Trade, tariffs and tech dominated the markets
Markets navigated another whirlwind session, as President Trump wasted no time rolling out his trade agenda. The big headline was Trump announcing plans to impose tariffs of up to 25% on Canadian and Mexican imports starting February 1, triggering sharp sell-offs in both the peso (-1.2%) and the loonie (-0.9%). However, the biggest relief for investors came from what didn’t happen; an immediate tariff on China. This decision was interpreted as a more measured approach to trade policy, sent the yuan nearly 1% higher and helped stabilize market sentiment.
Despite the initial shock from Trump's executive orders, investors quickly turned their attention to potential fiscal stimulus and tax cuts, pushing both the S&P 500 and the Nasdaq up. The bond market, meanwhile, showed little reaction to the tariff threats, suggesting that investors see these policies as more of a negotiating tactic than a serious inflationary threat.
Tech stocks once again stole the spotlight, led by a 15% surge in Netflix, which reported record subscriber growth and sent its stock soaring past $1,000 for the first time. Oracle saw a 9% jump after announcing a massive $100 billion AI infrastructure joint venture with SoftBank and OpenAI. With the “Magnificent Seven” tech stocks remaining the most crowded trade in the Bank of America’s latest survey, the tech sector maintained an optimistic outlook.
Meanwhile, European equities extended their rally, with the Stoxx Europe 600 hitting a new record as AI and electrification stocks led the charge. Optimism around technological innovation continued to fuel global markets, even as geopolitical risks remained in play.
For now, the market’s message is clear: investors are choosing to look past tariff threats and focus on the potential benefits of Trump’s economic agenda. It remains to be seen whether that optimism will hold as policy details emerge.
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