationary pressures are likely to persist in China this year, analysts say, unless policymakers can rekindle sluggish domestic demand, with tariffs by U.S. President Donald Trump on Chinese goods adding pressure on Beijing to spur growth in the world's second-largest economy.

The consumer price index rose 0.5% last month from a year earlier, quickening from December's 0.1% gain, data from the National Bureau of Statistics showed on Sunday, above the 0.4% rise estimate in a Reuters poll of economists.

Core inflation, excluding volatile prices for food and fuel, sped up to 0.6% in January from 0.4% the previous month.

Although consumer prices are expected to rise gradually, producer prices are unlikely to return to positive territory in the short term as overcapacity in industrial goods persists, said Xu Tianchen, senior economist at the Economist Intelligence Unit.

"If measured by the GDP deflator, it will still take a few quarters to get out of deflation, " Xu said.

The numbers were skewed by seasonal factors, as the Lunar New Year, China's biggest annual holiday, began in January this year versus February last year. Typically, prices rise as consumers stockpile goods, particularly food for big family gatherings.

Prices of airplane tickets rose 8.9% from a year earlier, tourism inflation was 7.0% and movie and performance ticket prices rose 11.0%.

Consumer spending reports over the holidays were mixed, reflecting worries over wage and job security.

Investing.com-- U.S. President Donald Trump said on Sunday that he will announce additional 25% tariffs on all steel and aluminum imports into the U.S., and will also announce reciprocal duties over what he sees as unfair trading practices. 

Speaking to reporters on Air Force One, Trump said he will announce the 25% tariffs on Monday, and will announce the reciprocal tariffs on Tuesday or Wednesday, with both duties to be effective immediately. 

The president was on his way to the NFL Super Bowl in New Orleans- a route that saw him fly over the Gulf of America, which the president had recently renamed from the Gulf of Mexico. 

Trump on Sunday also signed an executive order recognizing February 9 as “Gulf of America Day.” 

Trump’s tariff threat comes just days after his 10% duties against China took effect, as the U.S. president uses tougher trade policy to push through his broader international agenda. Beijing had retaliated with a slew of measures and duties.

He had threatened 25% tariffs against Canada and Mexico over stricter border control, but had postponed the tariffs on assurances from the two countries. 

Canada, Brazil, Mexico, South Korea, and Vietnam are the biggest exporters of steel to the U.S., government data showed. 

Canada is also by far the biggest exporter of aluminum to the U.S.

Trump had in his first term imposed 25% tariffs on steel and 10% tariffs on aluminum, but had later granted duty-free quotas to allies such as Canada, Mexico, and Brazil.

On reciprocal tariffs, Trump said he will hold a conference later this week to provide more information on reciprocal trade tariffs- plans for which he had first revealed on Friday. 

The president has consistently criticized uneven import duties imposed by other countries on U.S. goods. He has long criticized the European Union’s 10% tariffs on U.S. auto imports, which is much higher than the 2.5% import duty charged by the U.S.

Analysts and Federal Reserve officials have expressed some concerns that Trump’s trade tariffs- which will be borne by U.S. importers, will push up inflation in the coming months.

U.S. stock index futures crept lower after Trump’s announcement. 

Investing.com-- Gold prices rose in Asian trade on Friday, remaining in sight of recent record highs as traders favored safe havens amid uncertainty before key U.S. nonfarm payrolls data.

The yellow metal was set for strong weekly gains as a renewed trade war between the U.S. and China spurred haven demand, while weakness in the dollar also helped. 

Fears of renewed tensions in the Middle East, after U.S. President Donald Trump claimed that the U.S. would take over the Gaza strip, also fueled some haven demand for gold. 

Spot gold rose 0.2% to $2,862.67 an ounce, while gold futures rose 0.3% to $2,884.81 an ounce by 00:58 ET (05:58 GMT). Spot prices were up 2.4% this week. 

Citi and UBS analysts hiked their gold price forecasts for 2025, stating that the yellow metal was likely to extend its bull market through the rest of the year. Citi sees gold hitting $3,000 an ounce in the short-term, while UBS expects $3,000 an ounce by end-2025.

Gold upbeat ahead of nonfarm payrolls data 

Spot prices remained close to a record high of $2,882.35 an ounce, as weakness in the dollar underpinned the yellow metal.

But the dollar steadied on Friday, with focus turning to key nonfarm payrolls data due later in the day. 

Traders were bracing for a strong payrolls reading, especially amid signs of continued resilience in the labor market. A strong labor market gives the Federal Reserve less impetus to cut interest rates.

