Us equity futures are slightly lower with yields flat and the dollar lower as traders appear exhausted at the end of a rollercoaster week full of headlines on trade tariffs and rumors on Ukraine peace efforts, as well as a slew of earnings and further proof inflation isn't going away. As of 8:00am ET, S&P futures were down 0.2%, a modest retreat from Thursday’s near-record close; Nasdaq futures were also lower as Palo Alto Networks fell 6.1% in premarket while Airbnb jumped after beating expectations. Mag 7 are mostly flat to slightly lower, with the exception of TSLA’s +1.6% gain pre-market (GOOGL -0.2%, AMZN little changed, AAPL -0.2%, MSFT -0.2%, META -0.3%, NVDA -0.1% and TSLA +1.6%). Luxury stocks were a bright spot in Europe as Hermès rallied to a record after its holiday-season sales surged. Meanwhile, the China rally continues as a broader index of Chinese stocks trading in Hong Kong closed at a three-year high, as the nation’s growing AI capabilities bolster investor optimism over the market’s outlook. Yields are 1-2bp lower while the USD extends its losses on hopes that Trump’s tariff approach poses less of an upside risk to inflation. Commodities are mixed: energy and ags are higher, base metals are lower. The House Budget Committee advanced a budget resolution yesterday, a major first step towards Trump’s legislative agenda. Today, key macro focus will be the latest Retail Sales, which consensus expects to decline 0.2% MoM but the control group to rise by 0.3% MoM.
In premarket trading, Chinese stocks listed in the US rallied as a potential meeting between the nation’s top leaders and Alibaba co-founder Jack Ma bolstered confidence that Beijing could adopt a more supportive stance toward the private sector. Intel shares jumped 1.9%, putting the chipmaker’s stock on track for its biggest weekly gain on record. The stock has rallied more than 26% this week on reports of the US government possibly getting involved with a plan involving both Intel and TSMC. Here are some other notable premarket movers.
After President Donald Trump proposed reciprocal tariffs on US trading partners, investors are taking some comfort from speculation that negotiations may blunt their eventual impact. Meanwhile, strategists at Bank of America Corp. said faster inflation in the US could actually prove positive for markets because it will force Trump to adopt less severe tariffs.
Wednesday’s hotter-than-forecast consumer price index reading prompted a brief pullback in stocks and bonds, but the price pressures are a “blessing in disguise,” BofA’s Michael Hartnett said in a note. They mean “Trump must go small not big on tariffs and immigration in coming months to avoid fanning a second wave of inflation.”
“The volume of news stories on tariffs has risen as you would expect, but the impact of those stories on the dollar is declining,” said Michael Metcalfe, head of macro strategy at State Street Global Markets. “In part, this likely reflects the fact that asset managers already have a significant overweight in the dollar and if anything in 2025 have been trimming positions.”
The work required to propose reciprocal levies will occur on a country-by-country basis and could take until April to complete, said Howard Lutnick, Trump’s nominee to lead the Commerce Department. The comments followed news that Trump had ordered his administration to consider reciprocal tariffs on numerous trading partners.
“The fact that Trump didn’t explicitly target Europe yesterday and left an April deadline to negotiate with him brings some relief,” said Karen Georges, a fund manager at Ecofi in Paris.
In Europe, the Stoxx 50 holds near record levels as speculation grows that new tariffs threatened by US President Trump could mainly be intended as a negotiating tool. Basic resources is Europe’s best-performing sub-group as iron ore prices briefly spiked to four-month highs after a powerful cyclone narrowly missed hitting the world’s main export hub in Australia. Corporate earnings are also playing a role with Hermes leading a rally in luxury stocks after its sales surged in the fourth quarter. Another drop in European natural gas prices provides a further tailwind as concerns about refilling storage sites have eased, while prospects for peace talks between Russia and Ukraine have emerged. Here are the most notable European movers:
Earlier in the session, Asian stocks rose, headed for a third day of gains as a rally in Chinese tech shares resumed. Signs of a delay in US President Donald Trump’s tariffs also helped lift sentiment. The MSCI Asia Pacific Index rose as much as 0.7%, with Alibaba and Tencent among the biggest contributors. The regional benchmark was set to cap its fifth-straight weekly advance. A gauge of Chinese tech shares in Hong Kong rebounded more than 5% after profit-taking pressure emerged in the previous session. A broader index of Chinese stocks trading in Hong Kong closed at a three-year high, as the nation’s growing capabilities in artificial intelligence bolster investor optimism over the market’s outlook. Traders are also looking forward to further government stimulus from the Two Sessions coming up in March.
