Market Analysis – 02/04/25
Markets Await Tariff Update – Nasdaq Jumps 0.9%
Yesterday's trading session in the US was marked by a cautious atmosphere, with investors adjusting their positions ahead of a crucial tariff update from President Trump later today. The Dow ended nearly flat, down by just 0.03%, while technology stocks helped propel both the S&P 500 and Nasdaq to finish the day in the green, up 0.38% and 0.87%, respectively. Treasury yields fell again, with the 2-year bond down by 0.2 basis points to 3.881%, and the 10-year bond dropping 3.6 basis points to 4.169%. Major currencies experienced a quiet day, trading within established ranges, with the DXY adding a slight 0.05% to close at 104.23. Oil prices retreated from five-week highs, with Brent down 0.48% at $74.41 and WTI slipping 0.39% to $71.20. Gold, which had surged to a new all-time high, pulled back slightly to end the day down 0.4%, closing at $3,110.55.
Investors Await Tariff Update with Caution
The market is closely watching President Trump’s tariff announcement scheduled for later today, as any new tariffs introduced will take immediate effect. Speculation surrounding the scale and scope of the tariffs remains high, with discussions focused on whether the President will implement broad, universal tariffs—possibly around 20%—or pursue more targeted reciprocal tariffs. Regardless of the specifics, traders are bracing for volatility, as the announcement is expected to shake up market dynamics and create significant price movements across asset classes.
Quiet Economic Calendar Ahead of Tariff Update
The economic calendar for today is largely devoid of major events, which sets the stage for the President’s tariff update to take center stage later in the day. Early in the session, markets will hear from RBA Assistant Governor Christopher Kent, and moves in the Australian Dollar are expected as a result. However, there are few notable releases in the Asian session. In Europe, third-tier data will be released, with a focus on the ADP Non-Farm Employment Report in the New York session. Expectations are for the creation of 118,000 new jobs last month. However, most market participants are anticipating that the tariff update will dominate the day’s trading, with the potential for substantial volatility following President Trump's 4 PM New York Time announcement.