The central bank recently signaled that it had no plans to cut interest rates quickly, amid uncertainty over sticky inflation and Trump’s policies. 

Investing.com– Most Asian stocks fell on Friday but Chinese shares extended gains on AI optimism despite U.S. tariffs, while focus turned to the Reserve Bank of India’s interest rate decision due later in the day.

U.S. stock index futures were largely unchanged in Asian trading after a mixed close on Wall Street.

RBI rate decision in focus; Asian central banks see  pre-emptive rate cuts

The RBI will decide on its interest rates and cash reserve ratio later in the day. 

Economists widely expect the central bank to cut the benchmark repo rate by 25 basis points to 6.25%, marking the first rate reduction since May 2020.

India’s Nifty 50 Futures signaled a positive start at the open.

Recent domestic data showed that India's retail inflation eased to a four-month low of 5.2% in December, but was still above the RBI's medium-term target of 4%.

On the growth front, India's economy is projected to expand at 6.4% in the current fiscal year, a slowdown from the 8.2% growth recorded in the previous year.

These factors, coupled with growing uncertainty around U.S. policies, have bolstered bets for a rate cut.

“Due to uncertainty surrounding tariffs and external demand, Asian central banks are becoming more cautious about the domestic growth outlook, leading to pre-emptive rate cuts.” ING analysts said in a recent note.

Recently, Singapore eased monetary policy for the first time in almost five years, while Indonesia saw unexpected rate cuts.

China stocks rise bucking the regional trend

Despite the imposition of 10% tariffs by the Donald Trump administration on Chinese goods, China's AI sector, led by companies like DeepSeek, has demonstrated resilience, bolstering investor confidence.

China’s Shanghai Composite rose 0.8% on Friday, while the Shanghai Shenzhen CSI 300 index jumped 1%. Hong Kong’s Hang Seng index advanced 0.9%. 

Hong Kong-listed Lenovo Group (HK:0992) jumped 7.5%, while Xiaomi (OTC:XIACF) Corp (HK:1810) rose 4.8%.

Elsewhere, most regional stocks were lower amid global uncertainty around Donald Trump’s policies, keeping investors away from riskier assets.

Indonesia’s Jakarta Stock Exchange Composite Index slumped 1.7%, while Thailand’s SET Index declines 1.9%

Japan’s Nikkei 225 lost 0.5% while TOPIX fell 0.4%. 

South Korea's KOSPI index was 0.3% weaker, while Singapore's Straits Times Index was largely unchanged.

Australia's S&P/ASX 200 index advanced 0.4%.

By Promit Mukherjee

OTTAWA (Reuters) -Bank of Canada Governor Tiff Macklem said on Thursday a policy shift in the U.S. was causing uncertainty and President Donald Trump's tariff threats were already impacting businesses and households.

Trump agreed on Monday to temporarily pause a 25% levy on almost all imports from Canada and Mexico, which if implemented could have pushed the economies of both the countries into a whirlwind of recession and higher prices.

The tariffs have been suspended for a month, the U.S. government said this week.

"Trump's threats of new tariffs are already affecting business and household confidence, particularly in Canada and Mexico," Macklem said while virtually addressing a conference held in Mexico City.

"The longer this uncertainty persists, the more it will weigh on economic activity in our countries," he said.

The Bank of Canada said last month the threat of tariffs was making economic projections difficult, but cautioned that a 25% tariff could cause major economic damage.

In his prepared remarks on Thursday, Macklem said if significant broad-based tariffs were imposed, they would reduce long-run prosperity, which monetary policy cannot change.

But besides the looming tariffs, other headwinds were also posing challenges for monetary policy such as prospects of war, rising trade protectionism, economic fragmentation, the advent of new technologies and catastrophic weather events, he said.

"In a world with more structural change and more negative supply shocks, central banks will be faced with harder choices," Macklem said, adding that all of the challenges make central banks vulnerable to criticism.

"We will be called ineffective or criticized for not doing enough. And some will challenge our independence," he said.

The Bank of Canada was criticized during the pandemic when market participants and politicians blamed its monetary policy measures for failing to tame recession and joblessness.

In a report published last month on the review of steps it had taken during the pandemic, the bank said it would improve its communications and its forecasting models to predict future shocks.

Macklem said amid an uncertain world, central bankers will have to rely on their strategies to maintain price stability, communicate clearly on the limitations of monetary policy, create advanced modeling and work collaboratively with other central banks.

"We need to remain evidence-based, technocratic and professional, and free of political influence," he said.