In FX, the Bloomberg Dollar Spot Index is down ~0.2% after its largest one-day fall since Jan. 20 on Thursday. The Bloomberg Dollar Spot Index has dropped about 2.5% from February’s high as investors wind back bets that Trump is determined to ramp up global tariffs as part of his “America First” policy. Elsewhere in currencies, the yen rose, while the pound hit its highest level against the dollar this year. The euro fluctuated after data showed unexpected growth in the euro area economy in the final quarter of 2024.
In rates, treasuries climb, outperforming peers, with US 10-year yields falling less than 1 bps to 4.52%. US long-end yields are ~1bp cheaper, 2-year sector marginally richer on the day, steepening 2s10s curve by ~1.5bp, 5s30s by ~1bp; 10-year is little changed around 4.535%, with bunds and gilts relatively cheaper by 1bp and 3bp. Long-dated dollar swap spreads extended this week’s sharp widening move, reaching least inverted level in more than a year; 30-year tenor touched -68.3bp, ended Thursday at -69.5bp. European bond yields rise, with UK and German 10-year borrowing costs adding 1-2 bps each.
In commodities, oil prices advance, with WTI rising 0.3% to $71.50 a barrel. Spot gold adds $10 to around $2,938/oz, and near a record high, on track for a seventh week of gains — its longest run since August 2020. The precious metal has gained this year, powered by haven demand, setting successive records with potential to line up a test of $3,000 an ounce. Bitcoin rises 0.6% to just above $97,000.
The US economic data calendar includes January retail sales and import/export price index (8:30am), January industrial production (9:15am) and December business inventories (10am). Fed speaker slate includes Dallas Fed President Logan at 3pm.
Market snapshot
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A more detailed look at global markets courtesy of Newsquawk
APAC stocks were mostly higher following the positive handover from Wall St, where yields declined following the latest PPI data and stocks benefitted despite US President Trump's reciprocal tariff plan, as the delayed implementation provided optimism regarding negotiations. ASX 200 touched a record high with the index led by strength in gold miners, tech and some defensive sectors. Nikkei 225 bucked the trend and was pressured by recent currency strength although Sony, Nissan and Honda were among the biggest gainers in the index post-earnings. Hang Seng and Shanghai Comp were positive with continued strong momentum in Hong Kong amid a tech surge, although the gains in the mainland were only modest despite the PBoC's recent policy implementation pledges, while this week's open market operations resulted in a net weekly drain of around CNY 575bln.
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European bourses (Stoxx 600 U/C) began the session mostly lower, despite a stronger session in APAC trade overnight; though sentiment gradually improved as the morning progressed, to display a mixed picture thus far. Some modest pressure was seen in the complex after the Ukrainian President Zelensky said he does not think that the US has a plan for peace in Ukraine yet. European sectors are mixed, and aside from the top performer, the breadth of the market is fairly narrow. Basic Resources finds itself right at the top of the pile, lifted by gains in metals prices, given the positive risk tone in APAC trade overnight; particularly in China. Consumer Products follows behind, with the sector buoyed by strength in Luxury names after both Hermes (+3.5%) and Moncler (+1%) reported strong results.
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DB's Jim Reid concludes the overnight wrap
May I be the first to wish many of you a happy Valentine's Day this morning. How are my wife and I celebrating this most romantic of days? Well she's going to a spa weekend in Bath with some friends and I'm babysitting, or what some people refer to as "parenting". Wish me luck.
It was a love-in for markets yesterday with bonds and equities rallying following better-than-expected inflation data and news that details on reciprocal tariffs would not come before April. This led to a revival of hopes that the Fed would still cut rates this year, particularly after the more hawkish fears post the upside surprise in the CPI report the previous day. That meant the 10yr Treasury yield fell -9.5bps to 4.53%, whilst the US 2yr inflation swap (-2.1bps) also fell back a bit, coming off its highest level in almost two years. And with investors becoming more relaxed on inflation again, the S&P 500 was up +1.04%, closing less than 0.1% beneath its all-time high last month.
