A Look Ahead: European and Global Markets

Overview

Markets in Europe are expected to proceed with caution as they anticipate U.S. President Donald Trump’s impending tariff decisions regarding Mexico and Canada.

Market Predictions

The Mexican peso and Canadian dollar are on track for weekly losses. European shares are anticipated to open lower, with EUROSTOXX 50 futures declining by 0.15% in the Asian session.

Currency Movements

Notably, the yen is predicted to achieve its best January performance in seven years, supported by expectations of forthcoming rate hikes from the Bank of Japan, contrasting the global trend of policy easing.

Technology Sector Developments

Technology firms are aiming to end the week positively after an earlier downturn caused by the low-cost AI model from Chinese startup DeepSeek. CEOs of Microsoft and Meta highlighted the importance of substantial AI investments for maintaining competitiveness. Nasdaq futures are up by 0.5%, buoyed by Apple executives’ strong sales growth forecasts.

Trump’s Tariff Threats

Trump reiterated his threat of 100% tariffs on BRICS nations, as well as the consideration of new tariffs on China, potentially affecting Lunar New Year celebrations in the second-largest economy.

Economic Indicators

Markets will also be receiving key inflation readings from Germany and France later today. The European Central Bank has indicated the possibility of further rate cuts, reflecting concerns over a weak euro zone economy and some progress against inflation. Additionally, the U.S. will release December’s core PCE price index, the Federal Reserve’s preferred inflation measure, which could offer insights into future monetary policy shifts.

Conclusion

Despite the persistent uncertainties, barring significant negative surprises in inflation data, the Fed is likely to maintain its prudent approach toward easing rates as suggested earlier this week.

Key Developments Influencing Markets:

• France preliminary CPI (January)
• Germany preliminary CPI (January)
• U.S. core PCE price index (December)

(Author: Rae Wee; Editor: Edmund Klamann)