Investing.com-- The S&P 500 closed higher for third-straight day on Thursday, but investors had to contend with stocks swinging between gains and losses intraday on a deluge of corporate earnings and economic data ahead of the crucial monthly jobs report due Friday. 

At 4:00 p.m. ET (21:00 GMT), the S&P 500 index rose 0.3%, the NASDAQ Composite gained 0.5%, and the Dow Jones Industrial Average fell 125 points, or 0.30%.

Jobless claims rise; nonfarm payrolls eyed.

The number of Americans applying for first-time unemployment benefits edged up by more than expected last week, consistent with a slowing -- albeit slowly -- labor market.

Initial jobless claims came in at 219,000 in the week ended on Feb. 1. The prior week's figure was slightly revised higher by 1,000 to 208,000, while economists had expected a reading of 214,000.

The data comes ahead of the release of the all-important nonfarm payrolls report for January on Friday, which should provide a glimpse into labor demand that is closely monitored by Federal Reserve policymakers. Economists are predicting that the US economy added 169,000 jobs last month, down from 256,000 in December.

Earlier this week, separate data have shown that private payrolls expanded in January, while job openings slipped by the most in 14 months. However, resilient hiring and a relatively low level of layoffs has suggested that the labor market is not entering a sudden downturn, bolstering the case for the Fed to leave interest rates unchanged until at least June.

Quarterly earnings continue; Amazon reports after the closing bell 

E-commerce giant Amazon (NASDAQ:AMZN) is due to headline a slew of quarterly returns on Thursday, after the close.

Like its Big Tech peers, the company is expected to face fresh questioning from analysts about its artificial intelligence spending plans following DeepSeek's rise to prominence.

This week, Alphabet (NASDAQ:GOOG) announced a capital spending outlook in 2025 that exceeded Wall Street estimates, partly sparking a downturn in the search giant’s stock price on Wednesday. Executives at Facebook-owner Meta Platforms (NASDAQ:META) and software titan Microsoft (NASDAQ:MSFT) have also defended their own massive AI expenditures, arguing that they are necessary to keep up in the race to monetize the technology.

Elsewhere, Eli Lilly (NYSE:LLY) stock rose more than 3% after the drugmaker posted a surge in fourth-quarter revenue thanks in part to a spike in demand for its obesity treatment Zepbound.

Yum! Brands (NYSE:YUM) stock soared over 9% after the fast food holding company surpassed estimates for fourth-quarter comparable sales, as value offerings from Taco Bell attracted budget-conscious US consumers to the popular Tex-Mex chain.

Tapestry (NYSE:TPR) stock jumped 12% after the fashion holding company raised its 2025 guidance and reported better-than-expected second-quarter results. 

Ford (NYSE:F) stock fell over 7% after the auto giant forecast weaker annual profit at a time when the threat of US tariffs on Canada and Mexico, which have been temporarily paused, continues to stoke uncertainty.

Qualcomm, Arm , Skyworks slump to pressure chips 

Qualcomm (NASDAQ:QCOM) stock slid more than 3% after the chipmaker forecast no revenue growth for its lucrative patent licensing business in 2025 after its license with China’s Huawei expired. The segment was expected to represent another leg of growth for the company.

Arm Holdings (NASDAQ:ARM) sank over 3% after its earnings outlook for the current quarter was in line with expectations, denting hopes that AI demand will spur outsized sales for the chip designer.

Skyworks Solutions Inc (NASDAQ:SWKS), which makes chips for consumer electronics such as smartphones, fell 24% after warning that it expects Apple (NASDAQ:AAPL) to reduce demand for its parts to be used in the upcoming iPhone 17 cycle. 

(Peter Nurse, Ambar Warrick contributed to this article.)

By Balazs Koranyi and Francesco Canepa

FRANKFURT (Reuters) - European Central Bank interest rates have room to fall further as inflation moderates, ECB board member Piero Cipollone said, warning that the U.S. administration's trade war with China could have a detrimental impact on the 20-member euro zone.

The ECB has lowered borrowing costs five times since June as growth concerns start to trump price worries, and investors see at least three more rate cuts this year in a bid to boost an economy struggling to rebound from two years of near stagnation.

"We all agree there is still room for adjusting rates downwards," Cipollone told Reuters in an interview. "We are almost on target...(and) we are still in restrictive territory."

But higher energy prices and global trade tensions are tugging the ECB in different directions, so there is no sense in committing to any specific move for now, including a widely anticipated and fully priced in cut in March, Cipollone added.