The stock rally gathered more steam after Trump’s press conference unveiling reciprocal tariff plans which was light on immediate specifics. Specifically, the President ordered “to investigate the harm to the United States from any non-reciprocal trade arrangements adopted by any trading partners” and propose remedies. In determining of reciprocal tariffs against individual trading partners, Trump’s memo also mentioned countries’ use of non-trade barriers and VAT taxes. Such a country-by-country process should inevitably take some time and Commerce Secretary nominee Lutnick said that investigations would complete by April 1 and remedies could be implemented immediately after. In the meantime, questions whether this tariff threat will be used as a negotiating tool are likely to linger. Separately, Trump said that tariffs on cars above the reciprocal tariffs would also be coming soon. Still, the combination of limited tariff news and lower yields led to the broad dollar index (-0.83%) falling to its lowest since mid-December.
So this did little to derail the bond rally that had emerged earlier after the release of the US PPI inflation data for January. On the face of it, the headlines weren’t overly positive, as PPI came in at +0.4% for the month (vs. +0.3% expected). However, the components of the PPI such as healthcare and air fares that feed into PCE (which is the Fed’s preferred measure of inflation) came in softly. So that led US Treasuries to rally across the curve, because the view was that this unwound some of the upside surprise we got from the CPI the previous day. As a result, futures raised the likelihood of a rate cut by the Fed’s June meeting to 45%, up from 37% the previous day, even if that's still lower than the 58% probability before CPI.
All-in-all, this backdrop proved to be pretty favourable for US equities, with the S&P 500 (+1.04%) closing just -0.06% beneath its record high from January 23. The advance was led by the Magnificent 7, which surged +1.85%. But the rally broadened amid the limited news on tariffs, with all 11 major S&P 500 sector groups higher on the day and the small cap Russell 2000 up +1.17%. The gains were also helped by the supportive macro backdrop, as the initial weekly jobless claims fell to 213k in the week ending February 8 (vs. 216k expected), which pushed the 4-week moving average down to 216k. Moreover, the continuing claims for the week ending February 1 fell back to 1.850m (vs. 1.882m expected).
Otherwise yesterday, financial assets were still reacting to the developments around Ukraine, given President Trump had said that negotiations would open with Russia. So that led to a fresh outperformance for European equities, with the STOXX 600 (+1.09%) and the DAX (+2.09%) both powering forward to new records. Indeed, the DAX’s advance already leaves it up +13.58% for the year, cementing its position as the best performing major equity index of 2025. And in Ukraine itself, the country’s dollar bonds continued to surge yesterday, with the 10yr yield coming down to a near three year low of 12.56%. Watch out for headlines on this from the annual Munich security conference that starts today.
Elsewhere in Europe, there was some better-than-expected data from the UK yesterday, as Q4 GDP unexpectedly grew by +0.1% (vs. -0.1% expected). So that led investors to dial back the likelihood of another rate cut at the Bank of England’s next meeting in March, with the probability of a cut now down to 17%, from around 25% before the data. Nevertheless, gilts moved in line with the broader rally across the continent, with yields on 10yr bunds (-5.9bps), OATs (-8.5bps), BTPs (-7.0bps) and gilts (-5.3bps) all experiencing a decent decline on the day. The moves were further supported by declines in European natural gas futures (-3.77%), which fell after Bloomberg reported that Germany had called for exemptions from the EU’s targets for storage filling. In fact, natural gas futures are now down -12.5% from their 2-year high on Monday.
Those overnight gains on Wall Street are also echoing across Asian equity markets with the Hang Seng (+2.24%) leading gains, and getting closer to topping its near three year highs back in October. Elsewhere, the CSI (+0.70%) and the Shanghai Composite (+0.25%) are also edging higher as enthusiasm around DeepSeek continues to buoy Chinese technology shares. Meanwhile, the KOSPI (+0.48%) and the S&P/ASX 200 (+0.31%) are also trading in positive territory while the Nikkei (-0.61%) is bucking the regional trend. S&P 500 and NASDAQ 100 futures are both trading around a tenth of a percent higher.
Early morning data showed that South Korea’s unemployment rate hit 2.9% in January, easing from its three-year high of 3.7% the month before (3.2% expected). However, much of this was due to the government front loading a jobs support program so the underlying picture is less healthy. In FX, the Japanese yen (+0.10%) is strengthening for the second consecutive session trading at 152.65 against the dollar following President Trump’s decision to postpone the implementation of reciprocal tariffs.
To the day ahead now, and there are several US data releases, including retail sales, industrial production and capacity utilization for January. Otherwise, we’ll hear from the Fed’s Logan. And the Munich Security Conference will get underway.