Market News 04 FEB
Markets Under Pressure: Tariff Threats and Investor Reaction
The primary factor behind the decline was the U.S. administration's announcement of new tariffs. President Donald Trump imposed 25% tariffs on Canada and Mexico and 10% tariffs on China. These measures raised concerns about increasing trade tensions and a potential global economic slowdown. Goldman Sachs warned of a possible 5% drop in the stock market, while RBC Capital Markets estimated potential losses of 5–10%.
However, after Mexico’s president announced that the U.S. would delay tariffs on Mexican goods for one month, the market partially recovered. Additional support came from strong ISM U.S. reports on manufacturing and construction spending.
Federal Reserve Actions: Uncertainty in Monetary Policy
Statements from Federal Reserve officials were mixed: Atlanta Fed President Raphael Bostic stated that it was necessary to wait before making another rate cut. Boston Fed President Susan Collins indicated that the Fed would not react to tariff changes until there were signs of sustained inflation. Currently, markets estimate a 14% probability of a 25-basis-point rate cut at the next FOMC meeting on March 18–19.
Corporate Reports: Investor Focus on the Tech Sector
Earnings season continues, with investors eagerly awaiting reports from major tech companies this week:
Alphabet and AMD – Tuesday,
Qualcomm – Wednesday,
Amazon – Thursday.
According to Bloomberg Intelligence, S&P 500 earnings for Q4 may rise by 7.5% year-over-year, marking the second-largest quarterly increase in the past three years.
International Markets: Declines Amid Global Risks
Euro Stoxx 50 fell 1.30%.
Japan’s Nikkei 225 dropped 2.66%.
China’s Shanghai Composite remained closed due to the Lunar New Year holiday.
Bond Market Reaction
U.S. bond yields showed mixed movements: 10-year bond yield fell by 3 basis points to 4.54%. 2-year bond yield rose by 3 basis points to 4.27%.
Sectors and Companies: Winners and Losers
The biggest losses were seen among companies reliant on imports from China:
Apple (AAPL) dropped more than 3%, leading losses in the Dow Jones.
Dell Technologies (DELL) fell over 2%.
PDD Holdings (PDD) declined more than 5%, leading losses in the Nasdaq 100.
Automakers were also hit by tariff concerns:
Tesla (TSLA) dropped more than 5%.
General Motors (GM) declined more than 2%.
Ford (F) fell 1%.
Aptiv Plc (APTV) and Autoliv (ALV) both declined over 2%.
The healthcare sector showed gains amid the broader market sell-off:
Molina Healthcare (MOH) rose more than 4%.
Elevance Health (ELV) climbed more than 2%.
AbbVie (ABBV) gained 3% after Morgan Stanley raised its price target to $239.
Forecast and Expectations
On Tuesday, key macroeconomic data releases are expected:
Job openings for December (previous value – 8.098 million).
December manufacturing orders (forecast -0.3%).
Additionally, markets will continue to monitor corporate earnings reports and Federal Reserve comments regarding future interest rate policy. Key risks remain tied to trade tariffs and potential retaliatory measures from China and Europe.
In the near term, investors should consider geopolitical risks, macroeconomic data, and key quarterly reports that may impact stock market trends.