Graphic: Take Five: The big Trump tariff countdown

MAG Silver

31/01/2025 08:47

Jan 31 (Reuters) - 
    President Donald Trump's tariff deadline is looming large,
the U.S. reports jobs data and markets are gauging the new AI
landscape ahead of major tech firms reporting. 
    The Bank of England has an interest rate decision to make,
and lenders in Europe also publish their results. 
    Here's your guide to the week ahead in global markets from
Kevin Buckland in Tokyo, Saqib Ahmed and Lewis Krauskopf in New
York, and Tommy Wilkes and Amanda Cooper in London.
      
    1/T DAY 
    From bond investors and currency traders to Fed officials
and foreign powers - everybody wants to know how serious Trump
is about tariffs, and how severe they will be. 
    Saturday could be the best indication so far, when Trump has
promised to slap neighbours Canada and Mexico with 25% levies
until both illegal migrants and the drug fentanyl stop crossing
their borders. In scope for tariffs are a combined trillion
dollars of U.S.-bound shipments a year. 
    Canada is hoping to head off any action, launching a
fentanyl crackdown, while Mexico scored the biggest fentanyl 
bust in its history in December.
    An arguably more interesting case is China. It's anyone's
guess if mooted 10% tariffs are also on the cards for Saturday.
The White House reiterated it's still seriously considering
this, despite Trump's comments he didn't really want to use
tariffs with China following a "friendly" phone call with Xi
Jinping.

    2/SHOULD I STAY OR SHOULD I GO?
    The monthly U.S. jobs report due on Feb. 7 comes as
investors assess the prospects for further interest rate cuts
and how dramatic new Trump administration policies could reshape
the labour market. 
    December's blowout jobs report raised doubts about whether
the Fed would have room to ease monetary policy further and sent
Treasury yields shooting higher. Encouraging inflation data did
calm market fears, but a hot January jobs report could change
all that.
    Fed Chair Jerome Powell said he is in no rush to cut rates
again until inflation and jobs data make it appropriate.
    The big unknown though is Trump's labour market agenda,
including an immigration crackdown and plans to slash the
federal workforce, with the White House offering 2 million
federal employees financial incentives to quit. 
    
    
    3/TECH-TONIC SHIFTS
    Investors have long speculated about what might eventually
slow the AI-investment steamroller and now have a new
perspective to consider: The emergence of China AI sensation
DeepSeek, which has overturned assumptions about the computing
power and investment needed to create state-of-the-art models.
    This shift pummelled Nvidia's stock, inflicting a record
loss in market value. But DeepSeek is also challenging the
broader dominance of U.S. technology, raising questions about
the competitive advantages of the top seven tech stocks, dubbed
the Magnificent Seven.
    With upcoming earnings reports from Mag 7 members Alphabet
 GOOGL.O  on Tuesday and Amazon  AMZN.O  on Thursday, investors
will have the chance to determine whether recent AI market
volatility is a warning of future challenges or an opportunity
to reinvest in this rapidly growing sector.
    
    4/IN FOR A SQUEEZE
    European bank earnings pick up pace in the week ahead, with
French lenders BNP Paribas  BNPP.PA , Societe Generale  SOGN.PA 
and Credit Agricole  CAGA.PA , Switzerland's UBS  UBSG.S  and
Spain's Santander  SAN.MC  all reporting fourth-quarter numbers.
    Most lenders are expected to have still wrung enough extra
cash out of higher interest rates - helped by soaring investment
banking revenues - to boost their profits and keep a
two-year-long share price rally rolling on. Investors will
listen for any hints that a recent burst of deal-making has
further to run.
    Still, challenges loom. Falling interest rates mean pressure
on the difference between what banks earn on loans and what they
pay on deposits, and there is economic weakness at home just as
the U.S. economy powers ahead.
    Germany's Deutsche Bank  DBKGn.DE  gave some cause for
concern when it reported a sharp drop in profits and ditched a
key goal on costs, sending its shares lower. 
    
    5/DECISION TIME 
    The Bank of England meets on Thursday to set interest rates.
Markets aren't quite fully pricing in a quarter-point cut, but
economists seem to think that is the likely outcome. 
    UK data is weakening - multiple measures of employment show
cracks appearing in the labour market, and consumer spending
unexpectedly shrank in the key holiday shopping period. Growth
flatlined in the third quarter of 2024 and the BoE expects the
same in the last one. 
    Several banks see the British economy struggling to expand
by even 1% this year, in spite of finance minister Rachel
Reeves' plans to revitalise growth. 
    And there's the matter of the bond market turmoil earlier
this month, which pushed the government's 10-year borrowing
costs to their highest since 2008. Gilt yields have since
retreated, but remain uncomfortably above 4.5% - more than any
G10 economy bar New Zealand. 
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
America's biggest trade partners face a nervy wait as Trump
tariffs loom    https://reut.rs/3WvnvE2
Eyes on first US jobs report in 2025 after Fed paused rate cuts 
  https://reut.rs/3PYvo1a
The Magnificent Seven versus the market    https://reut.rs/3CxtSQM
European banks outperform    https://reut.rs/4hDBC2C
Bank of England expected to cut at least twice this year    https://reut.rs/4hcn61R
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 (Graphics credits to Sumanta Sen, Vineet Sachdev, Prinz
Magtulis and Kripa Jayaram
Compiled by Karin Strohecker
Editing by Frances Kerry)