📆 Monday, February 10
► European markets opened poorly but saw sharp dip buying, with the Stoxx 600 rising 0.5%, following seven consecutive week of gains, the longest streak since March 2024. Gains were led by BP (+7.1%), after activist investor Elliott Management disclosed a stake in the company. However, mining stocks underperformed, as Trump’s announcement of a 25% tariff on steel and aluminum imports weighed on sentiment. Germany’s DAX (+0.65%) and France’s CAC 40 (+0.3%) moved higher despite growing concerns over a potential EU response to US tariffs, with German Chancellor Olaf Scholz, who will soon be voted out of office, stating that the EU is “ready to respond within an hour” if tariffs on European goods are imposed.
► US stock futures pointed to a rebound, with S&P 500 and Nasdaq 100 futures rising 0.55% and 0.75%, respectively, after Friday’s sharp pullback that came for most investors as a surprise. Investors appeared to shrug off Trump’s tariff threats, viewing them as a negotiation tactic rather than an imminent economic threat. Treasury yields remained steady, with the 10-year yield hovering near 4.49%. Market focus will now shift to Federal Reserve Chair Jerome Powell’s semi-annual testimony before Congress, as well as upcoming US CPI data (Wednesday), which could influence the Fed’s rate-cut timeline. In addition, Trump hinted at further “reciprocal tariffs” on all countries, set to be announced on Tuesday or Wednesday.
► Asian markets were mixed, reacting to Trump’s tariff announcement and China’s retaliatory measures, which included tariffs on US coal and agricultural equipment. Japan’s Nikkei 225 closed lower at 0.12%, despite the JPY weakening to 152/USD, reversing recent gains. China’s Shanghai Composite rose 0.56%, supported by higher consumer spending post Lunar New Year and inflation rising to 0.5%, its highest level in five months (which is positive as it reduces concerns of deflation). Meanwhile, Hong Kong’s Hang Seng Index surged 1.84%, marking its third straight session of gains, driven by optimism in China’s tech sector.
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