The major assets had a wild ride as Trump’s surprise tariff moves rattled investor confidence, pushing stocks lower and fueling a dollar rally, while oil prices bucked the trend with gains on supply concerns.
How did the major assets trade the headlines on Thursday?
Let’s take a closer look:
Headlines:
- New Zealand ANZ Business Confidence for February 2025: 58.4 (56.0 forecast; 54.4 previous)
- Trump removes Chevron’s Venezuela oil license, threatening to remove about 240,000 barrels per day from global supply
- BOJ Gov. Kazuo Ueda thinks the “very strong uncertainty” on U.S. policies warrants a closer look from the central bank
- Swiss GDP Growth Rate for Dec. 2024: 0.2% q/q (0.4% q/q forecast; 0.4% q/q previous); 1.5% y/y (1.7% y/y forecast; 2.0% y/y previous)
- ECB January meeting minutes showed there was “a shift in the balance of (inflation) risks to the upside since December”
- Canada Current Account for December 31, 2024: -5.0B (-2.5B forecast; -3.2B previous)
- U.S. Durable Goods Orders for January 2025: 3.1% (2.2% forecast; -2.2% previous)
- U.S. Core Durable Goods Orders for January 2025: 0.0% (0.3% forecast; 0.3% previous)
- U.S. GDP Price Index QoQ 2nd Est for December 31, 2024: 2.4% (2.2% forecast; 1.9% previous)
- U.S. GDP Growth Rate QoQ 2nd Est for December 31, 2024: 2.3% (2.3% forecast; 3.1% previous)
- U.S. Initial Jobless Claims for February 22, 2025: 242.0k (225.0k forecast; 219.0k previous)
- U.S. Pending Home Sales MoM for January 2025: -4.6% (-0.9% forecast; -5.5% previous)
- Trump plans tariffs on Mexico and Canada for Tuesday, while doubling existing 10% tariffs on China
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
The major assets had a rough ride as President Trump’s tariff moves rattled investor confidence. He set 25% tariffs on Canada and Mexico to start March 4 (not April 2 as previously suggested), added a 10% tariff on Chinese imports, and threatened 25% levies on European cars and goods.
Stocks took a hit, with the S&P 500 dropping to 5,861.57 from an intraday high near 6,000 while the Nasdaq also slipped. Nvidia led the slide, falling 8.5% despite beating earnings estimates, as it flagged rising competition from China’s DeepSeek and its low-cost AI models. European markets mostly followed Wall Street lower, though the UK’s FTSE 100 managed a modest gain thanks to Rolls-Royce’s strong performance.
U.S. Oil prices bucked the trend, climbing to $70.50 after Trump revoked Chevron’s Venezuela license, potentially cutting 240,000 barrels per day from global supply. Gold retreated to $2,875 despite geopolitical jitters, while bitcoin traded around $84,400, partially recovering after dipping to $82,700.
The US 10-year Treasury yield rose to 4.285%, snapping a six-day decline as profit-taking emerged. Month-end flows likely added to the volatility as portfolio managers rebalanced ahead of Friday’s key PCE inflation data.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar showed strength throughout the trading day, with mixed performance across currency pairs as economic data and tariff announcements shaped market sentiment.
The Greenback started strong in the Asian session, benefiting from safe-haven demand after Bank of Japan Governor Ueda hinted at scrutinizing U.S. policy and as weaker-than-expected Australian capital expenditure data dampened risk appetite. The dollar then eased just before the European session opened, likely due to profit-taking and positioning ahead of European data releases.
USD/JPY surged in early European trading as rebounding US Treasury yields widened the yield gap, pressuring the yen. Swiss GDP data met expectations at 0.2% q/q, briefly impacting USD/CHF. Meanwhile, the British pound displayed notable strength, with optimism surrounding trade discussions between Trump and UK Prime Minister Starmer limiting the dollar’s gains against sterling.
The U.S. session brought the real fireworks. Trump’s tariff announcements sparked a strong dollar rally as he confirmed 25% tariffs on Canada and Mexico starting March 4, added a 10% tariff on Chinese imports, and threatened 25% levies on European goods. The Australian dollar took the hardest hit, reflecting its sensitivity to Chinese trade.
By the end of the day, the dollar index climbed 0.8% to 107.28, as traders repositioned ahead of month-end and braced for Friday’s PCE inflation data.
Upcoming Potential Catalysts on the Economic Calendar:
- Japan Housing Starts YoY for January 2025
- Germany Retail Sales MoM for January 2025
- U.K. Nationwide Housing Prices MoM for February 2025
- U.K. BoE Ramsden Speech
- Swiss Retail Sales YoY for January 2025
- Swiss KOF Leading Indicators for February 2025
- Canada GDP MoM for December 2024
- U.S. Goods Trade Balance Adv for January 2025
- U.S. Core PCE Price Index MoM for January 2025
- U.S. Personal Income & Spending for January 2025
- U.S. Wholesale Inventories MoM Adv for January 2025
- U.S. Chicago PMI for February 2025
Traders will be glued to Germany’s retail sales and Switzerland’s economic outlook report in Europe, hoping for signs of an economic boost to keep the market vibe upbeat.
Meanwhile, the U.S. session is set to bring the heat with key inflation data and spending reports that could sway the Fed’s next move. But the real wild card might be fresh tariff updates, which could either light a fire under risk appetite or send traders running for cover!
With month-end flows also in play, we could see some unexpected moves as big players adjust their portfolios, adding an extra layer of spice to the price action.
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