Source: Wall Street News

The US economy shows more signs of weakened consumer demand. Due to persistently high interest rates and severe weather, new home sales in the US fell to a three-month low in January. As growth expectations fade and inflation concerns remain high, fears of stagflation in the US have intensified, and expectations for interest rate cuts have risen again. A series of weak economic data has led the US bond market to bet that the Federal Reserve will soon shift from worrying about inflation to worrying about slowing economic growth, driving the 10-year US Treasury yield down for the sixth consecutive day to its lowest point of the year.

In the context of weak consumer confidence data in the US, the European market has demonstrated relative resilience. Benefiting from news of a mineral agreement reached between the US and Ukraine, as well as strong earnings reports from several European companies, European stocks have reached new highs, with defense stocks seeing widespread increases. According to CCTV, the Ukrainian Prime Minister stated that the Ukrainian government has approved signing a mineral framework agreement with the US. Analysts have said this agreement is seen as a positive signal for easing geopolitical tensions, progressing faster than expected, boosting investor confidence.

Tariff threats are intertwined with tax reform plans. Earlier, the US House of Representatives narrowly passed a $4.5 trillion tax cut plan proposed by Trump, and this budget resolution has been sent to the Senate, where Republicans are expected to push it forward quickly. Analysts have stated that this mainly benefits US companies, with expectations for less regulation and tax cuts, elevating optimistic sentiment, which led to a rise in the dollar, US stocks, and Treasury yields, along with a temporary increase in related European assets.

Subsequently, during the initial remarks at his first cabinet meeting of the second term, Trump was asked when tariffs would be imposed on Canada and Mexico. He stated, "April 2, applicable to all," leading the market to believe the President was extending the tariff deadline from March 1 to April 2, which strengthened the Canadian dollar and Mexican peso.

However, market sentiment was subsequently suppressed by Trump's new tariff threat. According to Global Times, President Trump stated that starting April 2, the US will impose a 25% tariff on goods imported from Mexico and non-energy goods imported from Canada. Even more concerning for the market, Trump also promised to soon expand the scope of the tariffs, stating that a 25% tariff would be imposed on the EU.

The market realized that tariffs may still come into effect as planned, causing a rapid pullback in the Canadian dollar and a drop in the euro and European ETFs listed in the US. As risk aversion increased, US stocks retraced early gains, US Treasury prices surged to daily highs, and oil prices fell. Analysts have stated that the uncertainty of Trump's policies has indeed impacted many soft data, which is why intentions for commodity purchases, capital expenditures, and plans have genuinely declined.

Trump's tax reform proposal was passed, and the three major US stock indexes initially rose together, but concerns about Trump's trade policies caused the stocks to retreat from their intraday highs. The S&P 500 barely closed up 0.01%, ending a four-day losing streak. AI spending remains strong, as the benchmark and favorite stock — NVIDIA's Q4 revenue slowed but still hit a new high, Blackwell generated 11 billion, and Q1 guidance was better than expected, with the stock falling over 2% after-hours before rising over 3%.

• The three major US stock indexes had mixed performances. The S&P 500 Index closed up 0.01%. The Dow Jones, closely related to the economic cycle, fell 0.43%. The tech-heavy Nasdaq rose 0.26%. The Nasdaq 100 rose 0.22%. The Nasdaq Technology Market Capitalization Weighted Index (NDXTMC), which measures the performance of the components in the Nasdaq 100 Technology sector, rose 1.04%. The Russell 2000 Small Cap Index, more sensitive to the economic cycle, rose 0.19%. The VIX fear index dropped 1.85%, closing at 19.07.

• The US industry ETFs had mixed results. The Semiconductors ETF rose 2.34%, leading the various industry ETFs in the US. The Technology Industry ETF and the Internet Stocks Index ETF increased by over 1%, while the Global Technology Stock Index ETF rose by over 0.9%. The Energy Industry ETF fell by about 0.6%.

• The "Tech Seven Sisters" had mixed performances. NVIDIA rose 3.67%, briefly over 3% after hours. Meta rose 2.46%, with reports indicating Meta is planning a massive $200 billion data center. Amazon rose 0.68%, with the CEO stating that the company's investment in AI exceeds that of any other company. Amazon has created or is developing over 100 generative AI functions. Amazon launched a generative AI version of its assistant Alexa+, costing $19.99 a month. Microsoft rose 0.46%, while Google A fell 1.53%, with reports of layoffs in Google Cloud. Apple fell 2.7%, and Tesla fell 3.96%.

• Chip stocks generally rose. The PHLX Semiconductor Index closed up 2.09%. NVIDIA doubled the leverage on its ETF. Intel rose 7.74%. Analog Devices rose 8.79%, Wolfspeed rose 6.97%, Micron Technology rose 4.82%, Broadcom rose 5.13%, Taiwan Semiconductor ADR rose 2.77%, and Qualcomm rose 0.55%.

