Trump Confirms Plan to Dismantle USAID: On Tuesday,
U.S. President Donald Trump reaffirmed his intention to dismantle the United States Agency for International Development (USAID),
a move reflecting his administration’s commitment to reducing government spending in alignment with the “America First” policy.
On Tuesday, U.S. President Donald Trump reaffirmed his intention to dismantle
the United States Agency for International Development (USAID),
a move reflecting his administration’s commitment to reducing government spending in alignment with the “America First” policy.
The agency is experiencing significant disruptions as the administration plans to merge it
into the State Department as part of a broader restructuring effort to downsize
its workforce and redirect its budget to Trump’s foreign policy priorities.
Trump also praised Elon Musk, who is leading these efforts,
He stated that he was doing a “great job” and justified the decision
by claiming there was “a lot of fraud” within the agency.
New Zealand’s Labor Market Shows Mixed Performance in Q4 2024
On Tuesday evening, Statistics New Zealand released labor market data for the fourth quarter of 2024,
which showed mixed results compared to market expectations.
According to the report, employment in New Zealand contracted by 0.1% in Q4,
a better-than-expected outcome than forecasts of a 0.2% decline.
This follows a 0.6% employment contraction in Q3, revised from an initial estimate of 0.5%.
Meanwhile, the unemployment rate rose to 5.1%, the highest since Q3 2020.
While this reading matched market expectations, it was worse than the 4.8% recorded in Q3.
France’s Industrial Production Contracts More Than Expected in December
Industrial production in France declined by 0.4% in December,
according to a report published by the National Institute of Statistics and Economic Studies (INSEE) on Wednesday morning.
This was worse than market expectations, which had projected only a 0.1% decline.
Additionally, the data showed a weaker performance than November,
which saw a 0.1% increase, revised down from the initial 0.2% estimate.
These figures highlight the French industrial sector’s ongoing challengesamid mounting economic pressures.
How to Buy IBM Shares: A Comprehensive Guide for Investors
IBM is one of the oldest and most reputable technology companies in the world,
offering attractive investment opportunities for those interested in the technology and artificial intelligence sectors.
In this guide, we will explain how to buy IBM shares easily, from researching the stock to executing the purchase.
IBM stock has several advantages that make it an attractive option for investors,
whether they are looking for long-term investments or short-term trading opportunities.
Here are the key analytical aspects of the stock’s advantages:
1.1. Financial Stability and Sustainable Profits
IBM has a long history of generating profits and distributing them to shareholders. It is one of the few technology companies that pay regular cash dividends, making it an ideal choice for investors seeking steady income from their investments.
1.2. Attractive Valuation Compared to Competitors
When comparing IBM stock to other technology companies such as Microsoft and Amazon, IBM often has a lower price-to-earnings ratio (P/E Ratio), which may indicate an investment opportunity at a reasonable price, especially for investors who prefer companies with stable values.
1.3. Growth in Innovative Sectors
Although IBM is traditionally known for its focus on infrastructure solutions, it is heavily investing in artificial intelligence and cloud computing through its Red Hat platform and Watson AI solutions. These investments may enhance the company’s growth in the coming years and increase its market value.
1.4. Moderate Price Volatility
Compared to other tech stocks that experience sharp fluctuations, IBM stock is relatively stable, making it a good option for investors who want to avoid high risks.
1.5. Strong Brand and Global Expansion
IBM has a broad customer base that includes major corporations and government institutions worldwide, ensuring stable cash flows and supporting future growth.
Final Assessment:
IBM stock is an attractive choice for investors seeking financial stability, sustainable profits, and expansion in emerging technologies.
However, it is essential to consider overall market performance and investment strategy before making a purchase decision.
Steps to Buy IBM Shares
2.1. Choosing a Suitable Trading Platform
To buy IBM shares, you will need a trading account with a reliable brokerage platform, such as Evest, which offers:
Low trading fees.
Access to the New York Stock Exchange (NYSE), where IBM shares are traded.
Analytical tools to help you make better investment decisions.
2.2. Opening a Trading Account
After choosing Evest as your broker, you will need to:
Register a new account by entering your personal information.
Provide the required documents (such as a passport or national ID).
Deposit funds into your account via bank transfer or available payment methods.
2.3. Researching and Analyzing IBM Stock
Before purchasing, it is advisable to analyze the stock using fundamental and technical analysis tools, such as:
Reviewing financial reports: Check the company’s revenue and annual profits.
