Global Markets: Markets brace for Trump tariffs, US inflation data

Federated Hermes

31/01/2025 10:17

(Updates after European markets open)

        * 
      US futures rise after Apple's positive sales forecast 
    

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      Dollar edges higher, gold hits record on tariff worries
    

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      US inflation data due later in the session
    

  
    By Iain Withers and Ankur Banerjee
       LONDON/SINGAPORE, Jan 31 (Reuters) - Global stocks
steadied on Friday after a volatile week due to the emergence of
a low-cost Chinese artificial intelligence model, while
investors braced for the threat of U.S. tariffs on Canada and
Mexico as early as Saturday.
    Relatively strong sales forecasts from Apple overnight
helped support market sentiment. European stocks  .STOXX  were
up 0.4% in early trading, while Wall Street futures were up
between 0.4 and 0.7%.  EScv1   NQc1 
    Technology stocks across the globe stumbled badly on Monday
as investors reckoned with Chinese company DeepSeek's AI model,
with shares of high-profile tech names such as Nvidia  NVDA.O ,
and Oracle  ORCL.O  plunging. 
    Tech stocks have since recouped some of their losses, with
the CEOs of Microsoft and Meta defending their massive spending
to stay competitive in the AI field.
    The looming threat from U.S. President Donald Trump of 25%
tariffs on Mexico and Canada is also firmly in investors' sights
and has helped lift the dollar, push gold prices to a record
high and pressured the Mexican peso and Canadian dollar.  FRX/ 
 GOL/   MXN=   CAD=  
    "There is big market complacency in terms of the manner that
the market could digest the tariffs," said Michael Nizard,
multi-asset chief investment officer at Edmond de Rothschild.
    Markets are underpricing the potential risks of Trump's
tariffs and Europe could well be next in his sights, he added.
    U.S. inflation data due later on Friday will also be
scrutinised for clues as to the future path for interest rates,
after the Federal Reserve held rates steady on Wednesday.
    Data on Thursday showed U.S. economic growth slowed in the
fourth quarter, but remained robust enough for investors to
expect the Fed to lower rates only gradually this year. 
    The U.S. dollar index was last up 0.1% on the day and was on
track for a 0.7% weekly gain.  =USD 
    The European Central Bank cut interest rates on Thursday as
expected, while the market is betting the Bank of England will
follow suit next week. The euro and sterling were both down
slightly on Friday.  EUR=   GBP= 
    In Japan, the yen  JPY=EBS  was last at 154.71 per dollar.
Expectations of further rate increases from the BOJ this year
have recently boosted the yen. Deputy Governor Ryozo Himino said
on Thursday the BOJ will continue to raise rates if the economy
and prices move in line with the central bank's forecasts.
    In commodities, gold  XAU=  rose to hit a record $2,800.99
and was last flat on the day.  GOL/  
    Brent crude futures  LCOc1  slipped 0.3% to $76.7 a barrel.
U.S. crude futures  CLc1  dipped 0.2% to $72.62 a barrel.  O/R  
  
    Stock markets in mainland China, Hong Kong and Taiwan
remained closed for the Lunar New Year. The MSCI broadest index
of Asia-Pacific shares outside Japan  .MIAPJ0000PUS  slipped
0.1%, but was still on course for about a 1% gain this month.   

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GRAPHIC-Spot gold price in USD per oz    https://reut.rs/42BwzeK
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 (Reporting by Iain Withers in London and Ankur Banerjee in
Singapore, Lawrence Delevingne in Boston and Amanda Cooper in
London; additional reporting by Anjana Anil in Bengaluru;
editing by Emelia Sithole-Matarise, Jane Merriman, Lisa
Shumaker, Diane Craft, Gerry Doyle and Mark Heinrich)
 ((ankur.banerjee@thomsonreuters.com;; Mobile - +65 8121 3925;))