Stocks Struggle Amid Tariff Tensions, Investors Look to Powell and Inflation Data
Global markets are grappling with uncertainty as news of US tariffs on steel and aluminum sparks caution among traders. The latest developments have cast a shadow on sentiment ahead of testimony from Federal Reserve Chair Jerome Powell and key US inflation data this week.
Tariffs Weigh on Stocks
S&P 500 and Nasdaq 100 futures have retreated after President Donald Trump's announcement of tariffs on US imports of steel and aluminum. Europe's Stoxx 600 index has been held back by declines in mining and travel stocks, while Asian stocks have also fallen.
Gold Hits Record High, Dollar Strengthens
Gold has touched a fresh record high, while the dollar has maintained gains from Monday. Treasury yields have risen, reflecting investors' uncertainty about the potential impact of Trump's actions on global trade, corporate earnings, and inflation.
Powell's Testimony and Inflation Data in Focus
Investors will be closely watching Powell's testimony before Congress this week for insights into the Fed's monetary policy stance. Expectations for inflation over the next year and three years remained unchanged in January, according to results from the New York Fed's Survey of Consumer Expectations. However, preliminary inflation data for February will be released on Wednesday, providing the latest update on price pressures.
UK Monetary Policy
In the UK, Bank of England policymaker Catherine Mann voted for a significant half-point interest rate reduction at last week's meeting, citing concerns about a weakening economy. The pound initially weakened but has since regained some ground.
Oil and Gold Advance
Oil prices have risen from near their lowest levels this year, supported by concerns over a potential supply disruption from Russia. Gold has soared about 11% in 2023, setting successive records, as investors seek safe-haven assets amid geopolitical and trade uncertainties.
Corporate Highlights
* Coca-Cola Co.: Profit exceeded Wall Street expectations as consumers paid higher prices for the company's beverages.
* Travelers Cos Inc.: Estimated catastrophe losses of $1.7 billion pretax related to California wildfires.
* BP Plc: Pledged major changes after reporting a sharp drop in profit, seeking to reverse a period of underperformance.
* UniCredit SpA: Failed to impress investors with plans to return more money in coming years amid ongoing M&A ambitions.
* Kering SA: Shares rose on better-than-expected profit and signs of stabilization at Gucci.
Key Economic Events This Week
* Tuesday: Fed Chair Powell testifies to Senate Banking Committee
* Wednesday: US CPI data
* Thursday: Eurozone industrial production
* Friday: US retail sales, industrial production, business inventories
Market Movements
* Stocks: S&P 500 and Nasdaq 100 futures down, Stoxx 600 and MSCI World Index little changed
* Currencies: Dollar index and euro steady, pound and yen slightly lower
* Cryptos: Bitcoin and Ether higher
* Bonds: Treasury yields higher
* Commodities: Oil up, gold down