Analyzing historical stock performance: Examine price movement over previous years.
Comparing IBM to competitors: Compare its performance with companies like Microsoft and Amazon to determine its market position.
2.4. Determining the Quantity and Purchase Price
After analyzing the stock, you can:
Buy at market price: If you want to purchase the stock immediately at the current price.
Place a limit order: To set a specific price at which you wish to buy the stock.
2.5. Executing the Trade and Monitoring the Investment
After executing the purchase, ensure that you monitor your investment by:
Keeping up with IBM news and quarterly reports.
Periodically reassessing the stock to decide whether to hold or sell.
Diversifying your investment portfolio to reduce risks.
Is Buying IBM Shares Right for You
Investing in IBM depends on your financial goals and investment strategy.
If you are looking to invest in a well-established tech company with stable profits and future growth potential,
IBM might be a suitable choice. However, it is always advisable to consult a financial advisor before making significant investment decisions.
Conclusion
Buying IBM shares is a straightforward process if you have the right tools and knowledge.
By choosing the right broker, conducting thorough research,
and making a well-informed trade, you can become a successful investor in one of the most influential technology companies in the world.
How to Buy IBM Shares: A Comprehensive Guide for Investors
Trump Suspends Tariffs on Canada and Mexico for 30 Days
U.S. President Donald Trump has announced a 30-day suspension of tariffs on Canada,
which were originally set to take effect at a 25% rate on Sunday,
according to Canadian Prime Minister Justin Trudeau.
In a post on X (formerly Twitter),Trudeau stated: “I had a good call with President Trump,” noting that the suspension came after
Canada pledged to stop the flow of the deadly drug fentanyl into the United States.
The decision followed a similar announcement regarding Mexico,
where the country’s president offered Trump a 30-day suspension of tariffs in exchange for deploying forces at the border to combat drug smuggling into the U.S.
This announcement came after a day of heightened tensions in both U.S. and global markets,
where fears over protectionist policies triggered a broad sell-off. However, markets recovered some losses:
China is preparing countermeasures against the United States after Trump’s administration imposed new tariffs on Chinese imports last weekend.
According to news reports released Tuesday morning, China is planning to impose tariffs on certain U.S. energy imports,
including coal and liquefied natural gas (LNG), with a 15% duty on these products.
Additionally, reports indicate that Beijing is considering imposing further tariffs on U.S. oil and agricultural machinery,
in response to Trump’s trade policies, which have targeted multiple countries—particularly China—in an effort to improve the U.S. trade balance.
The Federal Reserve
Chicago Fed President: Caution Needed in Cutting Interest Rates Amid Rising Uncertainty
Austan Goolsbee, President of the Chicago Federal Reserve, stressed that the central bank should exercise caution
when considering further interest rate cuts, given the rising uncertainty caused by Trump’s policies.
In a radio interview on Monday, Goolsbee explained that policymakers must act wisely
when determining the pace of rate reductions, highlighting the potential risk of inflation rebounding—as reported by Bloomberg.
He also emphasized that evaluating the Federal Reserve’s approach to the impact of tariffs remains a significant challenge, as it is difficult to distinguish whether inflation is rising due to stronger economic activity or if it is merely a temporary effect of escalating trade tensions.
Trump Suspends Tariffs on Canada and Mexico for 30 Days
The S&P 500 index managed to trim its losses during Monday’s session,
driven by growing investor optimism following the postponement of new U.S. tariff impositions.
Markets experienced sharp fluctuations amid ongoing concerns over the impact of trade tensions between the United States and its partners, particularly Canada and Mexico. However, reports suggesting potential negotiations to ease trade restrictions helped calm investor worries, leading some back into the market.
At the same time, the U.S. dollar remained stable against major currencies, while U.S. Treasury yields recorded a slight decline, reinforcing expectations that the Federal Reserve may intervene to support the economy if necessary.
Market Indicators
Markets remain on edge, awaiting any developments regarding U.S. trade policies, with investors looking for further statements from the White House on the possibility of renegotiating tariffs.
In this context, Victoria Greene, Wealth Manager at G Squared, commented: “The situation is constantly evolving. Our core belief is that many of these tariffs are temporary and could be eased through agreements and concessions from affected nations. We are closely monitoring developments and their effects on markets, corporate earnings, and the U.S. dollar.”
