Today’s market analysis on behalf of Chris Weston Head of Research at Pepperstone
4th February 2025
I get a sense that traders are feeling a touch of tariff fatigue and hoping to move back to the old regime of data dependency, trading relative growth and central bank pricing – but here we are, with the showdown that was always the most likely to have played out of the three immediate tariff target nations – US vs China – with China looking to win hearts and minds from foreign parties, while Trump plays it hardball in a bid to maintain credibility for his ongoing weaponization of tariffs – with the EU the next to be put on the chopping block. In response to the news flow, we’ve seen some modest de-risking, with both oil and gold getting solid interest from clients, although the flows were seeing feel fairly orderly. WTI crude trades lower in response, and the clear concern stemming from view that two-party tariffs could lead to reduced demand – front month crude has pulled below the 50-day moving average ($72.10) and the prior three-day consolidation low ($71.94) – let’s see if the selling can build, but it takes a brave soul to counter the move lower here, and while the prospect of some sort of positive agreement is still in the playbook, for now, the more probable scenario is that both sides increase the friction, and where it’s all shaping up for a rather lively Asian trading session tomorrow when the Chinese equity market fires up and the PBoC can send out a statement through its CNY fixing.