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22/01/2025 - 08:22 UTCThe US dollar traded between gains and losses against most major currencies on Tuesday, with the dollar index (USDX) eventually down by 0.13%, reaching fresh two-week lows, amidst uncertainty over new policies and tariffs that the new president may implement. Trump said on Tuesday he is considering imposing 10% tariffs on Chinese imports from February 1, as he raised the possibility of increased duties on several major economies. Despite the expectation of a gradual tariff rollout, the full impact could be considerable on most currencies in Asia, given it's substantial trade ties with China.
The main U.S. stock indices saw slight increases Tuesday evening, as investors continued to analyze the new policies of the new President. Netflix shares skyrocketed after the closing bell due to strong financial results. Netflix Inc. stock surged over 14% in after-hours trading. This significant increase followed the company's announcement of a record-breaking 19 million new subscribers in the fourth quarter of 2024, exceeding Wall Street's projections. This surge in subscriptions was attributed to a series of successful content releases, including highly acclaimed new seasons and original films, and the introduction of region-specific programming that resonated with a diverse global audience.
In other news, Trump revealed a $500 billion joint venture, dubbed 'Stargate,' involving OpenAI, Oracle, SoftBank, Microsoft, NVIDIA, and other leading tech companies. This ambitious project aims to build large-scale AI data centers and power generation facilities in Texas over the next four years. The goal is to substantially enhance the nation's artificial intelligence capabilities. Oracle stock closed with a 7.7% increase, while Microsoft and Nvidia shares also saw gains in after-hours trading.
For Wednesday markets will most likely be focusing on a speech by ECB’s Lagarde in a panel discussion titled "Beyond Crisis: Unlocking Europe's Potential" at the World Economic Forum Annual Meetings, in Davos. For the week ahead markets attention could turn to the U.S. Flash Manufacturing and Flash Services PMIs, the University of Michigan revised consumer sentiment survey and U.S. jobless claims and existing home sales.
The EUR/USD pair remained range-bound on Tuesday, trading near the 1.0400 level as market participants struggled to find a clear direction. With economic data releases from both Europe and the US notably sparse this week, investor sentiment continues to hinge on potential trade policy announcements from US President Donald Trump.
The Euro's weakness is further exacerbated by its growing interest rate differential with the US Dollar. Uncertainty has been compounded by inconsistent signals from European Central Bank (ECB) officials. With a lack of coherent policy direction, market participants are increasingly tuning out ECB rhetoric. ECB President Christine Lagarde is set to deliver another address on Wednesday, but expectations for significant insights remain low.
Looking ahead, Friday will see the release of updated Purchasing Managers Index (PMI) business survey results from both the EU and the US.
Gold rallied by over 1% on Tuesday, climbing to a two-month peak of $2,745 as risk-averse investors sought the safety of the non-yielding asset. The move came in response to US President Donald Trump's comments on tariffs, which rattled markets.
Geopolitical tensions in the Middle East also contributed to safe-haven demand. A ceasefire agreement between Israel and Hamas was disrupted as Israeli forces launched operations in the West Bank city of Jenin, prompting Hamas to call for escalated hostilities.
Oil prices fell on Tuesday after U.S. President Donald Trump declared a national energy emergency on his first day in office, sparking concerns about increased U.S. crude output in an already oversupplied market.
The oil market is expected to face oversupply this year, as weak economic activity and the global energy transition continue to weigh on demand in major consuming nations like the United States and China. On Tuesday, the U.S. Energy Information Administration (EIA) reaffirmed its forecast for declining oil prices in 2024, citing robust global production growth and slowing demand as key factors.
Concerns about immediate market tightening eased after President Trump announced a delay in imposing 25% tariffs on imports from Canada and Mexico, which had been expected to take effect on his first day in office.
U.S. stock index futures edged higher on Tuesday following a day of gains on Wall Street as investors evaluated the implications of President Donald Trump’s policies. Netflix shares soared in after-hours trading on the back of strong quarterly results.
Netflix Inc. surged over 14% in after-hours trading, reaching $993.99, after reporting an extraordinary 19 million new subscriber additions in Q4 2024, far surpassing analyst expectations.
Investors will also be watching reports from Johnson & Johnson and Procter & Gamble Company (NYSE:PG) for further market direction.
The combination of strong corporate earnings, optimism surrounding new policies, and advancements in AI infrastructure continue to shape investor sentiment as markets navigate an evolving landscape.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
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