Trump’s Escalation
Some analysts believe that delaying tariffs reinforces the idea that Trump is using them as a negotiation tool, while also avoiding significant economic harm to American consumers.
However, his declaration of a trade emergency and the imposition of new tariffs on Canada, Mexico, and China represent the largest protectionist move by a U.S. president in nearly a century.
Tariff Impact
The biggest concern is whether the U.S. economy can withstand the effects of a potential trade war. This uncertainty has been reflected in the bond market, where short-term Treasury yields have risen, while long-term yields have declined, signaling investor worries about economic stability.
Young-Yoo Ma, of BMO Wealth Management, stated: “We believe tariffs are primarily a negotiation tool for President Trump, but it is difficult to determine whether they will remain temporary or become a lasting policy.”
He added: “Patience is key, and investors should seize opportunities carefully. Now is not the time for bold investment moves.”
Market Reactions
The S&P 500 declined 0.8%.
Auto, semiconductor, and heavy industry stocks saw some recovery but remained among the most affected sectors.
Defensive sectors gained traction as investors sought safe-haven assets.
The Nasdaq 100 dropped 0.8%, while the Dow Jones Industrial Average fell 0.3%.
The Wall Street volatility index (VIX) climbed above 18 points.
10-year U.S. Treasury yields remained largely unchanged at 4.53%.
The Bloomberg Dollar Index rose 0.1%.
The Mexican peso gained 1.8%, while the Canadian dollar strengthened 0.9%.
Commenting on the market situation, Jeff Rubin of Bernini Associates stated: “Given the current uncertainty, we are not making any drastic portfolio adjustments,
but we are also hesitant to inject new capital into the market until the situation becomes clearer.”
Tariff Delay Supports Markets
Investor Expectations
According to David Lefkowitz of UBS Wealth Management, tariff announcements have fueled market volatility, but he emphasized: “In our base-case scenario, we do not believe the Trump administration will take measures that significantly impact economic growth or corporate earnings.”
Trade Risks
David Kelly of JPMorgan warned that an ongoing trade war could lead to stagflation, increasing inflation and interest rates while negatively impacting economic growth and earnings.
Meanwhile, José Torres of Interactive Brokers stressed that trade stability is essential for sustaining economic growth, warning that escalating trade disputes could impact corporate revenues and profit margins.
Stock Movements
Goldman Sachs analysts predict that extended tariff measures could trigger a 5% decline in U.S. stocks in the coming months.
If tariffs persist, S&P 500 earnings could drop between 2% and 3%, potentially lowering stock valuations.
RBC Capital Markets analysts suggest that tariffs on Mexico, Canada, and China could lead to a 5% to 10% correction in the S&P 500 this year.
Fed Strategy
Michael Wilson, Chief Strategist at Morgan Stanley, noted that markets have not yet faced a real test regarding tariffs but warned that this perception could change over time.
Meanwhile, data from Goldman Sachs indicated that hedge funds continued selling U.S. equities for the fifth consecutive week, while retail investors bet that Trump would avoid an economic shock from aggressive tariffs.
Economic Outlook
Uncertainty continues to loom over markets, with the fate of stocks hinging on the next developments in the U.S. trade war with its key partners.
Investors Rush to the U.S. Dollar After Trump’s Tariffs: Wall Street banks, including Goldman Sachs and JPMorgan Chase,
see a significant opportunity to profit from buying the U.S. dollar,
even after President Donald Trump’s tariff policies increased the value of the currency.
According to forecasts, Goldman Sachs expects the dollar to surpass parity with the euro,
while JPMorgan anticipates the U.S. currency could reach 1.5 Canadian dollars for the first time in decades.
Most asset classes declined after Trump announced new tariffs on Canada, China, and Mexico,
which were set to take effect on Tuesday.
The dollarwas the biggest beneficiary.
While many traders had anticipated these tariffs since Trump took office,
his initially softened tone toward China had led to expectations that he might refrain from escalating tensions,
causing the dollar to dip briefly before rebounding strongly. Goldman Sachs strategists, including Dominic Wilson, wrote in a research note:
“Tariffs have a direct impact on exchange rates, unlike other asset classes,”
noting that the eurocould fall by 8%-10% if global tariffs are imposed.
