Tech names moved higher, also supported by news that Nvidia had reached a chip deal with Meta Platforms. There was however still a degree of caution due to escalating US-Iran tensions. This pushed up oil prices while the major equity indices declined on Thursday. In the following session, markets moved higher after the Supreme Court ruled 6-3 that President Trump had exceeded his powers in enacting the reciprocal tariffs. It did not take long before Trump announced a 10% global tariff under Section 122 of the Trade Act, and over the weekend it was increased to 15%.
For the week the Nasdaq Composite led, advancing 1.5% in its first weekly gain since early January. Meanwhile the S&P 500 gained 1.1% while the Dow Jones Industrial Average added a modest 0.3%. Also during the week, minutes from the Federal Reserve’s January meeting signalled little appetite from policymakers for rate cuts. Fourth quarter US GDP slowed more than expected, while the personal consumption expenditures price index rose in December. Both developments bolstered expectations that the Fed would not cut rates before June. Treasury yields edged up higher, with the 10-year Treasury yield ending at 4.08%.
European markets had a positive week, supported by generally upbeat earnings and economic data, which offset geopolitical concerns. Investors also welcomed the news that the US Supreme Court had ruled against Trump’s tariffs. This pushed the benchmark STOXX 600 index to end the week at a record high and overall it gained 2.1%, its biggest weekly increase since early January. Banks were amongst the top performers for the week, bouncing back after the previous week’s artificial intelligence sell-off. Regional indices logged gains, with the UK FTSE 100 also reaching a new high during the week, rising 2.3%, while the German DAX and French CAC 40 climbed 1.4% and 2.5% respectively.
Trading was relatively muted in the Asia Pacific region with many indices closing for the Lunar New Year holiday. Japan’s Nikkei 225 saw a modest loss of 0.2% but still remained close to its all-time high. Losses came even after the economy avoided a technical recession in the fourth quarter. Meanwhile inflation in January cooled, giving the Bank of Japan more breathing room to plan its next rate hike. South Korea’s Kospi extended its year-to-date gains, hitting another high on Friday and up 5.5% for the week. It was fuelled by a rally in chipmakers and defence stocks. Mainland China indices remained closed throughout the week while the Hang Seng dropped 0.6% in its shortened week.