
Markets Update: Trump's tariff threat on Mexico and Canada starting February 1 impacts sentiment. Investors remain wary of additional policy developments. The dollar rebounds significantly, influencing the Mexican peso and Canadian dollar.
Global Markets Roundup: 21 January 2025
FESX1! | Z1! | NI225 | NQ1! | ES1! | EURUSD | USDJPY | DXY | GOLD | CL1! | ZC1! | ZS1! HG1!
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Global markets responded with caution to Donald Trump's presidency on Tuesday in moves that were highly sensitive to headlines over the newly sworn-in president's plans for trade relations and tariffs in particular. U.S. markets were closed for a holiday on Monday, so the first reactions to Trump's return to the White House were felt during Asian trade on Tuesday, with European futures pointing to a lower open. Just as investors anticipated a delay in Trump's implementation of tariffs following a brief mention of the topic in his inauguration speech, the U.S. president stated shortly after that he was considering imposing 25% tariffs on Mexico and Canada as soon as Feb. 1. This led to the Mexican peso sliding 1% against the dollar while the Canadian dollar fell to a five-year low of C$1.4515. Trump also mentioned his intention to reverse the U.S. trade deficit with the European Union, either through tariffs or increased energy exports. European carmakers will be monitored after Trump revoked a 2021 executive order signed by his predecessor that aimed to ensure half of all new vehicles sold in the United States by 2030 were electric. Trump's tariff comments quickly reversed gains in global stock markets and led to a strong rebound of the greenback in choppy trade.
U.S. stock futures adjusted their earlier gains, leaving Nasdaq futures flat and S&P 500 futures 0.1% higher. Japan's Nikkei similarly fluctuated between losses and gains and was last up 0.13%. Trump's plans for significant import tariffs have been a key focus for financial markets, with concerns that such policies will increase inflation and heat up the U.S. economy, boosting the dollar and impacting bonds. Some investors had expected immediate tariff actions upon Trump's office re-entry, leading to a brief relief rally across stocks and U.S. Treasuries due to the lack of immediate measures. The benchmark 10-year U.S. Treasury yield was last 7.1 basis points lower at 4.54%. Yields move inversely to bond prices.
In China, stocks were volatile as investors tried to gauge the impact of Trump's potential tariffs on the world's second-largest economy. While he has threatened tariffs of up to 60% on imports of Chinese goods, the absence of immediate action left markets cautious. The CSI300 blue-chip index last traded 0.13% higher, while the Shanghai Composite Index eased 0.08%. Hong Kong's Hang Seng Index fared better, rising 0.79%, which helped lift MSCI's broadest index of Asia-Pacific shares outside Japan, which was up 0.34%.
In currencies, the dollar DXYÂ regained its losses from earlier in the session and moved away from a two-week low. The euro EURUSDÂ slid 0.3% to $1.0385, while sterling weakened 0.32% to $1.2290. The onshore yuan maintained some of its overnight gains and last stood at 7.2781 per dollar, while its offshore counterpart eased 0.2% to 7.2801. Elsewhere, Trump's new crypto token declined 20% to $35.27 on Tuesday after having peaked at more than $10 billion in market value at the start of the week. Bitcoin dipped 0.08% to $102,460.68, moving away from a record high hit on Monday. EURUSDÂ | USDJPY | AUDUSD | DXY | NZDUSD
In commodities, oil prices were steady as investors considered Trump's plan to maximize U.S. oil and gas production by declaring a national emergency. Brent crude futures were flat at $80.1 a barrel, near a one-week low. U.S. West Texas Intermediate crude futures fell 0.8% to $77.24 per barrel from Friday's close, with no settlement on Monday due to a U.S. public holiday. Spot GOLD rose by 0.6% to $2,722.83 per ounce, marking its highest point since November 6 and approaching the record high of $2,790.15 established in October.
In agricultural commodities, white sugar futures on the ICE exchange, serving as a global benchmark, fell to $470.20 per ton earlier, marking their lowest point since September 2021. They later settled down 0.9% at $474.30, with year-to-date losses exceeding 5%. Raw sugar futures did not trade due to a U.S. holiday, but last closed 1% lower at 18.22 cents per pound on Friday. London cocoa settled up 0.6% at $9,004 per ton, while robusta coffee increased by 2.7% to $5,143 per ton. The leading corn contract on the Chicago Board of Trade (CBOT) ZC1! rose by 1.03% to $4.89 per bushel, marking its highest point since December 8, 2023, following a long weekend. The exchange was closed on Monday due to the Martin Luther King Jr. Day holiday. CBOT soybeans ZS1! increased by 1.28% to $10.47 per bushel. Wheat ZW1! climbed 1.76% to $5.42-2/8 per bushel. BRN1! | CL1! | GOLD | HG1! | KC1! | RC1! | CC1!
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