US futures
Dow futures 0.20%, S&P futures 0.05% & Nasdaq futures 0.40%
In Europe
FTSE 0.25% & DAX -0.05%
- Stocks steady after AI worries and tariff confusion yesterday
- 10% global trade tariffs came in today, not 15%
- AI worries send the US Software sector 22% lower this month
- Oil hovers around a 6-month high ahead of US-Iran nuclear talks
Stocks steady despite tariff confusion, AI concerns
US stocks are set for a modestly higher open after steep losses in the previous session, as markets continued to weigh up the risk of disruption from AI advances in software development.
Software stocks have fallen by more than 20% over the past month amid fears that AI tools will replace software services. Yesterday, research house Citrine sketched out a worst-case scenario in the labour market and the wider economy from a rapid AI rollout. Those fears are showing some signs of steadying today.
However, any upside is being limited by confusion surrounding US tariffs since Friday. Trump's new tariffs at 10% came into effect today rather than the 15% announced by Trump on Saturday, highlighting the uncertainty surrounding U.S. policy. Meanwhile, countries around the world are wondering whether bilateral trade deals remain in place or are now defunct.
All this makes a difficult backdrop for President Trump's State of the Union speech later today, which may mean that he dwells more on geopolitical issues than on economic policies.
Corporate news
Home Depot is rising over 2% after the home improvement retailer beat estimates for Q4 results and maintained annual forecasts, benefiting from resilient demand from budget-strapped customers
Novo Nordisk drops a further 3% after JP Morgan downgraded the drug-making giant to neutral from overweight following disappointing results for an obesity drug trial yesterday
AMD is rising over 10% of the company agreed to sell up to $60 billion worth of AI chips to Meta Platforms over five years, and a deal that allows the Facebook owner to purchase as much as 10% of the chip firm.
Dow Jones forecast – technical analysis.
The Dow Jones broke below its multi-month rising trendline and the 50 SMA, before finding support at 48,700, the February 6 low. The price continues to trade within a familiar holding pattern. Sellers will need to break below 48,700 to create a lower low. Bringing 48,400 into focus, the February low and 48,000. Should the 48,700 support hold, buyers will look to rise above 49,650, the upper band of the rising to create a higher high and bring 50,000 into play.
FX markets – USD rises, UD/JPY gains
The U.S. dollar is rising, recouping yesterday's losses, as the markets continue to weigh up the potential impact of global tariffs on the outlook for monetary policy and the dollar. The latest 10% global tariffs are unlikely to trigger an immediate shift in the Fed's cautious stance on rate cuts.
EUR/USD is lower on U.S. dollar strength amid a quiet eurozone economic calendar. Attention is turning to German GDP figures tomorrow and German CPI data on Friday, although neither is expected to affect the ECB's outlook for rates, with no rate cut expected this year.
USD/JPY is rising amid a stronger U.S. dollar and after Prime Minister Takaichi indicated she will take a harder stance against the Bank of Japan's potential interest-rate hikes. As a result, the yen has fallen sharply against its major peers. Tokyo inflation is due later in the week and is expected to show inflation cooling further from the 2% target, pushing out rate hike expectations.
Oil hovers around a 6-month high ahead of US-Iran talks
Oil prices are rising, trading around a six-month high, ahead of a third round of nuclear talks between the US and Iran and amid economic uncertainty stemming from the latest US tariff turbulence.
Geopolitical tensions between the US and Iran have been in focus, lifting oil prices in recent weeks. However, Iran has indicated it's prepared to make concessions on its nuclear programme. The US trade envoy will meet with the Iranian delegation on Thursday. This comes amid growing concerns over potential military conflicts between the US and Iran.
On the demand side, concerns about the impact of higher US trade tariffs could limit the outlook for demand and the upside in oil prices, though there is still significant confusion about the outlook for tariffs.
