Market Turmoil Ahead: Tariffs, Tech Earnings, and Interest Rate Decisions Shake Global Markets

The global financial markets are bracing for a week of significant events, as various factors ranging from new tariffs to major earnings reports and crucial interest rate decisions are set to impact trading activity.

Trump's Tariffs Trigger Market Jitters

President Donald Trump's decision to impose tariffs on imports from Canada, Mexico, and China has introduced a significant level of uncertainty. These tariffs, including a 25% levy on goods from Canada and Mexico and a 10% duty on Chinese imports, have fueled worries about escalating global trade tensions.

• The tariffs were implemented due to concerns about illegal immigration and fentanyl flowing into the U.S..
• Some economists suggest these measures could increase inflationary pressures in the U.S., potentially impacting the Federal Reserve's interest rate decisions.
• Stock markets declined on Friday due to anxiety over Trump's trade policies.
• Notably, energy products from Canada face a 10% levy, while wider tariffs on oil and natural gas are expected around February 18.

 

Oil Market Reacts

The oil market experienced a mixed week, with Brent and West Texas Intermediate crude benchmarks finishing lower due to concerns about fuel costs impacting global economic activity. However, Trump's announcement of potential wider tariffs on oil and natural gas caused a jump in prices during extended hours trading on Friday.

 

Key Economic Data: The Jobs Report

Investors will be closely watching the release of the January jobs report on Friday, which is expected to show 154,000 new jobs, a decrease from the 256,000 added in December. The unemployment rate is anticipated to remain at 4.1%, and average hourly earnings growth is expected to stay at 0.3%. These figures will influence the Federal Reserve's monetary policy decisions.

 

Big Tech Earnings and AI Concerns

The week is also packed with quarterly earnings reports from major technology companies, including Alphabet (Google) and Amazon.

• Analysts are keen to assess these companies’ artificial intelligence spending strategies, particularly following the emergence of a low-cost AI model from the Chinese start-up DeepSeek.
• DeepSeek claims their AI model has comparable performance to OpenAI's ChatGPT, but was built for about $6 million.
• Other tech firms such as Qualcomm, Arm Holdings, and Uber are also due to report earnings.

 

Weight Loss Drugmakers in Focus

The pharmaceutical sector is also under scrutiny, with Eli Lilly and Novo Nordisk, key players in the weight-loss treatment market, set to announce their earnings.

 

Bank of England Expected to Cut Rates

In other global economic news, the Bank of England is widely anticipated to cut interest rates during its policy-setting meeting this week. Economists predict a reduction in the benchmark rate to 4.5% from 4.75%, as the UK economy faces stagnation. Analysts also expect the Bank of England to indicate more rate cuts given weak growth, a loosening labor market, and a faster-than-expected drop in services inflation.