• AI concept stocks generally rose. Super Micro Computer rose 12.23%, as the company previously submitted its delayed earnings reports, alleviating investors' concerns about its delisting risk. Oracle rose 2.33%. Dell Technologies rose 4.52%. BullFrog AI rose 5.65%, Palantir rose 1.67%, and AppLovin fell over 23% intraday, ultimately closing down 12.22%, as the company's stock was shorted by Culper and Fuuzy Panda. Snowflake rose 1.21%, briefly rising over 9% after hours. Software giant Salesforce rose 0.47%, but its after-hours earnings report showed revenue guidance below expectations, leading to a brief drop of over 7.8% after hours.

• China concept stocks significantly outperformed the overall US stock market. The Nasdaq Golden Dragon China Index rose 3.66%. Among ETFs, the China concept ETF YINN rose about 8.59%, "China Dragon" DRAG rose 3.11%, KWEB rose 2.35%, and CQQQ rose 1.15%. The FTSE A50 Futures Index continuously closed down 0.02%, reporting 13275.000 points.

• Among popular China concept stocks, Xiaopeng Motors rose 14.95%, NIO rose 10.54%, Li Auto rose 10.3%, Tiger Brokers rose 9.49%, Meituan ADR rose 8.21%, JD.com rose 6.14%, ZEEKR rose 6.12%, Xiaomi Group ADR rose 4.78%, with Lei Jun stating that the annual sales target of 0.01 million units for the Xiaomi SU7 Ultra has a 90% confidence level. Alibaba rose 3.78%.

On Wednesday, the European market welcomed a wave of quarterly earnings reports, with multiple companies' stock prices soaring. Supported by critical mineral agreement drafts between the USA and Ukraine and strong corporate earnings, European stocks reached a new all-time high. The pan-European index rose approximately 1% to achieve a record closing high, posting gains for two consecutive days. The German stock market maintained a strong upward trend post-election, with sectors broadly rising; the Banks and Travel sectors led the way with increases of over 2%. The German Finance Minister believes that defense spending is expected to surge, leading to most European defense stocks closing higher.

• The pan-European STOXX 600 index closed up 0.99%, reaching a record high. The Eurozone STOXX 50 index closed up 1.47%, nearing its historical peak. The FTSE Pan-European 300 index closed up 1.01%, achieving a new all-time high.

• The German DAX 30 index closed up 1.71%, approaching a historical high. The French CAC 40 index closed up 1.15%. The Italian FTSE MIB index closed up 1.32%. The UK FTSE 100 index closed up 0.72%. The Spanish IBEX 35 index closed up 1.64%.

• In the earnings reports published: Beer manufacturing giant Anheuser-Busch Inbev closed up 8.56%, with fourth-quarter sales surpassing market expectations. Austrian construction supplier Wienerberger rose 11.25%, announcing an increase in dividends and reporting a 7% year-on-year revenue growth. Recruitment giant Adecco closed up 12.30%, despite reducing dividends and reporting a 14% year-on-year decline in annual revenue, the company exceeded general administrative expense savings targets, achieving savings of 0.174 billion euros in 2024, indicating the effectiveness of its cost control measures. The world's fourth-largest automaker Stellantis fell 3.95%, with net profit plummeting 70% in 2024 and net revenue declining by 17%.

• In sector performance: European automotive manufacturing concept stocks broadly rose, with French Saint-Gobain, Renault, and Volvo increasing by 2.76%-2.06%. European luxury goods concept stocks rose broadly, with Burberry up 7.84%, LVMH Group, Pernod Ricard, and Richemont gaining 2.35%-2.12%, while Swatch Group fell by 1.63%. Most European defense stocks closed higher, with ThyssenKrupp rising 8.25%, Kion Group up 3.27%, Italian Leonardo up 2.1%, German Rheinmetall (RHM) up 1.81%, while UK BAE Systems fell 1.54%.

Comments on Trump's trade policies and economic weaknesses have prompted investors to seek safety, with the 10-year US Treasury yield falling towards 4.24%.

• US Bonds: The yield on the 10-year benchmark US Treasury fell by 4.59 basis points to 4.2486%. The yield on the 2-year US Treasury fell by 2.26 basis points to 4.0716%.

• Morgan Stanley predicts that if market expectations drive the rate down to 3.25%, then the 10-year yield could drop below 4%. The firm believes that if the January PCE inflation rate announced on Friday falls, its impact could be decisive; if the Federal Reserve makes dovish comments due to a drop in core PCE increases, investors will buy more long-term bonds, which will further drive down yields.

• European Bonds: At the end of the European market, the yield on German 10-Year Treasury Notes fell by 2.5 basis points, reporting at 2.433%. The yield on 2-Year German Bonds rose by 0.4 basis points. The yield on UK 10-Year Treasury Notes fell by 0.3 basis points. The yield on 2-Year UK Bonds rose by 0.4 basis points. The yield on French 10-Year Treasury Notes fell by 4.3 basis points, and the yield on Italian 10-Year Treasury Notes fell by 4.5 basis points.

