Markets Overview
- ASX SPI 200 futures up 0.9% to 8,568.00
- Dow Average up 0.7% to 44,699.38
- Aussie up 0.4% to 0.6304 per US$
- US 10-year yield fell 10.9bps to 4.5152%
- Australia 3-year bond yield fell 0.2 bps to 3.87%
- Australia 10-year bond yield rose 1 bp to 4.47%
- Gold spot up 0.8% to $2,926.80
- Brent futures little changed at $75.11/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$700 Million 1.5% 2031 Bonds
Stocks came within a striking distance of their all-time highs while the dollar got hit as President Donald Trump moved to impose reciprocal tariffs — but not right away.
All major groups in the S&P 500 rose, with the gauge up 1%. The greenback dropped against all of its developed-market counterparts. Treasuries rebounded from their worst slide since December. Big tech outperformed as Tesla Inc. and Nvidia Corp. each rallied over 3%. Apple Inc. gained 2% as chief Tim Cook said the “newest member of the family” is coming on Feb. 19. Meta Platforms Inc. advanced for a 19th straight day.
The decision not to implement tariffs right away could be seen as an opening bid for negotiation — following the same strategy Trump already used to extract concessions from Mexico and Canada — rather than a sign he’s committed to following through.
“President Trump is seeking to level the global playing field by implementing reciprocal tariffs against nations that maintain levies on the US,” Jose Torres at Interactive Brokers said earlier this week. “But investors are starting to realize that much of the talk is hardly going to come to fruition with the rhetoric increasingly appearing to be a negotiation tactic.”
To Ian Lyngen at BMO Capital Markets, Trump has left open the opportunity for the US’s major trade partners to come to the negotiating table with a counteroffer. But, there are enough moving parts to this process that it is challenging to have a precise take on how the final tariff structure will develop.
“We’re cautious against rushing too quickly to the conclusion that the market is in a position to move beyond the trade war saga for the time being,” Lyngen said.
Wall Street traders looked past hot inflation data amid signs the Federal Reserve’s favored price gauge will be softer than expected. The producer price index rose in January by more than forecast. However, several of its components that feed into the Fed’s preferred inflation measure — the personal consumption expenditures price index — were more favorable last month, registering declines in most health-care items and in airfares. The next PCE will be released on Feb. 28.
The S&P 500 topped 6,100. The Nasdaq 100 added 1.4%. The Dow Jones Industrial Average gained 0.8%. The Bloomberg Magnificent Seven Total Return Index climbed 1.8%. The Russell 2000 gained 1.2%. In late hours, Applied Materials Inc. gave a lukewarm revenue forecast. Airbnb Inc. issued an upbeat outlook.
The yield on 10-year Treasuries fell nine basis points to 4.53%. The Bloomberg Dollar Spot Index lost 0.7%. The yen gained 1.1% on safe-haven appeal, while the Canadian dollar touched a new high for the year.
