Markets navigated a volatile session on Tuesday, with the S&P 500 managing a slight gain as Federal Reserve Chair Jerome Powell signalled a patient approach to monetary policy. While Powell reassured investors that the economy remains strong, his cautious stance on interest rate adjustments kept sentiment in check. Meanwhile, renewed tariff tensions following President Trump’s latest trade measures added further uncertainty, as the European Union promised retaliation. Despite headwinds, Apple’s rally helped offset broader market pressures, while investors remained focused on upcoming inflation data that could shape expectations for future Fed policy moves.

Key Takeaways:

  • S&P 500 Posts Modest Gain as Powell Urges Caution: The S&P 500 edged up 0.03%, closing at 6,068.50, as investors digested Federal Reserve Chair Jerome Powell’s remarks on monetary policy. Powell signalled that the Fed is in no hurry to cut interest rates, emphasising that while inflation is easing, it remains above the central bank’s 2% target. 
  • Dow Climbs Over 120 Points While Nasdaq Slips: The Dow Jones Industrial Average gained 123.24 points, or 0.28%, closing at 44,593.65, supported by strength in blue-chip stocks. In contrast, the Nasdaq Composite fell 0.36% to 19,643.86, weighed down by losses in tech stocks amid concerns over rate policy and trade tensions.
  • Powell’s Testimony Lifts Treasury Yields as Rate Cut Hopes Fade: Treasury yields climbed following Powell’s comments, with the 10-year Treasury yield rising 4 basis points to 4.537%, while the 2-year Treasury yield edged up 2 basis points to 4.29%. Powell stated that with the economy remaining strong, the Fed does not need to rush into policy changes, reinforcing expectations that interest rates will stay elevated for longer.
  • Tariff Concerns Cloud Market Sentiment: President Donald Trump signed an executive order imposing 25% tariffs on steel and aluminium imports, reigniting fears of a global trade war. The European Union immediately vowed retaliation, warning that it would impose countermeasures if the US follows through with further tariff hikes. 
  • European Markets Extend Gains Despite Trade War Fears: The Stoxx 600 Index rose 0.23%, closing at 547.18, marking its second record close of the week, driven by strength in banking stocks, which gained 1.29%. The FTSE 100 climbed 9.59 points, or 0.11%, to 8,777.39, while France’s CAC 40 rose 0.3% to 8,029. Germany’s DAX Index gained 126 points, or 0.58%, while Italy’s FTSE MIB outperformed, adding 0.91% (340 points). However, UniCredit shares fell 1% after the bank warned of a potential slowdown in net interest income in 2025.
  • Asia-Pacific Markets Trade Mixed as Investors Assess Tariffs: Market sentiment was divided in Asia as traders weighed the implications of Trump’s tariffs. Australia’s S&P/ASX 200 closed flat at 8,484, while South Korea’s Kospi gained 0.71%, finishing at 2,539.05. Hong Kong’s Hang Seng Index dropped 0.87%, and China’s CSI 300 fell 0.46% to 3,883.14. Meanwhile, Japan’s markets were closed for a public holiday. Singapore’s Straits Times Index declined 0.36%, while India’s Nifty 50 slid 1.47%, and the BSE Sensex dropped 0.79%.
  • Oil Prices Climb on Supply Concerns, Trade War Risks Loom: Oil prices extended gains despite broader economic uncertainty. Brent crude futures rose 1.28% to $76.84 per barrel, while West Texas Intermediate (WTI) crude advanced 1.18% to $73.17 per barrel. The rally was fuelled by supply disruptions from Russia and Iran, with sanctions impacting exports to China and India. However, fears that escalating trade tensions could dampen global demand kept further gains in check.

FX Today:

