Market Analysis by Quasar Elizundia, Expert Research Strategist at Pepperstone
January 29, 2025 –
“Global markets are at a turning point, with rising trade tensions and uncertainty dominating the landscape ahead of key monetary policy decisions by major central banks.
Trade Tensions:
President Trump’s remarks on imposing broad tariffs on foreign products, including chips, pharmaceuticals, and steel, have raised concerns in the markets. This protectionist measure aims to boost domestic production but could trigger a trade war with unpredictable consequences for the global economy. The US Dollar Index (DXY) has strengthened by 0.4% following the announcement, reflecting the potential inflationary implications of these measures.Stock Market Movements:
Global equities show mixed performance. In the US, the S&P 500 and the Nasdaq are attempting to recover after sharp declines yesterday, driven by fears of increasing competition in the artificial intelligence sector. Nvidia, which experienced a historic 16.9% drop, is rebounding by 1% today. In Europe, Germany’s DAX approaches all-time highs, while Spain’s IBEX 35 rises by 1.2%. In Latin America, Brazil’s Ibovespa is down by 0.3%, amid expectations of an interest rate hike by Brazil’s Central Bank.Monetary Policy Expectations:
Investors are closely watching this week’s monetary policy decisions. The US Federal Reserve begins its two-day meeting today, with expectations to keep interest rates unchanged. However, markets will be looking for signals on future rate cuts. The Bank of Canada is also set to announce its decision tomorrow, with a high probability of an interest rate cut. In Europe, the European Central Bank (ECB) is expected to announce a 25-basis-point rate cut on Thursday.Currency Market Volatility:
The forex market is experiencing moderate volatility, especially in pairs like AUD/CAD, EUR/CAD, and USD/JPY, where some of the day’s largest movements are observed. The Mexican peso appreciates by 0.33% against the US dollar, while the Chilean peso depreciates by 0.3%.Commodities:
Oil (WTI) is rebounding by 0.4%, trading at $73.3 per barrel, driven by supply disruption risks in Libya. Gold remains stable at $2,740 per ounce, awaiting the Fed’s decision.Key Economic Data:
In the US, disappointing data on durable goods orders showed a 2.2% decline in December. Housing market data also came in, with the Case-Shiller index reflecting a 4.3% year-over-year increase in home prices for November. Looking ahead, attention will focus on US GDP and PCE data later this week.Conclusion:
Today’s trading session in financial markets is marked by uncertainty and volatility. Trade tensions and monetary policy expectations remain the primary factors influencing market behavior..”
Analysis by Quasar Elizundia, Expert Research Strategist – Pepperstone