A look at the current state of U.S. and global markets by Mike Dolan
Following a tumultuous week of fluctuating tariffs, Wall Street stocks are once again trending downward, influenced by a lukewarm reception for Alphabet, lingering rate hike plans, and renewed interest speculations in Japan.
U.S. stock futures are in negative territory as trading opens on Wednesday, with mega-cap Alphabet experiencing a 7% overnight decline. Concerns about its cloud computing business, similar to Microsoft's situation the previous week, and apprehension regarding substantial investments in artificial intelligence have led to this drop.
Adding to the pressure, also experienced a 9% decline due to disappointing AI chip revenue results.
Amidst a wave of corporate earnings releases worldwide, recent news on global macro policy has further contributed to the market's unease.
Japanese yen made significant gains, prompting discussions about a potential Bank of Japan rate hike this year following a 0.6% year-on-year increase in December's inflation-adjusted real wages.
As Chinese markets resumed activity after the Lunar New Year holiday, uncertainty loomed over the recent developments, including the 10% U.S. tariff hikes on Chinese imports, Beijing's intended retaliatory actions by Feb. 10, and advancements in DeepSeek AI technology.
Market indexes in mainland China and Hong Kong suffered losses on Wednesday after hopes of a meeting between U.S. President Donald Trump and China's President Xi Jinping were dashed. The U.S. decision to delay tariffs on Canada and Mexico eased tensions momentarily.
The currency situation showed mixed reactions, with the onshore yuan slightly weakening post-holiday, while the offshore yuan strengthened for the second consecutive day.
Elsewhere, a decline in U.S. Treasury yields and an unexpected drop in U.S. job numbers for December have affected the dollar's position, allowing for more flexibility in Federal Reserve policy adjustments.
Gold emerged as a safe haven asset amid the prevailing uncertainties, reaching a new year-to-date high.
In other news, Nissan is reportedly calling off merger talks with Honda, impacting their respective stock prices.
Crucial developments expected to impact U.S. markets later on Wednesday include:
- U.S. January private sector payrolls from ADP, Jan service sector surveys from ISM and S&PGlobal, December international trade balance; Canada Dec international trade
- Speeches by Federal Reserve officials Philip Jefferson, Michelle Bowma, Austan Goolsbee, and Thomas Barkin; European Central Bank chief economist Philip Lane to speak in Washington
- Notable U.S. corporate earnings reports from Qualcomm, Boston Scientific, Walt Disney, Ford, and others.