  • EUR/USD Gains as Buyers Step In After Recent Weakness: The EUR/USD pair closed at 1.0363, rising 0.56% on Tuesday as traders stepped in following recent declines. The pair found support at 1.0300, bouncing from multi-week lows and reclaiming resistance at 1.0350. The 50-day moving average at 1.0400 remains a key target, with further resistance at 1.0450, where previous rallies have stalled. Despite the rebound, EUR/USD continues to trade within a broader downtrend, with lower highs keeping pressure on the pair. A failure to hold above 1.0380 could see a retest of 1.0300, while a break above 1.0400 may shift momentum toward 1.0500. Market participants are closely watching upcoming economic data for further direction.
  • GBP/USD Climbs Above 1.2400 as Pound Recovers: GBP/USD gained 0.62% on Tuesday, closing at 1.2443 after bouncing from an intraday low of 1.2332. The pair pushed through resistance at 1.2400, with renewed demand supporting further upside. The 50-day moving average at 1.2484 presents a near-term hurdle, with additional resistance at 1.2500. On the downside, support is seen at 1.2380, followed by 1.2350, where previous dips have attracted buyers. A sustained move above 1.2480 could pave the way for a push toward 1.2530–1.2550, while a drop below 1.2350 could open the door to further downside pressure. Traders remain focused on UK economic data and broader market sentiment.
  • USD/JPY Strengthens as Treasury Yields Push Higher: USD/JPY closed at 152.57, gaining 0.39% on Tuesday after rebounding from a session low of 151.63. The pair attempted to challenge resistance at 153.00, though selling pressure kept gains in check. The 50-day moving average at 154.85 remains a key upside target, with additional resistance at 155.00, where sellers have previously emerged. On the downside, immediate support lies at 152.00, a level that has acted as a pivot zone in recent sessions. A move below this level could accelerate declines toward 151.00, with the 100-day moving average at 152.73 providing temporary stability. Traders continue to watch developments in US monetary policy and Japanese central bank moves for further signals.
  • USD/CAD Slips as Resistance Holds Near 1.4345: USD/CAD declined by 0.23% on Tuesday, closing at 1.4281 after facing resistance near 1.4345. The pair briefly tested higher levels before retreating, suggesting a loss of bullish momentum. The 50-day moving average at 1.4322 remains a key barrier, with a move above this level needed to confirm further gains toward 1.4400. On the downside, support is found at 1.4250, followed by 1.4200, where buyers may step in. A break below these levels could trigger a deeper pullback. The Canadian dollar remains influenced by oil price fluctuations and economic indicators, with investors awaiting fresh cues in the coming sessions.
  • Gold Pulls Back Below 2,900 After Briefly Touching Record High: Gold prices declined on Tuesday, closing at 2,896.39, down 0.38% after reaching an intraday high of 2,942.71. The metal initially surged on concerns surrounding new US tariffs before encountering resistance and retreating. Despite the decline, gold remains in an overall uptrend, maintaining support above 2,880. The 50-day moving average at 2,701.39 provides a key foundation, while the 100-day and 200-day moving averages at 2,685.22 and 2,550.12, respectively, reinforce a longer-term bullish structure. Immediate resistance is at 2,940, with a breakout above this level potentially driving prices toward 2,960–3,000. If gold falls below 2,880, a deeper retracement toward 2,850 is possible. While some profit-taking is expected, continued market uncertainty is likely to keep gold demand elevated.

Market Movers:

  • Lattice Semiconductor Surges After Strong Earnings Beat: Lattice Semiconductor shares jumped 7.7% after the company posted fourth-quarter revenue of 117.4 million, slightly surpassing analysts’ expectations of 117.1 million. 
  • Coca-Cola Gains on Earnings Outperformance: Coca-Cola shares climbed 4.7% after reporting stronger-than-expected fourth-quarter results. The company posted adjusted earnings of 55 cents per share on revenue of 11.54 billion, exceeding Wall Street estimates of 52 cents per share and 10.68 billion in revenue. 
  • Fidelity National Information Services Drops on Revenue Miss: Shares of Fidelity National Information Services plummeted 11.5% after its fourth-quarter revenue of 2.60 billion fell short of the FactSet consensus estimate of 2.63 billion. 
  • Fluence Energy Plunges After Disappointing Results: Fluence Energy saw its stock tumble 46.4% after the company reported a larger-than-expected fiscal first-quarter loss of 32 cents per share, significantly missing analysts’ expectations of a 19-cent loss. 
  • Coty Falls on Earnings And Revenue Miss: Coty shares slid 9.3% after the beauty products manufacturer reported weaker-than-expected earnings and revenue for its fiscal second quarter. The company also warned that foreign exchange headwinds are expected to weigh on reported sales in the second half of 2025, adding to investor concerns.
  • Astera Labs Declines Despite Strong Results: Astera Labs shares dropped 10.9% even after the semiconductor company delivered better-than-expected fourth-quarter earnings. However, its first-quarter guidance was softer than analysts had anticipated.

As markets digested Federal Reserve Chair Jerome Powell’s cautious stance on interest rates and the potential impact of new US tariffs, investors remained on edge ahead of key inflation data. The S&P 500 managed to make a small gain, while the Dow advanced over 120 points. European stocks posted gains despite trade tensions, while Asian markets saw mixed results, with Hong Kong and mainland China underperforming. Oil prices climbed as supply concerns from Russia and Iran outweighed fears of slowing demand due to escalating tariffs. Gold retreated slightly after briefly touching record highs, maintaining its safe-haven appeal amid ongoing uncertainty. With inflation reports coming up, all eyes remain on how the Federal Reserve will navigate economic conditions and whether trade policy developments will further disrupt market sentiment in the days ahead.