Global equities began the week on a strong footing, with the MSCI World Index gaining 0.5%. This positive trend was driven by a series of economic updates and policy changes across major economies. On Tuesday, the markets are closely monitoring speeches from the Federal Reserve's Hammack and Williams, as well as industrial production data from the euro area. These developments, alongside political uncertainties and currency fluctuations, continue to shape market dynamics.
In Norway, January's inflation report revealed a slight uptick, with core inflation rising to 2.8% year-on-year, slightly above the consensus of 2.6%. This unexpected increase in inflation is likely to influence monetary policy decisions in the region. Meanwhile, Denmark experienced a dip in its Consumer Price Index (CPI), which fell to 1.5% from 1.9%, primarily due to declining electricity prices.
The foreign exchange market remains volatile, with the EUR/USD pair trading weakly near 1.0305 in early European sessions on Tuesday. Analysts note that initial support is expected at 1.0250, while the first upside resistance is at 1.0406. The fluctuations in currency values are partly attributed to ongoing political uncertainty ahead of the German elections and quantitative tightening measures.
In the United States, President Donald Trump signed an executive order imposing a 25% increase in tariffs on steel and aluminium imports. This move is expected to impact international trade relations and could have significant implications for industries reliant on these materials. Moreover, the US ASW-spread is widening amid expectations of reduced bank regulation and unchanged supply between bonds and bills.
US futures are showing slight declines this morning, mirroring a similar trend in Asian markets. This comes as investors assess the potential impact of these tariffs alongside other economic indicators. Financial sectors have been underperforming across all regions, possibly due to profit-taking activities after being one of the top-performing sectors this year with a global year-to-date increase of 6%.
In Europe, attention is focused on industrial production data for December in the euro area. Consensus forecasts predict a modest increase of 0.4% month-on-month, which could signal a gradual recovery in manufacturing outputs. Meanwhile, the Sentix investor confidence index for February surpassed expectations, rising to -12.7 against a consensus of -16.3, suggesting a reduction in investor pessimism.
On a corporate front, Ripple made headlines by announcing a partnership with Unicâmbio, a Portuguese currency exchange provider. This collaboration marks another step in Ripple's expansion strategy in Europe and aims to enhance its cross-border payment solutions.
In the commodities market, gold prices surged beyond $2,900, reaching a new all-time high on Tuesday. The precious metal's rally reflects heightened demand amid economic uncertainties and geopolitical tensions.