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Yesterday was yet another ugly session for US stocks. The increasingly heavier weight of Trump talk, deteriorating relationships across the globe – except Russia – combined with higher inflation expectations on tariffs, the uptick in inflation and weakening expectations from US consumers are certainly to blame for the selloff in equities – that boost appetite in bonds, considered to be a safer investment option. Major US indices fell, Roundhill’s Magnificent 7 ETF dived more than 2%, Tesla tumbled more than 8% on news that its European sales nosedived 45% in January. Nvidia lost 2.80% and tested its 200-DMA to the downside a day before announcing its quarterly earnings.

Nvidia will reveal its Q4 earnings today, after the bell, and expectations are strong. But will strong results be enough to lift investor sentiment is yet to be seen!

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The European stocks started the week near flat, while German companies gave back early gains, boosted by the idea – hope – that the new German government will relax spending rules and announce a special defence spending budget that could go up to 200bn euros to take its own security in its own hands for the first time since the WWII.

Every penny spent on defence is one less penny spent elsewhere, and the latter could accelerate rotation toward the European equities. The worsening geopolitical and trade outlook boost appetite for safer pockets of the market. The US yields and gold advance to fresh record.

In energy, US crude extends rebound after approaching the critical $70pb support last Friday on news that Trump government imposed new sanctions on oil brokers and ships that were linked to illicit Iranian crude. But the worsening global economic outlook on rising trade tensions will likely keep the upside limited.

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The euro and the European equity futures are in the green this Monday morning on hope of higher spending by the new German government which could tackle the economic weakness of past years.

Across the Atlantic, things were looking pretty bad last Friday. The US stocks were hit by an ugly selloff on weaker-than-expected economic data and exploding inflation expectations. In fact, the US 5-10 year consumer inflation expectations hit the 3.5% mark – the highest since 1995 – on prospects of massive tariffs from Trump government and worsening trade relations with the rest of the world.

This week, investors will watch Nvidia earnings and the US’ latest GDP and PCE updates. The US dollar index slipped below the 100-DMA despite the exploding inflation expectations and is about to test an important Fibonacci level, the 106 major retracement on September to January Trump rally.

In energy, crude oil cleared the 100-DMA support without much pain and tumbled more than 3% on Friday.

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The US dollar is giving back gains despite the tariff talk, rate cuts in Australia and New Zealand and despite the hawkish Federal Reserve (Fed) minutes that hinted that the Fed officials are inclined to keep the rates unchanged until they see ‘further progress on inflation before making additional adjustments’.

On the Chinese front, the news are surprisingly well. Not only that Xi Jinping met with the Chinese Big Tech leaders to show off their now-improved relationship, but Trump also said that there could be a trade agreement with China as he’s got a ‘great’ relationship with Xi. And to top it all, Alibaba announced strong quarterly results – its fastest in a year – and said that AI is their ‘primary objective’. Alibaba shares gained more than 12% in Hong Kong today and they are up by more than 75% since mid-January.

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The US dollar extended gains and gold hit a fresh ATH fuelled by fresh tariff threats from Donald Trump. Worries in Chinese markets and rising geopolitical tensions support further gains despite all-time high levels.

Elsewhere, the early moodiness due to Trump’s new tariff threats quickly waned. The euro and Loonie recovered losses against the greenback, while the stock markets in Europe gave a mere reaction to Trump news. The energy and mining heavy FTSE 100 led gains in Europe, goldminer Fresnillo jumped almost 5% to a year-high, while BP rallied more than 7% on news that the activist investor Elliott Investment Management has acquired a substantial stake in the company to increase focus on traditional oil and gas operations and rely less on investments in renewable energy.

Across the Channel, the Stoxx 600 extended gains to a fresh ATH as well, while in the US, the S&P500 gained. US Steel Corp and Alcoa were happy about the tariff news, while the tech stocks led the rally. Nvidia extended gains by more than 2.50% as the French PM promised to invest more than 100bn euro in AI at a tech summit in France.

In the FX, the US dollar remains in demand as the Federal Reserve (Fed) Chair Jerome Powell begins his two-day testimony in front of US politicians today and is expected to adopt a cautious approach despite mounting pressure to lower rates from the Trump government.

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In this special Market Talk episode, we break down candlesticks and their importance in trading. Candlesticks aren’t just price movements—they tell a story of market sentiment, reversals, and potential trends.

While understanding candlestick formations can sharpen your market analysis, they’re not foolproof. The more traders react to patterns, the stronger the self-fulfilling prophecy effect.

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The US is planning to impose tit-for-tat tariffs globally, but studying tariffs case by case requires time and the tariffs won’t be effective until April. I don’t know if you could call it good news, but the markets’ reaction suggests that the latter has been perceived as good news, and helped keeping appetite afloat yesterday. The US dollar index was sharply sold despite the broadening tariff war, the US yields eased and equities gained.

But the macroeconomic and trade setup remains supportive of the US dollar – a setup that could keep gains in euro and sterling limited.

In equities, though, the European stocks continue to ignore the tariff threats and chose to surf on the rotation trade, while the Chinese stocks gather momentum on AI.

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Yesterday’s inflation update from the US didn’t go well. January data showed a hotter-than-expected report across monthly and annual readings and all categories including food, energy and housing.

As such, the Federal Reserve (Fed) rate cut expectations melted like snow under the sun after yesterday’s clear uptick in US inflation suggested that the Fed would better wait and see before doing anything else. The US yields rose, risk appetite weakened while the US dollar unexpectedly softened.

Gold, too, gained despite the rising US yields and the historically negative relationship between US yields and gold prices is no longer a thing.

Elsewhere, crude prices plunged on hope of resolution in Ukraine.

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Federal Reserve (Fed) Chair Jerome Powell’s testimony yesterday went smoothly and in line with the previous remarks that the Fed is not in a hurry to cut the rates.

All eyes are on today’s US inflation update. The US headline inflation is expected to steady near 2.9% y-o-y in January, core inflation may have eased from 3.2% to 3.1%. A set of softer-than-expected inflation numbers could help sooth inflation worries and encourage a deeper retreat in the US dollar and a further advance across the major peers. While a stronger-than-expected set of inflation figures could fuel worries, back a further rise in the US yields and the dollar, and weigh on risk appetite.

Elsewhere, Chinese tech stocks are surfing on the DeepSeek wave and stocks in Hong Kong didn’t look this promising in a while.

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