Markets Waver as Tariff Tensions Rise and Investors Await Key Economic Data | Daily Market Analysis

Key events:

• USA - Durable Goods Orders (MoM) (Jan)
• USA - GDP (QoQ) (Q4)
• USA - Initial Jobless Claims

The S&P 500 managed to scrape out a gain on Wednesday but finished well below session highs as renewed tariff worries dampened investor sentiment ahead of Nvidia’s (NASDAQ: NVDA) highly anticipated earnings release. By the closing bell at 4:00 p.m. ET, the benchmark index was down 0.2%, while the Nasdaq Composite rose 0.3%. The Dow Jones Industrial Average, however, lost 186 points, or 0.4%.

Technology stocks rebounded after a weak start to the week, with investors seizing the opportunity to buy the dip. Leading the charge, Nvidia surged over 3% in anticipation of its quarterly earnings report, which is set to be released after the market close. Traders are closely watching the results, as the chipmaker has been a major driver of the artificial intelligence boom that has fueled recent market rallies.

In the currency market, the EUR/USD pair weakened to around 1.0465 during Asian trading hours on Thursday as renewed trade tensions pressured the Euro. Late Wednesday, US President Donald Trump reaffirmed his commitment to imposing 25% tariffs on imports from the European Union, in addition to similar measures already set for Canada and Mexico. In response, the EU vowed swift retaliation against what it described as “unjustified” trade restrictions.

The trade dispute escalated further as Trump announced a delay in implementing the tariffs on Canada and Mexico, now scheduled to take effect on April 2, nearly a month later than the initial March 4 deadline. Meanwhile, fresh concerns over global trade were stoked by Trump’s decision to terminate a trade agreement with Venezuela, originally brokered under the Biden administration to facilitate free elections. The move comes after Venezuela’s refusal to accept the return of undocumented migrants from the US, adding another layer of uncertainty to international markets.

Gold prices came under pressure during the Asian session on Thursday but remained above the key $2,900 mark. A rebound in US Treasury bond yields helped the US Dollar recover from its lowest levels since December 10, putting downward pressure on the precious metal. Additionally, a generally positive sentiment in equity markets further weighed on safe-haven demand for gold, leading to fresh selling.

The Japanese Yen also faced selling pressure as Japanese government bond yields declined, following recent remarks from Bank of Japan Governor Kazuo Ueda, who hinted at increasing the central bank’s regular bond purchases. The US Dollar found support from modest gains in Treasury yields, which lifted the USD/JPY pair closer to the mid-149.00s. However, expectations that the BoJ will continue tightening policy due to broadening inflation in Japan helped limit losses for the Yen, preventing a sharper decline against the Greenback.

Meanwhile, the British Pound slipped after two consecutive days of gains, falling to around 1.2660 during Asian trading hours. The pair weakened as the US Dollar strengthened amid rising risk aversion and increasing Treasury yields. The move came as Federal Reserve Bank of Atlanta President Raphael Bostic reiterated on Wednesday that the Fed should keep interest rates unchanged to sustain downward pressure on inflation. He emphasized the need for additional economic data to determine whether January’s inflation spike was temporary or the beginning of a broader trend.

Adding to market uncertainty, Bank of England Monetary Policy Committee member Swati Dhingra weighed in on the tariff debate, stating that while higher US tariffs could temporarily strengthen the US Dollar, their overall inflationary impact on the UK would likely be offset by broader price reductions globally.

Investors await key US economic data releases later on Thursday, including the fourth-quarter Gross Domestic Product estimate and the latest Initial Jobless Claims report. These figures could provide fresh clues on the health of the US economy and influence expectations for future Federal Reserve policy moves.