The Dow Jones Industrial Average surged over 500 points, marking a strong rebound as investors interpreted Trump’s first-day executive actions as a measured approach to tariffs. Gains in industrials and small-cap stocks, coupled with resilience in the technology sector, fuelled the advance. However, concerns over inflationary pressures and global economic uncertainties kept the broader market cautious, with the Nasdaq’s gains tempered by a sharp decline in Apple shares following Wall Street downgrades.

Key Takeaways:

  • Dow Surges Over 500 Points on Tariff Optimism: The Dow Jones Industrial Average climbed 537.98 points, or 1.24%, to close at 44,025.81. Gains were supported by strength in industrials, with 3M rising over 4%, and renewed interest in small-cap stocks, which pushed the Russell 2000 up by 1.9%.
  • S&P 500 Hits New High: The S&P 500 advanced 0.88%, closing at 6,049.24, driven by optimism over a softer-than-expected tariff stance from the White House. While tech stocks contributed to the gains, they were moderated by Apple’s 3.2% decline following Wall Street downgrades.
  • Nasdaq Advances Amid Mixed Tech Performance: The Nasdaq Composite rose 0.64% to finish at 19,756.78, as big technology names like Amazon and Nvidia added over 2%. However, gains were limited by a sharp drop in Apple shares, which fell on subdued AI outlook concerns and revenue warnings from analysts.
  • European Markets Close Higher as New Trade Policies Take Shape: European stocks ended Tuesday in positive territory, with the pan-European Stoxx 600 rising 0.4%. The FTSE 100 Index gained 0.33% to close at 8,548.29, while Germany’s DAX reached a record high, closing up 0.2% at 21,041.5. France’s CAC 40 climbed 0.5% to 7,771, boosted by a 6.75% increase over the past four weeks. In the UK, private sector wages rose 6% in the three months to November compared to the previous year, marking the highest increase since May 2024. However, payroll figures fell 0.1% in November, and the unemployment rate edged up to 4.4%, reflecting a mixed labour market picture. Offshore wind developer Orsted fell 10.7% after reporting a $1.7 billion hit tied to U.S. projects, while Sweden’s Avanza rose 13% on strong earnings. 
  • Asia-Pacific Markets Mostly Rise as Investors Await Clarity: The Asia-Pacific region saw mixed but generally positive performances. Japan’s Nikkei 225 rose 0.32% to 39,027.98, while Australia’s S&P/ASX 200 climbed 0.66% to 8,402.40. Mainland China’s CSI 300 edged up 0.08%, closing at 3,832.61, and Hong Kong’s Hang Seng Index gained 1.02%. South Korea’s Kospi dipped slightly, falling 0.08% to 2,518.03, as the region awaited further clarity on US trade policies under Trump’s administration.
  • Oil Prices Slide as Tariff and Energy Policies Loom: US crude oil prices dropped 2.56%, closing at $76.89 per barrel, as President Trump hinted at potential tariffs on key trade partners, Canada and Mexico, while announcing measures to boost domestic energy production. Brent crude also declined by 1.07%, settling at $79.29 per barrel. Market participants remained cautious over the impact of tariffs on global fuel demand.
  • Treasury Yields Decline as Bond Markets React to New Policies: The 10-year Treasury yield fell more than 4 basis points to 4.566%, reflecting a cautious approach from investors digesting Trump’s return to the White House and his early executive actions. The 2-year Treasury yield remained steady at 4.272%. Uncertainty over future trade and economic policies added to the demand for safe-haven government bonds.

FX Today:

