A Look at the Day Ahead in European and Global Markets by Tom Westbrook

Gold Market Movements

Gold made a foray towards the $3,000-an-ounce mark in the Asia session overnight, touching $2,942, serving as markets’ release valve for the unpredictability of Donald Trump.

Central banks have been significant buyers for months, along with investors seeking safety. Concerns about U.S. tariffs on gold have also triggered a scramble to evacuate gold from London vaults and transport it across the Atlantic.

Stock Market Reaction

Stocks broadly steadied on Tuesday after Trump suggested he might exempt Australia from steel tariffs following a call with Australia’s Prime Minister. This reinforced investors’ belief that negotiations are possible.

Trump noted that the U.S. has a trade surplus with Australia because “they buy a lot of airplanes. They’re rather far away and they need lots of airplanes.”

He has pledged to impose reciprocal tariffs on various countries within the next two days.

Federal Reserve Focus

On Tuesday, the markets will also be attentive to Fed Chair Jerome Powell’s testimony on Capitol Hill, where he is expected to discuss inflation and tariffs.

Powell is scheduled to appear over two days, coinciding with the release of consumer price data for January. Markets have lessened their expectations for rate cuts this year to just 38 basis points.

EV Market Developments

A significant shakeout unfolded among electric vehicle stocks on Tuesday. China’s BYD (SZ:002594) has begun offering advanced autonomous driving features on most of its models, with prices as low as $9,555, undercutting competitors like Tesla (NASDAQ:TSLA).

Leapmotor (HK:9863), a Chinese partner of Stellantis (NYSE:STLA), launched a new EV with smart driving technology priced under 150,000 yuan ($20,535).

Tesla shares fell 3% to a two-month low, while shares in Chinese automakers Xpeng (NYSE:XPEV) and Geely Auto (HK:0175) plummeted in Hong Kong on Tuesday. However, BYD’s Hong Kong shares surged over 4% to a record high.

Key Developments Affecting Markets on Tuesday

• Earnings: BP (NYSE:BP), Banco BPM
• Speeches: BoE’s Mann and Bailey
• Jerome Powell Testifies to the Senate Banking, Housing and Urban Affairs Committee