Recap | 4 February 2026
- Feb 5
- 8 min read
US and Iran tentatively shift to nuclear negotiations in Oman
Ukraine talks remain at impasse over Donbas
China's Xi reaffirms strategic ties with Putin's Russia, speaks with Trump
US announces joint critical minerals initiative to address supply chain risks
AI cannibalization fuels technology selloff as metals swing to losses
Private payroll gains underwhelm amid service sector strength
Fed officials advocate pause as president presses for accommodation
Bank of England and European Central Bank expected to hold rates
New START treaty lapse marks setback for anti-proliferation efforts
China rebukes ruling canceling Panama Canal contracts
US extends Africa free trade agreement as EU resumes approval process
DHS funding in limbo over ICE restrictions, accountability measures
Supreme Court denies appeal challenging California redistricting referendum
Push to extend Affordable Care Act subsidies fades
EDWARD VON DER SCHMIDT
Headlines
US and Iran tentatively shift to nuclear negotiations in Oman
Shunning Turkey's offer to host talks that would include regional neighbors, Iranian officials pushed for a change in venue to Oman to narrow the scope to nuclear considerations only.
According to Secretary of State Rubio, the US would prefer broader discussions covering Iran's ballistic missile program, support of hostile proxies, and the welfare of detainees.
President Trump reiterated that there would be consequences for a failure to reach acceptable terms as the US positioned additional assets in the region.
Sources:
After crushing protests, Iran's supreme leader now tries to avert a US attack (AP)
Iran's president seeks 'fair and equitable' negotiations, while US shoots down drone (AP; 2/3)
Iran and the US will hold nuclear talks Friday in Oman as tensions remain high (AP)
US and Iran agree to Friday talks in Oman but still at odds over agenda (Reuters)
Oil prices fall as US, Iran agree to talks, easing conflict concerns (Reuters)
Trump Says Iran Should Be 'Very Worried' as Talks Set for Friday (Bloomberg)
Oil Declines After Iran Confirms US Negotiations Set for Friday (Bloomberg)
U.S., Iran Agree to Discuss Nuclear Issues Friday in Oman (WSJ)
Ukraine talks remain at impasse over Donbas
Another two days of US-brokered talks between Ukraine and Russia in Abu Dhabi furthered dialogue but appeared unlikely to resolve fundamental differences concerning the ceding of fortified areas of Donetsk and Luhansk not yet under Russian control.
At the same time, Russia continued to strike Ukrainian power infrastructure in its efforts to compel civilian capitulation.
Sources:
Russia and Ukraine envoys meet in Abu Dhabi for 2 days of US-brokered talks (AP)
Here's what international law says about striking energy facilities in war (AP)
Ukraine, Russia wrap 'productive' first day of US-backed peace talks (Reuters)
Ukrainians Defy Russia's Attempts to Freeze Them Into Submission (Bloomberg)
China's Xi reaffirms strategic ties with Putin's Russia, speaks with Trump
China's President Xi and Russia's President Putin reaffirmed their countries' shared strategic interests on a video call in which the leaders espoused views on various conflicts and the world order.
Afterward, a call between Xi and President Trump garnered an agreement on the importance of continued dialogue and a warning regarding US involvement in Taiwan.
Sources:
China's Xi and Russia's Putin discuss their growing links, ties with US and global crises (AP)
Trump and Xi discuss Iran in wide-ranging call as US presses China and others to break from Tehran (AP)
Xi, Putin hail ties in video call as Ukraine war nears anniversary (Reuters)
Trump, Xi discuss Taiwan and soybeans in call aimed at easing China, US relations (Reuters)
Trump, Xi Discuss Taiwan and Trade Ahead of Planned Summit (Bloomberg)
Trump Says He Spoke With China's Xi About Iran (WSJ)
US announces joint critical minerals initiative to address supply chain risks
The administration hosted a cadre of foreign leaders to announce an initiative to collaborate in supporting critical minerals industries dominated by China. The proposal included price floors to encourage industry participation.
Comment:
Floors involve the government guaranteeing a backstop or minimum contract price for goods in order to reduce market risk and incentivize production.
A dominant producer could otherwise undercut others by flooding the market with supply to drive down prices and short-term profitability, only to raise prices later in the absence of viable competition.
Such monopoly power is particularly concerning when the resources in question are a critical input to various industrial processes and thus represent a single point of failure.
Sources:
US wants to create a critical minerals trading bloc with its allies to counter China (AP)
US proposes critical minerals trade bloc aimed at countering China (Reuters)
US Pitches Mineral Price Floors, New Investment to Counter China (Bloomberg)
U.S. Enlists Mexico, EU and Japan in Its Minerals Race With China (WSJ)
Markets & Economies
AI cannibalization fuels technology selloff as metals swing to losses
Technology-led losses weighed on major equity indices amid wild swings in precious metals as the possibility of AI cannibalizing service industry profits dominated trading narratives.
Data processing demands reflected in enormous capital expenditure plans also weighed on chipmakers and mobile device manufacturers constrained by worsening memory shortages.
Comment:
CPUs and GPUs generally require cache and primary memory, which hold the data to be processed for quick access (as opposed to slower storage like a disk drive).
Memory requirements for AI are pushing manufacturers to focus on higher-margin data center products at the expense of consumer goods like laptops and mobile phones.
