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.
What To Note Today
Fresh Tariffs Unveiled
Over the weekend, U.S. President Donald Trump announced a sweeping set of new tariffs. Imports from Canada and Mexico will now face a 25% duty, while goods from China will be hit with a 10% tariff. Interestingly, Canadian energy products receive a slight relief with a 10% tariff reduction. In a swift response, Canadian Prime Minister Justin Trudeau imposed retaliatory tariffs of 25% on $155 billion worth of U.S. imports, heightening tensions between the two nations. U.S. industry leaders have already voiced concerns about the potential fallout.
Immediate Market Reactions
The financial markets wasted no time reacting. U.S. stock futures dipped sharply on Monday as investors processed the implications of the new tariffs. Brent crude prices climbed over 1%, and U.S. oil saw an almost 2% uptick. Analysts warn that while tariffs might temporarily boost commodity prices, a prolonged trade war could trigger a global economic slowdown, eventually dragging oil prices down. Meanwhile, Bitcoin tumbled nearly 3.9% to $94,174.61 by 2:20 p.m. Singapore time, though some experts argue that escalating trade tensions could ultimately benefit cryptocurrencies.
January’s Market Performance: A Mixed Bag
Despite the tariff shock, U.S. markets ended January on a positive note. However, Friday saw a reversal of earlier gains as traders braced for the impact of Trump’s announcement. The S&P 500 slipped 0.50%, the Dow Jones Industrial Average fell 0.75%, and the Nasdaq Composite dropped 0.28%. In Asia, markets mirrored this downturn. Japan’s Nikkei 225 and South Korea’s Kospi declined by over 2%, fueled by a tech sector sell-off linked to DeepSeek. Major Taiwanese tech firms like TSMC and Foxconn also faced significant losses.
China’s Manufacturing Growth Slows
China’s factory output showed signs of strain, with the Caixin/S&P Global Manufacturing PMI falling to 50.1 in January from 50.5 in December. This dip, slightly below Reuters’ forecasts, reflects weakened export demand despite improved domestic orders. It’s the second consecutive month of declining new export orders, highlighting the challenges faced by China’s manufacturing sector amid global trade uncertainties.
Winners and Losers in the Tariff Battle
Not all sectors will feel the tariff pinch equally. U.S. businesses that are heavily reliant on imports or integrated into global supply chains will likely face the biggest challenges. The blanket nature of these tariffs means few exemptions, making it harder for companies to absorb rising costs without passing them on to consumers.
Bottom Line
Trump’s tariffs have transitioned from political rhetoric to economic reality, marking a volatile start to the year. While the S&P 500 achieved a record high in January, sustained growth may be difficult amid escalating trade tensions. This week’s job reports and Big Tech earnings, typically key market drivers, might be overshadowed by tariff-related developments.
Commodities like gold and oil are already reflecting heightened market anxiety, with prices climbing amid global uncertainty. Conversely, Bitcoin’s decline underscores the unpredictable nature of investor sentiment during such times.
China’s slowing industrial activity further complicates the landscape, as U.S. companies may start to diversify away from Chinese suppliers. While Trump’s tariffs target specific countries and sectors, the ripple effects are likely to be felt across global markets, with few industries entirely shielded from the impact.