Affected by the increase in US fuel inventory, the potential peace agreement between Russia and Ukraine, and the agreement between the Iraqi government and Kurdistan to restore oil exports, along with Trump's tariff statements suppressing oil prices, US oil closed below $69, marking the lowest level in two months. However, after President Trump ordered the termination of oil trade with Venezuela, the decline in oil prices has narrowed.

• US Oil: WTI April crude oil futures fell by $0.31, a decline of nearly 0.45%, reporting at $68.62 per barrel.

• Brent Oil: Brent April crude oil futures fell by $0.49, a decrease of 0.67%, reporting at $72.53 per barrel.

• According to data from the US Energy Information Administration (EIA), US EIA crude oil inventory decreased by 2.33 million barrels last week, while analysts expected an increase of 2.51014 million barrels. Despite the unexpected decline in US crude oil inventory and an increase in refinery activity, gasoline and distillate oil inventories unexpectedly increased. This data further exacerbated market concerns about weak US fuel demand. UBS analysts believe that the market seems to react negatively to the increase in distillate oil inventories, which may also be related to a decrease in refined product exports.

• Natural Gas: US March natural gas futures fell by 6.42%, reporting at $3.9060 per million British thermal units. At the end of the European market, TTF benchmark Dutch natural gas futures fell by 6.00%, reporting at €41.275 per megawatt hour. ICE UK natural gas futures fell by 7.20%, reporting at 98.100 pence per kilocalorie.

Trump's tariff remarks became the focus, and the US dollar stabilized and rebounded on Wednesday. Economic data released by Australia was disappointing, with the Australian Dollar and New Zealand Dollar performing the weakest. The British Pound and Japanese Yen rose slightly, becoming the best in G10 currencies. The Euro weakened after Trump announced tariffs would soon be imposed on the EU. The Canadian Dollar initially strengthened after Trump's previous tariff remarks, but later Trump's tough statements led to a quick reversal of this trend. Bitcoin futures fell by over 4%, briefly approaching $0.084 million, as traders hedged against the risk of a decline towards the $0.07 million level.

• USD: At the New York close, the ICE USD Index rose by 0.14%, reporting at 106.457 points. The Bloomberg USD Index rose by 0.08%, reporting at 1285.72 points.

• Non-USD currencies: At the New York close, the euro fell by 0.30% against the US dollar, reported at 1.0483, while it briefly surged to 1.0529 during President Trump's first cabinet meeting speech. The British Pound rose by 0.07% against the US dollar, reported at 1.2675, and reached a daily high of 1.2716 at 01:30 Beijing time. The US dollar rose by 0.20% against the Swiss Franc, reported at 0.8947. Among commodity currencies, the Australian Dollar fell by 0.63% against the US dollar, the New Zealand Dollar fell by 0.55%, and the US dollar rose by 0.22% against the Canadian Dollar.

• The Japanese Yen briefly fell towards 150: At the New York close, the US dollar rose by 0.04% against the Japanese Yen, reported at 149.09 yen, refreshed the daily low to 148.63 yen at 08:18 Beijing time, and then rebounded, refreshing the daily high to 149.89 yen at 23:18.

• Offshore Renminbi: The offshore Renminbi (CNH) fell by 104 points against the US dollar at the end of trading, reported at 7.2653 yuan, and traded overall in the range of 7.2477 to 7.2680 yuan during the day.

• Cryptos: The largest market cap leader, Bitcoin, fell by 4.39% at the end of trading, reported at 84085.00 US dollars. The second-largest, Ethereum, fell by 6.62%, reported at 2327.50 US dollars.

Gold prices stabilized after reaching a historic high, with Trump's tariff plan boosting gold and other safe-haven assets, with New York futures gold rising by 0.5%, and during the Asia-Pacific early session, briefly rising above 2940 US dollars, before turning down at the opening of US stocks, London cobalt rose approximately 2.7%, increasing for two consecutive days:

• Gold: COMEX gold futures rose by 0.51%, reported at 2933.60 US dollars per ounce. Spot gold rose by 0.08% at the end of trading, reported at 2917.40 US dollars per ounce.

• Silver: COMEX silver futures rose by 1.22%, reported at 32.215 US dollars per ounce. Spot silver rose by 0.39% at the end of trading, reported at 31.8640 US dollars per ounce.

• London industrial metals showed mixed results: London Copper closed up 58 US dollars, reported at 9460 US dollars per ton. London Aluminum closed down 6 US dollars, reported at 2632 US dollars per ton. COMEX copper futures rose by 1.15%, reported at 4.5330 US dollars per pound. London Zinc closed flat, reported at 2812 US dollars per ton. London Lead closed up 18 US dollars, reported at 2010 US dollars per ton. London Nickel closed up 244 US dollars, reported at 15580 US dollars per ton. London Tin closed down 371 US dollars, reported at 32404 US dollars per ton. London Cobalt closed up 600 US dollars, an increase of more than 2.69%, rising for the second consecutive trading day, reported at 22880 US dollars per ton.

编辑/jayden