This report is from today’s TNC’s Daily Open, our international markets update. TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
The U.S. Federal Reserve rate-setting committee unanimously decided to keep rates unchanged in January, partly due to concerns about the effect of President Donald Trump’s tariffs on inflation. On Tuesday, Trump suggested (additional) potential tariffs on certain industries to demonstrate the Fed’s foresight.
Apple unveiled a new, inexpensive iPhone on Wednesday in an effort to increase its market share. However, if tariffs cause Apple and other U.S. corporations to boost costs, the competitively priced smartphone may lose some of its value compared to its normal counterparts.
The stock market remained stable as the S&P 500 cheerfully climbed to another record close. According to minutes from their January meeting, Fed officials are enthusiastic about the economic outlook, which may make it more difficult to reduce inflation. On the other hand, stocks are supported by a robust U.S. economy.
What To Note Today
Fed Worries About Tariffs
According to the minutes of their January meeting, which were made public on Wednesday, U.S. Federal Reserve policymakers decided they would have to wait for inflation to further decline before further reducing interest rates. “Upside risks to the inflation outlook” were mentioned. Participants specifically mentioned the potential consequences of prospective adjustments to immigration and trade laws.
Potential Trump Auto Tariffs
U.S. President Donald Trump hinted on Tuesday that he would levy taxes on imports of semiconductors, cars, and medications in addition to the duties he had already declared. Trump told reporters that the duties would be about 25%, that they could begin as early as April 2, and that they would become “substantially higher over a course of a year.” Mexico, Japan, and Canada are the countries that export the most automobiles to the United States.
S&P’s Second Consecutive Record
Wednesday saw the S&P 500 close at a record close, up 0.24%. The Nasdaq Composite increased by 0.07%, while the Dow Jones Industrial Average increased by 0.16%. Following the announcement that the US Defence Secretary is directing the Pentagon to reduce its budget, Palantir’s stock fell 10%. The markets in Asia-Pacific declined on Thursday. The threat of vehicle tariffs caused South Korean and Japanese auto stocks, including Hyundai and Nissan, to pull back, which hurt both nations’ indices.
Interest Rates Are Held In China
On Thursday, the People’s Bank of China did not alter its main interest rates. Beijing appears to be putting financial stability ahead of economic stimulation, as seen by the one-year loan prime rate remaining 3.1% and the five-year LPR at 3.6%. Both figures were consistent with estimates from a Reuters poll. The latter is a benchmark for mortgage rates, while the former affects business loans and most household loans in China.
Apple Releases The New iPhone
On Wednesday, Apple revealed the iPhone 16e, which will go on sale later this month and costs $599 less than its flagship iPhone models. The A18 chips made by Apple are used in it and are also present in the primary iPhone 16 versions. This means the iPhone 16e supports Apple Intelligence, making it Apple’s least-cost new phone that can access capabilities like image generation and notification summaries.
Ignoring the Tariff Threat
Despite the uncertainties produced by tariffs—and with each week seemingly a new one announced—equities have largely rallied since Trump’s inauguration. Tuesday and Wednesday saw the S&P reach two straight closing highs. According to the head economist at Goldman Sachs, this is why Trump’s tariffs haven’t alarmed investors.
Bottom Line
Microsoft unveiled Majorana 1, its first chip for quantum computing, on Wednesday. The tech behemoth asserts that it had to develop a completely new state of matter, which it calls a topological state, to construct Majorana 1. Microsoft’s quantum device uses aluminum, a superconductor, and indium arsenide, a semiconductor, to create eight topological qubits.
Microsoft is producing the Majorana 1 components in the United States rather than depending on TSMC or another business for fabrication. That is feasible because the work is being done on a modest scale. Scientists think that in the future, quantum computers may be able to effectively tackle issues that would be difficult, if not impossible, for traditional computers.
