US markets faced renewed pressure on Friday as investors reacted to the White House’s confirmation that new tariffs on key trading partners had taken effect on Saturday. The S&P 500 slid 0.50%, while the Dow Jones Industrial Average tumbled over 300 points, dragged down by a sharp decline in Chevron. The Nasdaq Composite also edged lower as tech stocks struggled for direction. Market sentiment shifted abruptly following the announcement, with sectors exposed to international trade facing heightened volatility. Meanwhile, inflation data showed core prices rising in line with expectations, keeping Federal Reserve policy in focus. With earnings season in full swing and global trade tensions escalating, investors remain on edge as they assess the broader economic impact. 

Key Takeaways:

  • Dow Falls Over 300 Points as Tariffs Take Centre Stage: The Dow Jones Industrial Average tumbled 337.47 points, or 0.75%, to close at 44,544.66 as investor anxiety intensified over the White House’s confirmation that tariffs on key US trading partners would begin on Saturday. Despite closing the month in positive territory with a 4.7% gain, the Dow finished the final trading session of January on a sour note.
  • S&P 500 Declines as Market Sentiment Weakens: The S&P 500 shed 0.50%, closing at 6,040.53, as concerns over trade policy overshadowed an otherwise strong earnings season. The broad-market index erased earlier gains after White House confirmed that 25% tariffs on Canada and Mexico, and a 10% duty on China, would be implemented. The index still managed to end January with a 2.7% monthly gain.
  • Nasdaq Slides as Tech Stocks Struggle to Recover: The Nasdaq Composite edged 0.28% lower to 19,627.44, weighed down by weakness in the semiconductor sector. Nvidia, which fell nearly 17% on Monday, ended the week down roughly 16%, struggling to regain momentum. 
  • European Markets Post Strong January Gains Amid Volatility: European equities closed higher Friday, capping off a volatile but positive month for major indexes. The Stoxx 600 index, which hit a record high earlier in the week, ended January with a 6% gain despite some turbulence. The FTSE 100 climbed 500.94 points, or 6.13%, to 8,673.96, leading regional markets higher, while France’s CAC 40 edged up 0.1% to 7,950, wrapping up the month with an impressive 7.7% advance. Germany’s DAX held steady at 21,732 (+0.02%), marking a new all-time high. Meanwhile, Italy’s FTSE MIB closed at 36,471.75, rising 0.12% on the session.
  • Asia-Pacific Markets Mixed as Inflation and Trade Concerns Weigh: Asian markets were largely higher on Friday, with some indexes erasing early losses amid a volatile trading session. Japan’s Nikkei 225 gained 0.15% to close at 39,572.49, extending its winning streak to three sessions, while the broader Topix index climbed 0.24% to 2,788.66. However, economic data painted a mixed picture, as Tokyo’s core CPI rose 2.5% YoY in January, up from 2.4% the previous month, while Japan’s unemployment rate dipped to 2.4% from 2.5%, missing expectations. South Korea’s Kospi dropped 0.77% to 2,517.37, pressured by tech sector weakness, while the Kosdaq closed flat at 728.29 after a four-day break. Meanwhile, Australia’s S&P/ASX 200 surged 0.45% to an all-time high of 8,532.30, fuelled by stronger-than-expected 3.7% annual PPI growth.
  • Oil Declines for Second Consecutive Week as Tariff Impact Looms: Oil prices slipped on Friday, with investors bracing for trade disruptions as the US prepared to impose 25% tariffs on Canadian and Mexican imports. Brent crude futures for March fell 11 cents to $76.76 per barrel, while US West Texas Intermediate (WTI) crude dipped 20 cents, or 0.3%, to $72.53. Both benchmarks suffered weekly losses, with Brent falling 2.1% and WTI sliding 2.9%, marking their second straight week in the red. 
  • US Treasury Yields Rise as Inflation Data Signals Fed Caution: Treasury yields ticked higher Friday after core PCE inflation came in at 2.8% YoY, in line with expectations but above the Fed’s 2% target. The 10-year Treasury yield rose 5 basis points to 4.563%, while the 2-year yield edged up 2 basis points to 4.218%. 

