Morning Note: A Round-up of Global Financial Market News
Market News
The dollar and S&P 500 futures (-0.6%) declined as ambiguity over trade policy damped sentiment toward US assets and raised the prospect of heightened volatility across global markets. The Japanese yen, Swiss franc, and the euro led gains against the dollar as a broader gauge of the greenback retreated following last week’s advance. Gold ($5,130 an ounce) and silver ($85 an ounce) climbed.
The US Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) does not empower the President to impose tariffs. The ruling strikes down many of the sweeping levies that Trump had enacted. The President responded by invoking Section 122 of the Trade Act of 1974 to apply a new 10% global tariff on imports. Such levies are limited to just 150 days without congressional approval. Over the weekend, he has escalated further, increasing the global tariff to 15% via executive order.
The ruling opens doors to billions in refunds for importers who paid under the IEEPA tariffs, sparking potential legal battles and administrative chaos. However, USTR Jamieson Greer told CBS that trade deals negotiated with partners remain in place, even as the EU threatened to freeze ratification of a US pact and India postponed Washington talks.
Adding to the negatives for the US was the recent data showing fresh hints of stagflation. US economic growth slowed more than expected near the end of 2025 while inflation held firm, complicating the Federal Reserve’s path on interest rates. GDP rose at an annualised rate of just 1.4%, well below the market forecast of 2.5%. The softness was partly blamed on the government shutdown that ended in November. Meanwhile, inflation held firm in December, according to the gauge most closely watched by Fed officials. The core personal consumption expenditures (PCE) price index, which excludes food and energy, rose 3% in December. That matched the consensus forecast but kept the pivotal inflation measure well above the Fed’s 2% target.
Tensions remain high in Iran. Trump told advisers if diplomacy or a limited US strike fails to push Iran to scrap its nuclear program, he will consider a bigger attack, the NYT said. Talks are set to resume on Thursday in Geneva. The US has dramatically increased its military presence in the region. Several news outlets report that the scale of the deployment – which appears oriented towards air power – has echoes of the US’s build-up ahead of the 2003 Iraq invasion. The oil price remains above $70 a barrel.
The FTSE 100 is currently 0.2% lower at 10,665, while Sterling trades at $1.3515 and €1.1435.
Alphabet rose by 4% on Friday after the Google owner announced it has begun rolling out a new version of Gemini, its AI agent – Gemini 3.1 Pro. AI bellwether Nvidia is scheduled to release results after the market close on Wednesday.
Source: Bloomberg
