Global Markets: Trump Tariffs and AI Volatility Shape Fed Expectations

Trade Wars and Geopolitical Risks U.S.
President Donald Trump's firm stance on customs tariffs continues to weigh on global market risk appetite.
Trump's criticism of Supreme Court decisions has increased uncertainty regarding trade policies, signaling potential friction between the administration and the judiciary.
On the geopolitical front, the conclusion of indirect talks between Iran and the U.S.
and ongoing debates over nuclear programs are impacting oil prices.
Brent crude started the day with a 0.5% increase, reaching $71.6 per barrel due to supply concerns.
The Fed's Interest Rate Path and Macroeconomic Data Statements from Federal Reserve Board Member Christopher Waller regarding the labor market have shifted expectations for the rate-cutting process.
Waller indicated that if the recovery continues, the Fed might pause its cuts, leading markets to price in the first interest rate reduction for July.
Economic activity showed signs of slowing as U.S.
factory orders fell by 0.7% in December.
Meanwhile, 10-year Treasury yields stabilized at the 4.05% level.
Sharp Fluctuations in the AI Sector In the technology sector, Anthropic's announcement of new programming capabilities created selling pressure on cybersecurity and software giants.
Declines in shares of CrowdStrike, Zscaler, and IBM pulled down the Nasdaq and S&P 500 indices, while investor focus shifted toward Nvidia's upcoming earnings report.
Cautious Sentiment in European and UK Markets In Europe, ECB President Christine Lagarde emphasized that inflation is under control but noted that U.S.
tariff plans must remain within a legal framework.
Regional markets maintain a cautious stance ahead of scheduled remarks from Bank of England Governor Andrew Bailey.