FX Today:

  • EUR/USD remains under pressure, holds near 1.0350: EUR/USD dropped to 1.0356 on Wednesday, losing 0.32% for the session. The pair traded between 1.0433 and 1.0349, struggling to find upside momentum. The 50-day SMA at 1.0422 is a key resistance level, while the 100-day SMA at 1.0659 remains far above current prices. If EUR/USD breaks below 1.0320, further declines toward 1.0300 are likely. On the upside, a move above 1.0400 could trigger a recovery toward 1.0450. Technically, the pair remains bearish, with lower highs and lower lows confirming the downward trend. 
  • GBP/USD extends losses, struggles below 1.2450: GBP/USD declined to 1.2391 on Wednesday, falling 0.21% as the pair failed to hold above key resistance levels. The session’s range was between 1.2472 and 1.2386, with selling pressure increasing as the 50-day SMA at 1.2510 limited upside potential. With a lack of bullish momentum, immediate support lies at 1.2350, followed by 1.2300 if sellers maintain control. The relative strength index (RSI) remains neutral, but the broader trend suggests continued weakness. If GBP/USD reclaims 1.2450, buyers may attempt to push toward 1.2500, but failure to do so could see further downside in the coming sessions.
  • USD/JPY faces resistance near 155.00: USD/JPY traded within a tight range, hitting a high of 155.21 before pulling back to close at 155.16, marking a 0.56% gain for the session. The 50-day SMA at 154.85 remains an immediate technical barrier, while the 100-day and 200-day SMAs at 151.86 and 152.80 provide strong downside support. With RSI showing signs of exhaustion, the pair may be at risk of a pullback if it fails to hold above 154.00. Key support lies at 153.50, and a break below this level could trigger further selling pressure. Conversely, if USD/JPY surpasses 155.50, momentum could shift in favour of buyers, with the next resistance level at 156.00.
  • USD/CAD holds gains but faces resistance near 1.4550: USD/CAD climbed to 1.4521 on Wednesday, rising 0.28% as the pair maintained its recent uptrend. Price action fluctuated between 1.4558 and 1.4369, with the 50-day SMA at 1.4278 providing a solid support base. However, the 1.4550 level has emerged as a major resistance zone, limiting further upside. If the pair breaks above this threshold, it could extend gains toward 1.4600. On the downside, a move below 1.4450 may lead to a retest of 1.4300. With the US set to impose 25% tariffs on imports from Canada, traders are closely watching USD/CAD for signs of volatility as markets digest the economic impact.
  • Gold holds near recent highs, eyes breakout above 2,800: Gold (XAU/USD) closed at 2,798 on Wednesday, gaining 0.18% as strong bullish momentum kept the metal near record highs. Prices fluctuated between 2,817 and 2,791, with gold remaining well above the 50-day SMA at 2,671 and the 100-day SMA at 2,666, reinforcing the broader uptrend. Technical indicators suggest that bullish momentum remains intact, though RSI levels are nearing overbought conditions, signalling the possibility of short-term consolidation. A breakout above 2,800 could push gold toward 2,830 and 2,850, while support at 2,770 is likely to limit downside moves. If gold drops below this level, a further decline toward 2,671 is possible. 

Market Movers:

  • Deckers Outdoor tumbles on revenue guidance miss: Shares of Deckers Outdoor, the parent company of Ugg and Hoka, plunged 20.5% after its full-year revenue guidance fell short of analyst expectations. 
  • Atlassian surges after strong earnings report: Atlassian stock soared 14.9% to a new 52-week high after the software company reported fiscal second-quarter results that exceeded Wall Street expectations.
  • Walgreens Boots Alliance plunges 10.3% after suspending dividend: Walgreens Boots Alliance shares suffered a steep 10.3% decline after the company announced it would suspend its quarterly cash dividend. 
  • Beazer Homes sinks 20% after missing earnings expectations: Shares of Beazer Homes plummeted 20% following the release of its fiscal first-quarter earnings, which fell short of Wall Street estimates. The company reported earnings of 10 cents per share, missing the consensus forecast of 31 cents per share. 
  • Eastman Chemical jumps 7.5% on strong quarterly performance: Eastman Chemical surged 7.5% after reporting better-than-expected fourth-quarter results. The company posted adjusted earnings of $1.87 per share, topping analysts’ expectations of $1.57 per share. 
  • Palantir Technologies edges higher ahead of earnings: Palantir Technologies shares gained 1.6%, reaching a new 52-week high ahead of its upcoming quarterly earnings report. The defence and AI-focused technology company has seen a remarkable surge over the past year, with shares climbing more than 420% in the past 12 months. 

As the week came to a close, markets remained volatile as investors digested the White House’s confirmation of new tariffs on key trading partners and the latest inflation data. The Dow Jones dropped sharply, weighed down by losses in energy stocks, while the S&P 500 and Nasdaq struggled for direction. European markets ended the month on a strong note, despite lingering economic uncertainty, while Asian markets saw mixed performances. Oil prices continued to slide, posting a second consecutive weekly loss, while gold held firm near record highs. With inflation remaining above the Federal Reserve’s target and uncertainty around monetary policy persisting, investors are bracing for a potentially turbulent start to February.