Still, the euro zone economy has not fundamentally changed since December, when the ECB's projections assumed four rate cuts in 2025, including a move already delivered in a unanimous decision last month.

"The overall understanding of where we are going is there, the fundamentals haven’t changed, so I do not expect a big change in direction," Cipollone said. "This convergence with the inflation target is coherent with a declining interest rate path."

Inflation inched up to 2.5% last month but the ECB sees it back at 2% sometime this summer after four years above target.

CHINA RISK

The big uncertainty is U.S. trade policy and that could hit Europe hard, even before any direct trade barriers on the bloc, Cipollone argued.

"What concerns me more is if President Trump engages in a full trade war with China," Cipollone, the newest member of the ECB's board, added. "This is a more serious threat because China has 35% of the world’s manufacturing capacity."

The U.S. imposed a 10% tariff on all Chinese imports this week, prompting retaliatory measures from Beijing.

Curtailing access to the U.S. would force China to find other markets and it could dump discounted products on Europe, curbing growth and prices, Cipollone said.

Models compiled by the Peterson Institute for International Economics, a Washington-based think tank, concluded that while the imposition of tariffs would see the U.S. itself take a hit to growth, it would suffer less than any of its targets.

However, Cipollone appeared to downplay the impact of potential tariffs directed at Europe.

He said firms could absorb some of the higher costs by sacrificing profit margin while the euro's inevitable weakening against the U.S. dollar would also buffer the bloc.

Trade strife could drag economic growth down but not enough to induce a recession, especially since other parts of the economy are showing resilience.

Cipollone noted that the labour market is holding up, consumption is likely to rebound, construction is strong, rate cuts are feeding through to the economy and even industry, in recession for the past two years, is showing signs of bottoming out.

"We might not be booming but I am not expecting a recession at all," he said.

Even if trade tensions threaten to drag inflation lower, other factors, particularly energy costs, were pulling prices in the other direction, so risks to the outlook remained balanced, even if some policymakers fear the ECB could undershoot its target.

Click here for the full Q&A of the interview.

Investing.com– Most Asian stocks were higher on Thursday as the broader tech sector rose tracking Wall Street gains, though escalating U.S.-China trade tensions tempered overall optimism.

U.S. stock index futures edged higher in Asian trade after Wall Street saw gains in tech stocks after NVIDIA (NASDAQ:NVDA) forecasted solid capital spending on artificial intelligence. 

Tracking their peers, heavyweight Asian tech stocks were also on the rise, leading to broad-based gains in the region.

Regional tech stocks jump on AI optimism 

Despite the imposition of 10% tariffs by the Donald Trump administration on Chinese goods, China's AI sector, led by companies like DeepSeek, has demonstrated resilience, bolstering investor confidence.

The enthusiasm surrounding DeepSeek has been a key factor in offsetting concerns related to the ongoing trade tensions between the U.S. and China.

As a result, China’s Shanghai Composite rose 0.8% on Thursday, while the Shanghai Shenzhen CSI 300 index gained 0.7%. Hong Kong’s Hang Seng index advanced 0.4%. 

Hong Kong-listed Semiconductor Manufacturing International Corp (HK:0981) (SMC) shares hit their record high, while Sunny Optical (OTC:SNPTF) Technology (HK:2382) stock jumped 6.1%.

In Tokyo, the Nikkei 225 gained 0.3%. Semiconductor giant Tokyo Electron (TYO:8035) saw its shares climb 1.8%, while Sony Corp (TYO:6758) added 1.2%. 

Renesas Electronics Corp (TYO:6723) surged 12% following robust earnings for the December quarter.

South Korea's KOSPI index rose 0.5%, with Samsung Electronics (KS:005930) and SK Hynix Inc (KS:000660) adding 1.1% and 2.7%, respectively.

US-China tariff concerns persist, limiting gains

However, the upside was limited as investors remained cautious ahead of the implementation of China's retaliatory tariffs on U.S. imports, set to take effect next week. 

The ongoing trade tensions have prompted global investors to adopt a more cautious stance toward riskier assets.

Singapore's Straits Times Index gained 0.4%, buoyed by strong performances in the financial and technology sectors. 

Singapore Exchange Ltd (SGX:SGXL) reported a 27% rise in its half-yearly profit on Thursday. The bourse operator’s stock rose nearly 1%.

Elsewhere, India's Nifty 50 Futures were largely muted on Thursday.

Australia's S&P/ASX 200 index advanced 0.7%, with technology and mining stocks leading gains.