  • EUR/USD Holds Steady Amid Consolidation: The EUR/USD pair traded at 1.0416 on Tuesday, maintaining a stable position as it tested resistance levels following its recent rebound. After recovering from lows near 1.0200 earlier this month, the pair is now approaching the 50-day SMA at 1.0446, which serves as a critical hurdle. Momentum indicators are mixed, with RSI moving toward neutral territory, while MACD hints at potential upward momentum. Immediate support lies at 1.0350, with further downside at 1.0200. On the upside, a decisive break above 1.0446 could open the path toward the 100-day SMA at 1.0710. 
  • GBP/USD Edges Higher as Recovery Gains Momentum: GBP/USD climbed to 1.2333, up 0.04% for the session, as it extended its recovery from recent lows near 1.2100. Resistance at 1.2400 aligns with the 50-day SMA at 1.2554, and a break above this level could target the 100-day SMA at 1.2831. Support remains at 1.2200, with further downside risk toward 1.2100. Improving momentum indicators, including RSI exiting oversold territory and signs of a bullish MACD crossover, support the pair’s upward trajectory. However, the longer-term bearish outlook persists as GBP/USD remains below the 200-day SMA at 1.2790. 
  • USD/CAD Consolidates Amid Mixed Signals: USD/CAD traded at 1.4343, up 0.27% for the day, as the pair stabilised following a pullback from recent highs near 1.4480. Resistance is seen at 1.4400, with 1.4480 providing a stronger ceiling. Support lies at 1.4300, close to the 50-day SMA at 1.4211, and a break below this level could target the 100-day SMA at 1.3940. Momentum indicators remain mixed, with RSI easing from overbought levels and MACD showing weakening momentum. Oil prices, a key driver for the Canadian dollar, slid 2.56%, weighing on CAD sentiment.
  • USD/JPY Eases as Consolidation Continues: USD/JPY traded near 155.54, down 0.05% for the session, as the pair consolidated following its retreat from highs near 157.00. Support lies at 154.50, close to the 50-day SMA at 154.77, while resistance remains at 156.00 and 157.00. Momentum indicators suggest caution, with RSI in neutral territory and MACD hinting at a bearish crossover. Despite the pullback, USD/JPY remains above the 200-day SMA at 152.78, maintaining its longer-term bullish bias. Traders are watching US interest rate expectations and Japanese monetary policy for further direction.
  • Gold Advances on Safe-Haven Demand: Gold prices surged to $2,743.12, up 1.21% for the session, as the metal extended its recent uptrend amid ongoing demand for safe-haven assets. Resistance lies at $2,750, with a break above this level targeting $2,770. On the downside, support is seen at $2,720, followed by the 50-day SMA at $2,645, which has consistently provided a strong base. Momentum indicators support the bullish outlook, with RSI trending higher and MACD confirming positive momentum. Gold’s trajectory remains linked to global risk sentiment and US interest rate expectations, with sustained trading above $2,750 signalling a continuation of the rally.
  • Silver Extends Its Uptrend Amid Robust Demand: Silver prices climbed to $30.820, up 1.15% for the day, as the metal continued its recovery from December lows near $28.50. Immediate resistance is seen at $31.00, with a break above this level targeting the recent high of $31.30. On the downside, support lies at $30.50, followed by the 50-day SMA at $30.31. Silver’s trajectory remains driven by industrial demand and its status as a safe-haven asset, with sustained trading above $31.00 paving the way for further gains.

Market Movers:

  • Apple Drops 3.2% on Downgrades: Shares of Apple fell 3.2% after Jefferies downgraded the stock to underperform from hold, citing a subdued AI outlook and potential revenue challenges in its upcoming fiscal first-quarter earnings report. 
  • Charles Schwab Rises on Strong Earnings: Charles Schwab shares jumped 5.9% following better-than-expected fourth-quarter earnings. The brokerage firm reported adjusted earnings per share of $1.01, beating analyst estimates of $0.91. Revenue climbed 20% year over year to $5.33 billion, with total client assets surpassing $10 trillion.
  • Walgreens Plunges 9% Amid Opioid Lawsuit: Walgreens Boots Alliance shares dropped more than 9% as the US Justice Department filed a nationwide lawsuit accusing the company of knowingly filling unlawful prescriptions for opioids and other highly addictive drugs. 
  • Moderna Gains 5.4% on Bird Flu Vaccine Funding: Moderna’s stock rose 5.4% after the U.S. Health and Human Services Department awarded the company $590 million in funding to accelerate the development of its bird flu vaccine. 
  • Chinese EV Stocks Rally on Trump Tariff Delay: Chinese electric vehicle companies saw significant gains as President Donald Trump refrained from immediately implementing tariffs after his inauguration. XPeng surged 6.2%, while Li Auto gained 5.3%, reflecting renewed investor optimism for the sector.
  • Urban Outfitters Soars 9.9% on Upgrade: Urban Outfitters shares surged 9.9% after Morgan Stanley upgraded the stock to overweight from equal weight, citing strong growth prospects. The firm raised its price target to $63 from $41, implying a potential 15% upside from current levels.

As the markets digested President Donald Trump’s initial executive actions and comments on trade, optimism over a potentially softer tariff stance fuelled gains across US equities, with the Dow surging over 500 points and the S&P 500 hitting new highs. European and Asia-Pacific markets also reacted positively, though sector-specific challenges and mixed economic data tempered enthusiasm. Key drivers, including robust earnings from 3M and Charles Schwab, and strong gains in the EV and industrial sectors, highlighted areas of growth, while Apple’s sharp decline and concerns over Walgreens’ legal troubles underscored lingering uncertainties. With commodity prices fluctuating and Treasury yields dipping, investors remain focused on Trump’s evolving policies and their implications for the global economy in the days ahead.