China and Japan closed for holidays

US stock index futures began the week on a cautious note after President Trump raised his new Worldwide Tariffs to 15% from 10% over the weekend. The announcement followed Friday’s ruling from the US Supreme Court when it struck down a broad portion of Trump’s “reciprocal” tariffs.

These had first been imposed last April under the International Emergency Economic Powers Act (IEEPA). But the Court ruled that the president had exceeded his authority. All the major US indices were weaker in early trade on Monday, but were trading off their overnight lows by mid-morning.

Investors reacted positively when they first heard about the court ruling on Friday afternoon. US stock indices had been under some downside pressure. But they rebounded on hopes that trade tensions might ease, while opening the door to refunds for companies impacted by the now-invalidated tariffs.

This helped to push the Dow, S&P and NASDAQ back into positive territory by Friday’s close, and all posted overall gains for the week, led by the tech-heavy NASDAQ, which added 1.5%.

Source: TN Trader

But President Trump responded over the weekend and announced a new, legally tested tariff framework, warning that additional levies could follow in the coming months. The shift has reinforced uncertainty around the outlook for inflation, global growth and supply chains, keeping investors on edge.

Last week, Core PCE (the Fed’s preferred inflation measure) rose to 3.0% year-on-year, from 2.8% previously. Meanwhile, Flash Manufacturing and Services PMIs both disappointed, while Advance GDP came in at just +1.4% for the fourth quarter of 2025. This was below the +2.8% expected and way under the +4.4% recorded in the previous quarter.

The news led to a shift in rate cut expectations, as the probability of a 25-basis point cut from the Fed in June fell sharply. Despite this, the CME’s FedWatch Tool still predicts 50-basis points-worth of cuts before year-end. There are some key events this week. Early on Wednesday morning, President Trump will deliver his State of the Union address to Congress, while Nvidia will release its earnings after Wednesday’s close.

Before then, there’s a stack of Fed members lined up to speak, and Wholesale inflation data on Friday. There are some hints of frayed investor nerves now starting to show as the major US indices struggle to maintain their upside momentum.

Renewed tariff uncertainty is now added to concerns over US-Iranian nuclear proliferation talks, while private credit shows some unwelcome cracks which could infect the banking sector and beyond.

European stock index futures dropped as Asian Pacific markets reopened overnight. This weakness fed through to the European open, as well as global investors reassessed the implications of President Trump’s revised tariff strategy.

European markets had ended the previous week higher on optimism that the Supreme Court ruling might ease trade tensions, but that optimism faded after the weekend tariff announcement.

Source: TN Trader

With no major earnings releases scheduled, attention turns to macro data. Germany’s Ifo Business Climate Survey came in above expectations and higher than the previous month’s reading. This helped to lift the German DAX off its lows seen on the open.

The US dollar put in a strong performance last week in a move which saw the Dollar Index rally from 96.60 on Monday to just shy of 97.80 on Friday morning, its best level in close to a month. But it pulled back sharply later in the day as investors responded to the US Supreme Court’s ruling, which struck down the Trump administration’s ‘reciprocal’ tariffs.

It fell again overnight but has started to recover lost ground this morning. There is certainly plenty of bearish sentiment directed at the US dollar. But the contrarians out there are starting to wonder if the bottom is already in for the greenback?

While Friday’s tariff news added to general confusion, and a clutch of disappointing US data releases argued for looser monetary policy, the jump in inflation could make that an impossibility, no matter what the incoming Fed Chair and Donald Trump may wish for. That could lead to a more protracted advance in the US dollar.

Source: TN Trader

Precious metals remained well supported at the start of the week as renewed trade uncertainty and escalating geopolitical tensions boosted demand for defensive assets. On Friday, gold surged above a mild level of resistance around $5,060 to push and hold above $5,100 at the close.

It has built on those gains this morning, trading significantly above the $5,000 level, which acted as a bit of a magnet for prices last week. Gold retains a constructive bias, underpinned by persistent concerns around global tariffs, slowing growth, and Middle East risks.

Source: TN Trader

The catalyst for the latest move higher was Donald Trump’s decision to impose a new 15% global tariff framework following the US Supreme Court ruling that invalidated large parts of his ‘reciprocal’ tariffs launched last April. Mr Trump’s swift policy pivot has reignited fears of retaliatory measures, supply-chain disruption and weaker global demand, conditions that traditionally favour non-yielding safe-haven assets like gold.

Once again, silver outperformed and was up around 3% overnight before pulling back a touch during the European morning session. Silver was making itself comfortable above $86 per ounce, and the daily MACD suggests that upside momentum is building as it curls up from oversold conditions.

But, as ever with silver, traders should take great care. The long side risks have ballooned, particularly since silver broke above $60 back in December. At the same time, given the parabolic upside moves at the end of January, it’s not really a market to short either. Any trade in silver requires plenty of nerve and deep pockets.

Source: TN Trader

Crude oil opened lower overnight as traders sought to balance geopolitical risk and demand-side concerns. Front-month WTI dropped below $65.50 early this morning as investors focused on the potential economic impact of higher global tariffs and renewed trade uncertainty. But prices subsequently recovered, and WTI pushed its way back above $66 per barrel.

Source: TN Trader

While geopolitical developments continue to provide underlying support, concerns over future global demand growth appear to be keeping prices in check, for now. President Trump’s tariff hike has raised concerns that slower global growth and weaker trade flows could weigh on energy consumption, particularly if trade tensions escalate further or trigger retaliatory measures from major trading partners.

Attention is also focused on diplomatic developments between the US and Iran. Negotiators from both sides are expected to meet again in Geneva this week, with Iranian officials signalling that a diplomatic solution remains within reach. Any progress toward a deal could ease supply risks, limiting upside for crude prices in the near term.

That said, the downside remains constrained by lingering geopolitical risk. President Trump has reiterated that “bad things” would happen if Iran fails to curb its nuclear ambitions, keeping the threat of military escalation firmly on the radar. Analysts at Deutsche Bank noted that recent pullbacks in Brent crude reflect some unwinding of the weekend risk premium.

Cryptocurrencies extended their recent selloff this morning. The move comes against a backdrop of persistent uncertainty around US trade policy and broader macro conditions. Bitcoin has now erased all its gains which followed President Trump’s re-election in November 2024.

Optimism around a more crypto-friendly administration pushed Bitcoin to a record above $126,000 last October. Investor flows remain negative. US-listed spot Bitcoin ETFs recorded their fifth straight week of net outflows. In the last 24 hours alone, the broader crypto market shed $100 billion in value, underlining how sensitive digital assets remain to shifts in global risk sentiment.

Market volatility cooled modestly at the start of the week, with the VIX pulling back from the recent high seen last Tuesday. While this suggests some near-term stabilisation, volatility remains elevated.

Investors continue to grapple with overlapping sources of risk, including US trade policy uncertainty, slowing growth signals, sticky inflation and rising geopolitical tensions involving Iran. As a result, volatility is likely to remain sensitive to headlines and may remain relatively elevated given the drop-off in upside momentum in the S&P 500.

In short, markets are holding together, but conviction remains fragile. The Supreme Court ruling briefly eased trade tensions, yet President Trump’s swift tariff reset has reintroduced uncertainty around growth, inflation and global supply chains. With geopolitics, central bank policy and trade headlines all in play, investors remain highly reactive, keeping risk sentiment finely balanced.