Sources:
More drops for technology stocks weigh on Wall Street (AP)
Wall Street ends down as AI worries slam tech stocks (Reuters)
Selloff wipes out nearly $1 trillion from software and services stocks as investors debate AI's existential threat (Reuters)
Trillion-Dollar Tech Wipeout Ensnares All Stocks in AI's Path (Bloomberg)
Tech Stock Selloff Worsens in Asia, Silver Plunges: Markets Wrap (Bloomberg)
Qualcomm, Arm Hit by Concern That Memory Shortage is Spreading (Bloomberg)
AI Threatens a Wall Street Cash Cow: Financial and Legal Data (WSJ)
Intensifying Tech Slide Sends Nasdaq to Worst Two-Day Drop Since April (WSJ)
Private payroll gains underwhelm amid service sector strength
Private payroll gains from ADP came in below consensus forecasts ahead of a delayed employment report and household survey that will be released next Wednesday.
Notwithstanding an uncertain policy and trade environment, services PMIs reflected resilience in the non-manufacturing sector.
Sources:
US services sector steady in January, supply constraints from AI data centers feared (Reuters)
US Private Hiring Missed Forecasts in January, ADP Data Show (Bloomberg)
US Services Sector Maintains Fastest Growth Since 2024 (Bloomberg)
Private-Sector Job Growth Cooled in January (WSJ)
With Jobs Data Delayed, Analysts Flock to Unofficial Data (WSJ)
Fed officials advocate pause as president presses for accommodation
Fed Governor Cook and Richmond Fed President Barkin both advocated prudence with labor markets relatively stable and inflation remaining above target.
President Trump indicated his expectation that the Federal Reserve will lower policy rates when Kevin Warsh succeeds Jerome Powell as Chair.
Comment:
Until Warsh is confirmed by the Senate - which appears unlikely until the DOJ investigation is resolved - Powell will remain as Chair. Miran, who resigned from his White House post on the Council of Economic Advisers, will also continue to serve as a Fed Governor until he is replaced on the Board by Warsh.
Sources:
Fed's Cook says it's time to 'wait and see' on rates (Reuters)
Trump says 'not much' doubt interest rates will be lowered, in NBC interview (Reuters)
Trump Says Warsh Would've Lost Fed If He Pledged Rate Hike (Bloomberg)
Fed's Cook Says Central Bank Must Maintain Inflation Credibility (Bloomberg)
Fed's Barkin Says We Have Been Bringing Rates Back Down Toward Neutral Levels (WSJ; 2/3)
Fed's Cook Focused on Inflation Risks as Greater Threat to Economy (WSJ)
Bank of England and European Central Bank expected to hold rates
The Bank of England and European Central Bank were widely expected to hold policy rates steady on Thursday while facing divergent inflation outlooks.
Update:
They did.
Sources:
Around the World
New START treaty lapse marks setback for anti-proliferation efforts
The New START treaty (i.e., Strategic Arms Reduction Treaty) lapsed on Wednesday. Although Russia had already withdrawn from monitoring, the agreement nominally restricted the number of nuclear armaments held by Russia and the US.
President Trump indicated a preference to include China in any new deal, however unlikely.
Sources:
China rebukes ruling canceling Panama Canal contracts
A high court ruling in Panama that voided the contracts of Hong Kong's CK Hutchison group to operate ports on the canal drew condemnation from China and further complicated a proposed sale to a US-led consortium.
Sources:
US extends Africa free trade agreement as EU resumes approval process
The White House temporarily extended the African Growth and Opportunity Act (AGOA) free-trade agreement until the end of the year.
Meanwhile, EU leaders resumed the process for effecting last year's trade agreement in principle with the US.
Sources:
Odds & Ends
DHS funding in limbo over ICE restrictions, accountability measures
Funding for the Department of Homeland Security and related agencies remained in limbo as Congress appeared at odds over proposed restrictions on ICE operations and enforcement.
The standalone stopgap funding bill runs until February 13.
Sources:
Democrats demand 'dramatic changes' for ICE, including masks, cameras and judicial warrants (AP)
Trump signs spending bill that ends four-day government shutdown (Reuters; 2/3)
Democrats Demand Strict Limits on ICE as Funding Deadline Nears (Bloomberg)
Democrats' Push to Curb ICE Powers Hits GOP Wall (WSJ)
Supreme Court denies appeal challenging California redistricting referendum
SCOTUS unanimously ruled to dismiss a challenge to California's redistricting referendum that passed last year. The decision was foreshadowed in a separate ruling concerning gerrymandering in Texas.
Comment:
Razor-thin margins in the House and competitive Senate races will put control of Congress up for grabs in the mid-terms.
Expect the administration and lawmakers from both parties to pursue every viable avenue to secure an advantage in critical elections that will decide the balance of power in Washington.
Sources:
Supreme Court allows new California congressional districts that favor Democrats (AP)
Legal fight escalates over Georgia, voting records as Trump says he ants to 'take over' elections (AP)
US Supreme Court allows pro-Democratic California voting map (Reuters)
Supreme Court Allows New California Voting Map for Midterms (Bloomberg)
Supreme Court Lets California Use New Congressional Map Favoring Democrats (WSJ)
Push to extend Affordable Care Act subsidies fades
Sponsors of a proposal to extend Affordable Care Act subsidies indicated that the initiative had lost momentum and was unlikely to see the Senate floor, let alone pass. The subsidies effectively lowered marketplace health insurance premiums.
Source:
Negotiators Say Talks to Restore ACA Subsidies Likely Dead (WSJ)
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