The Dollar and U.S. Inflation
The dollar is gaining appeal as expectations rise that the trade war will boost U.S. inflation,
leading to higher interest rates from the Federal Reserve and strengthening the dollar’srole as a safe-haven currency. On Monday, the Canadian dollar hit its lowest level in over 20 years,
while the Mexican peso, the euro, and the Australian dollar all dropped to multi-year lows. Valentin Marinov, Head of G10 FX Strategy at Crédit Agricole, stated:
“The primary impact on the forex market is likely to come
from increased risk aversion amid growing concerns about global economic growth,”
adding that this would further support the dollar.
The Dollar as a Safe Haven and Currency Trades
JPMorgan recommends buying the dollar and yenagainst currencies most affected by tariffs,
such as the Canadian dollar and the euro.
The bank estimates that a 25% tariff could push the Canadian dollar to 1.58 per U.S. dollar,
while the U.S. dollar could reach 23.5 against the Mexican peso and 7.37 against the offshore yuan. Although the Eurozone was not directly targeted in Trump’s latest tariff announcement,
he reaffirmed that tariffs on the European Union were “definitely going to happen.”
Market Expectations and Dollar Movements
Goldman Sachs expects the dollar to maintain its strength against currencies such as the Chinese yuan,
as its safe-haven status enhances its appeal. The bank forecasts that the onshore yuan could fall to 7.5 per dollar. Meanwhile, Citistrategists are more cautious.
They expect short-term dollar strength but suggest that the trend could
reverse as markets begin to fully assess the impact of tariffs on the U.S. economy.
Expert Market Opinions
Bloomberg strategists point out that traders still view Trump’s tariffs as a short-term negotiation tactic,
giving the dollar further room to rise, and the more extended trade disputes persist. Ken Peng, Head of Asia Investment Strategy at CitiPrivate Bank in Hong Kong, commented:
“When the economic consequences start affecting the U.S., things may begin to reverse.
For now, I’d rather invest in market volatility than bet on a specific direction.”
At the same time, Canada has already responded with a 25% tariff on the U.S.,
while Mexico and China have vowed to take retaliatory measures.
The European Union has also pledged to “respond firmly” if the U.S. imposes additional tariffs.
The Future of the Dollar Amid Trade War
Eric Nelson, a macro strategist at Wells Fargo,
noted that markets might still be underestimating the seriousness of the tariff situation.
He suggested that Bloomberg’s U.S. dollar index could climb another 3%,
surpassing its 2022 highs if Trump continues to escalate threats. Nelson also predicted that a permanent 25% tariff on Canadian imports
could push the exchange rate to 1.7 CAD per USD,
with continued depreciation expected for the Mexican peso and Chinese yuan.
Investors Rush to the U.S. Dollar After Trump’s Tariffs
Australian Retail Sales Decline Less Than Expected in December: In the early hours of Monday,
the Australian Bureau of Statistics released retail sales data for December,
which came in better than expected despite showing a slight contraction.
Australian Retail Sales Decline Less Than Expected in December
In the early hours of Monday, the Australian Bureau of Statistics released retail sales data for December,
which performed better than expectations despite showing a slight contraction.
According to the data, Australian retail sales declined by 0.1% month-over-month in December,
while forecasts had anticipated a more significant contraction of around 0.7%.
This follows a revised 0.7% growth in November, initially reported at 0.8%.
Retail sales recorded 0.1% quarterly growth in the final quarter of 2024, compared to 0.5% growth in Q3.
Swiss Manufacturing Sector Continues to Contract, Reaching Its Lowest Level Since July
Data released by the Swiss Purchasing and Supply Management Association
on Monday indicated that the Swiss manufacturing sector continued to contract in January,
exceeding expectations and reaching its lowest level since July.
According to the report, the Swiss Manufacturing PMI fell to 47.5 in January, down from 48.4 in December,
performing worse than market expectations of an increase to 49.0.
The Purchasing Managers’ Index (PMI) is a leading economic indicator that reflects
The overall health of the Swiss economy is measured by measuring how quickly
companies respond to market conditions and provide valuable insights for purchasing managers on the general economic landscape.
Elon Musk: Working with Trump to Shut Down USAID
Elon Musk, co-chair of the U.S. Government Efficiency Department,
stated that he is working alongside President Donald Trump to shut down
the United States Agency for International Development (USAID) as part of the new Republican administration’s policy to reduce government spending.
