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Monday Afternoon Shake - Markets Update - 3 February 2025 - Global Stocks Decline Amid Trump Tariffs; Gold Peaks Near Record

Writer's picture: The Trade  Academy TeamThe Trade Academy Team

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Markets Update: Trump slaps 25% tariffs on Canada, Mexico; 10% on China. Global stocks drop as Canada, Mexico retaliate. US stocks open lower. Hang Seng drops flat after holiday, mainland markets shut.

 

Global Markets Roundup: 27 January 2025


FESX1! | Z1! | NI225 | NQ1! | ES1! | EURUSD | USDJPY | DXY | GOLD | CL1! | ZC1! | ZS1! HG1!


Equity Markets

President Trump has imposed tariffs of 25% on imports from Canada and Mexico, and 10% on goods from China. These actions have precipitated a decline in global market indices, with Canada and Mexico retaliating. Consequently, U.S. markets opened lower. The Hang Seng index remained flat post-holiday, while mainland markets were closed. Wall Street experienced a downturn on Monday due to the global selloff spurred by concerns that President Trump's tariffs are the precursor to a global trade war that could impede economic growth. The U.S. S&P 500 index fell nearly 1.5%, and the Nasdaq declined by 1.8%. The Russell 2000 index, which is seen as a major beneficiary of Trump's policies, decreased by almost 1%. The United States implemented tariffs of 25% on Mexican and most Canadian imports, and an additional 10% on Chinese goods, effective from Tuesday. In Europe, the STOXX 600 index experienced a 1.3%, marking its largest one-day decline this year. Automakers in the region, who are particularly vulnerable to trade duties, saw a decline of more than 3%, while technology shares fell by over 2%. The UK's FTSE 100 index decreased by 1.4%.


The Cboe Volatility Index, known as Wall Street's "fear gauge," surged to its highest level since December 20, before stabilizing around 18.84. Overnight derivative market activities indicated that traders were unprepared for the swift retaliations following Trump's tariff announcements. While volatility levels had moderated during European trading, many investors remained cautious, awaiting further clarity in the afternoon session.


Currency Movements

In currency markets, The Mexican peso (USDMXN) reached its lowest point in nearly three years at 21.2882 per U.S. dollar and was last stable at 20.679. The Canadian dollar (USDCAD) similarly slumped to 1.462 per U.S. dollar, a level not seen since 2003. The Australian dollar (AUDUSD) hit a five-year low, and the New Zealand dollar (NZDUSD) fell to its lowest level since October 2022. These two currencies are often used as liquid proxies for the Chinese yuan. The euro EURUSD plunged by as much as 2.3% to $1.0125, the lowest since November 2022, as investors braced for tariffs on Europe from the Trump administration. It was last down 0.62% against the dollar at $1.0298. Over the weekend, Trump announced that tariffs on the European Union would proceed, but did not specify a timeline. The U.S. dollar added as much as 1.1% to 0.9210 per Swiss franc (USDCHF), the highest since last May, before trading at 0.9115. The British pound (GBPUSD) fell by 0.14% to $1.2378. Conversely, the Japanese yen USDJPY) remained resilient, with the dollar sliding 0.4% against the yen to 154.6. The dollar index (DXY), which measures the U.S. currency against six others, stood at 108.87, having touched a three-week high of 109.88 in early trading. Bitcoin (BTCUSD) was at $98,255.3, sliding below $100,000 to its weakest level in nearly three weeks.


Commodities

In the commodities market, oil prices experienced an uptick, with U.S. Texas Intermediate crude increasing by $1.31 to $73.82 per barrel and Brent crude futures rising by 80 cents to $76.46 per barrel, as investors assessed the potential impact of tariffs on global energy markets. Additionally, the OPEC+ ministerial meeting on Monday updated its list of secondary sources used for monitoring member output, choosing to exclude the U.S. Energy Information Administration. Gold rose to $2,820 per ounce in February, a new record high, amid a wave of looser monetary policy from major central banks while the market assessed the impact that unclear trade policy from the US may have in the global economy. In soft commodities, arabica coffee futures hit a record high, rising 2.2% to around $3.86 a pound in midday European trading, peaking at $3.88 earlier. Cocoa futures recovered to over $11,300 per tonne from a low of about $11,092 on January 31st due to improved soil conditions in West Africa. Chicago corn, wheat, and soybeans declined on Monday after President Trump imposed tariffs on Canada, Mexico, and China, raising trade war concerns. Most active corn fell 1.6% to $4.74-1/4 a bushel, wheat dropped 1.0% to $5.53-3/4 a bushel, and soybeans decreased 0.7% to $10.34-3/4 a bushel.


Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.



 

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team

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