Musk, the CEO of Tesla and SpaceX, revealed in a live audio broadcast
on his platform X, he has discussed the issue with Trump multiple times, and the former president has fully supported the initiative.
NBC News reported that during his downing of USAID,
Musk did not specify the legal grounds for shutting down approval or whether the White House
has the authority to make such a decision without Congressional approval.
Australian Retail Sales Decline Less Than Expected in December
Market Drivers and Trends: Investors and traders anticipate a week filled with significant economic events
that could shape global market trends. From Eurozone inflation indicators to U.S. employment reports and the Bank of England’s interest rate decision,
these factors could directly impact currencies, stocks, and precious metals. In this report, we will highlight the most important economic data and its potential market impact,
along with a technical analysis of gold, the U.S. dollar, stock indices, and major currency pairs.
Manufacturing PMI (January) – 17:45 GMT-United States
ISM Manufacturing PMI (January) – 18:00 GMT-United States
Tuesday, February 4, 2025
JOLTS Job Openings (December) – 18:00 GMT-United States
Wednesday, February 5, 2025 ADP Non-Farm Employment Change (January) – 16:15 GMT-United States
Services PMI (January) – 17:45 GMT-United States
ISM Non-Manufacturing PMI (January) – 18:00 GMT-United States
Thursday, February 6, 2025 Bank of England Interest Rate Decision (February) – 15:00 GMT-United Kingdom Initial Jobless Claims – 16:30 GMT-United States
Friday, February 7, 2025
Average Hourly Earnings (MoM) (January) – 16:30 GMT-United States
Non-Farm Payroll Report (January) – 16:30 GMT-United States
Unemployment Rate (January) – 16:30 GMT-United States
Gold reached a new all-time high last week, trading around $2,817,
as market tensions escalated due to fears surrounding tariffs and their impact on global inflation.
The metal closed around $2,797, and it is expected to continue its upward movement
this week if it remains stable above the $2,800 level, targeting $2,817, and potentially $2,845.
U.S. Dollar Index
The U.S. Dollar Index rebounded last week following the Federal Reserve’s decision to hold interest rates steady,
supporting the index.
From a technical perspective, if the indexbreaks above the 108.50 resistance level and closes higher,
the bullish momentum could extend toward 109.40.
However, if reversal price action appears around current levels, a downside correction could occur,
bringing the index back to test 107.70 before resuming its upward trend.
USDJPY (U.S. Dollar vs. Japanese Yen)
The pairsaw some gains toward the end of last week,
supported by a stronger U.S. dollar following the Fed’s rate decision.
However, the downside bias remains the dominant scenario,
given expectations that the interest rate gap between the two countries may narrow.
Technically, the pairis expected to see an upward correction toward 155.92 before resuming a new bearish wave targeting 153.22.
EURUSD (Euro vs. U.S. Dollar)
The pairresumed its downward movement as the dollar strengthened after the Federal Reserve’s rate hold,
combined with the European Central Bank’s rate cut.
Additionally, a bearish reversal pattern has formed on the 4-hour chart,
with the price breaking below 1.0370, supporting further declines toward 1.0268.
If this level is breached, the downward trend could extend toward 1.0183.
Dow Jones Index
Signs of weakness started to appear in the Dow Jones towards the end of last week,
as it failed to break above the all-time high of 45,055.
Reversal price action indicated a potential downward correction toward 44,000.
However, the indexmay resume its uptrend after this correction.
European Markets Decline Amid Trump’s Trade War Escalation and Threats Against the EU
European markets began their weekly trading with sharp declines, impacted by U.S. President Donald Trump’s decision to impose new tariffs on China, Canada, and Mexico, while escalating threats to impose additional tariffs on the European Union, increasing uncertainty in global markets.
The Stoxx Europe 600 index dropped 1.28% to 532 points, amid broad-based losses across most sectors.
The automotive sector led the declines, falling 3.5%, alongside drops of around 2% in the technology, industrial, and mining sectors. Among the affected companies, France’s Valeo, an automotive components manufacturer, plunged 6.70% to €10.10, while Renault fell 2.05% to €48.63.
In Germany, BMW shares declined 3.44% to €75.90, while Volkswagen lost 5%, dropping to €93.72, and Porsche fell 3.80% to €59.30.
These market declines occurred amid an escalating trade war, as Trump announced on Saturday a 25% tariff on Canadian and Mexican imports, along with a 10% tariff on Chinese goods, set to take effect on Tuesday.
In an interview with the BBC, Trump indicated that the EU could be the next target of his tariff policies, stating:
“They don’t import our cars, they don’t take our agricultural products, or almost anything at all,
while we take everything from them, from millions of cars to vast amounts of food and agricultural products.”
He added that tariffs on European imports could be imposed very soon,
though he did not provide a precise timeline, describing the move as “imminent.”
Europe
EU Warns of Strong Response
In response, the European Union condemned Trump’s tariff decisions on China, Canada, and Mexico,
warning that it will not stand idle if its exports are targeted.
Despite escalating rhetoric against the EU, Trump appeared more flexible toward the United Kingdom, suggesting that he could reach an understanding with Prime Minister Keir Starmer, citing the stable trade relations between the two nations.
Global Markets
Escalating Tensions Pressure Global Markets
This escalation comes amid a period of heightened market uncertainty, with investors fearing the potential consequences of protectionist policies on the global economy and supply chains.
As threats of further tariffs continue, markets remain highly volatile, with concerns growing over the possibility of a full-scale trade war that could significantly impact global economic growth.
European Markets Decline Amid Trump’s Trade War Escalation
Canada Responds to U.S. Tariffs: 25% Tariff Imposed on Products Worth 155 Billion Canadian Dollars: Canadian Prime Minister Justin Trudeau has imposed a 25% tariff on U.S. products
in response to the tariffs previously announced by U.S. President Donald Trump.
Canada Responds to U.S. Tariffs: 25% Tariff Imposed on Products Worth 155 Billion Canadian Dollars.
Canadian Prime Minister Justin Trudeau has imposed a 25% tariff on U.S. products
in response to the tariffs previously announced by U.S. President Donald Trump.
Trudeau made this announcement during a press conference,
where he clarified that the government would apply these tariffs
to products with a total value of 155 billion Canadian dollars.
Trudeau added that the tariff implementation will begin next Tuesday on goods worth 30 billion dollars,
and additional tariffs will be imposed on goods worth 125 billion dollars within 21 days.
ECB Governor Expects U.S. Tariffs to Impact Inflation, Interest Rates, and Weaken the Euro
Klaas Knot, a member of the European Central Bank’s Governing Council,
expressed his expectations that the new tariffs announced by U.S. President Donald Trump
will lead to higher inflation and interest rates in the United States,
which will likely weaken the euro.
These remarks were made during his Sunday statements.
Knot, who also serves as the Governor of the Dutch Central Bank,
stated in an interview with Dutch television that trade wars harm all involved parties.
He pointed out that the best economic response to the imposition of tariffs is to refrain from taking any countermeasures.
However, Knot predicted that the affected countries would inevitably respond to these measures, primarily driven by political considerations rather than economic ones.
Canada Responds to U.S. Tariffs: 25% Tariff Imposed on Products Worth 155 Billion Canadian Dollars.
Trump Imposes New Tariffs: Markets Shake, Tech Under Pressure: Financial markets experienced sharp volatility following U.S. President Donald Trump’s Imposes New Tariffs on China, Mexico, and Canada.
This move caused widespread disruptions in stock indices,
particularly as the increasing influence of technology weighed on markets.
The announcement comes at a time of growing concerns about a slowdown in the tech sector,
leaving investors in a state of cautious anticipation amid unexpected economic changes.
Trump’s Tariffs Sink U.S. Stock Indices After ‘Deep Seek’ Shock
Rapidly changing tariff news surprised traders across various asset classes on Friday,
breaking the deadlock fueled earlier by easing concerns over the tech sector.
The White House confirmed that President Donald Trump plans to impose tariffs on
China, Mexico, and Canada will start on Saturday, raising the dollar and causingstocks to decline.
The S&P 500 index gave up gains of nearly 1%, while the dollar surged,
recording its strongest weekly performance since November after confirming 25% tariffs on Mexico and Canada and 10% on China.
The U.S. government denied reports suggesting a one-month delay in implementation,
which briefly pushed the dollar lower.
The Canadian dollar fell by 0.2%,
while the Mexican peso remained relatively stable.
Meanwhile, Oilprices rose after Trump announced that tariffs would apply to crude oil.
Market Volatility Due to Tariffs
On Friday, President Trump stated that he would impose tariffs on a wide range of imports in the coming months,
including steel, aluminum, oil, gas,pharmaceuticals, and semiconductors.
This escalated his threats of new tariffs against trade partners. He also hinted that the U.S. might take action against the European Union.
Daniel Skelly, head of market research at Morgan Stanley, commented: “We warned of potential volatility linked to tariffs, and today, we see that reflected in the markets.”
He added: “Just like with the AI news on Monday, many questions remain unanswered,
and the landscape could change in the coming days.”
After a positive start, stock markets were affected by fears that a low-cost
AI model from the Chinese startup Deep Seek could impact the valuations of major tech companies.
Max Gokhman from Franklin Templeton Investment Solutions stated: “Bullish investors have done their best to hold on and push forward despite the disruptions this week,
but uncertainty prevents them from supporting stocks with confidence.”
He added: “As the weekend approaches, even those closest to the White House don’t have all the details,
so some bullish traders have opted for caution to avoid a potential storm.”
Meanwhile, the Bloomberg Dollar Spot Index rose 0.4%,
while the 10-year Treasury yield increased by two basis points to 4.54%.
Tech Stocks Performance
Tesla shares rose after the company projected a positive outlook for car sales despite challenges in 2024,
while Meta shares rebounded after initially declining after the announcement of the announcement of earnings.
Conversely, IBM’s stock jumped on strong results, while Microsoft’s fell due to slowing growth in its cloud computing business.
Elsewhere, SoftBank shares fluctuated following reports that the company is considering a $25billion investment in OpenAI.
The volatility in major tech stocks remains a significant concern on Wall Street,
as the performance of the S&P 500 is increasingly reliant on a small number of companies
an unprecedented trend in over 20 years.
Michael Hartnett from Bank of America noted that fewer
than one-third ofS&P 500companies have outperformed the index over the past two years.
From “Magnificent Seven” to “Languishing Seven”
Hartnett warned that big tech companies that have driven market gains since 2022 could soon become the “Languishing Seven,”
suggesting that investors might shift towards cheaper international stocks instead of chasing expensive U.S. equities.
He stated: “The American exception is now exceptionally expensive and concentrated in the hands of very few companies.”
According to Matt Maley from Miller Tabak+Co, recent developments could undermine expectations for tech earnings growth.
He explained: “While AI remains a positive force, it may not be as powerful as markets anticipated over the past six months.”
AI Hype and Its Impact on Markets
Matt Maley from Miller Tabak+Co believes that recent market developments this week
have somewhat dampened optimistic expectations regarding the growth of AI sector profits.
Maley explained: “We believe it won’t take long before the stock market needs to adjust to the reality that AI,
While still a positive factor, it may not be as strong as markets had anticipated over the past six months.”
A slowdown in demand for AI chips, along with the emergence of Deep Seek technology, AMD, Qualcomm, and Arm Holdings are expected to dominate the landscape as they release their financial results.
Meanwhile, Alphabet(Google) faces questions about reducing the costs of developing its AI tools
amid increasing competition from Deep Seekand low-cost AI technologies.
However, strong demand for cloud services is expected to support Alphabetand Amazon,
which remain among the most influential companies in the sector.
John Belton from Gabelli Funds stated: “Deep Seek will remain a key focus in the sector.
It has achieved significant engineering breakthroughs that could help other AI labs develop more efficient models.
However, many of the figures associated with these discoveries may be misleading.
This is more of an evolution than a groundbreaking revolution,
aligning with the natural progression of computing efficiency over time.
The Impact of ‘Deep Seek’ on Markets
The emergence of Deep Seek rattled markets earlier this week,
However, a Bloomberg Market Live Pulse survey showed that most investors expect only a limited impact on major tech players.
Among 260 investors surveyed, 88% believed that the new AI technology
which erased $784 billion in market value from S&P 500companies on Monday
will have little to no effect on U.S. tech giants in the coming weeks.
Retail investors continue to pour money into U.S. stocks,
injecting $8.1 billion into equities over the past week—the most significant inflow in two years, according to an analysis by J.P. Morgan.
Solita Marcelli from UBS Global Wealth Management stated: “The new low-cost algorithms are expected to enhance economic productivity,
supporting the broader stock market.
With a strong U.S. economy, growing earnings, lower borrowing costs,
and increased capital market activity, stocks may continue their upward trend through 2025.”
Trump Imposes New Tariffs: Markets Shake, Tech Under Pressure