The Mexican peso hit a one-month-high. Silver price under pressure from weak data from China and Trump’s tariff policy

The Dow Jones Index (US30) was down 0.32% on Friday (+2.57% for the week). The S&P 500 Index (US500) was down 0.29% (week-to-date +1.77%). The Nasdaq Technology Index (US100) fell by 0.58% (week-to-date +1.45%). The stock market traded quietly on Friday, helped by relative stability in the bond market, which has driven much of the activity on Wall Street of late. When worries about inflation and rising US government debt intensified, Treasury yields rose and helped push stock prices lower. When fears subside, such as after last week’s encouraging inflation data, yields fall and help stocks rise.

Earnings season is in full swing, with companies reporting Q4 results. Texas Instruments closed down more than 7% on Friday, topping the chipmaker’s list after estimating weaker-than-expected first-quarter earnings per share. According to Bloomberg Intelligence, analysts estimate S&P 500 earnings growth of 7.5% y/y in Q4, the second-highest preseason projection in three years.

Canadian dollar growth continues to be held back by ongoing tariff threats from the US, including a proposed 25% tariff hike on Canadian imports effective February 1, which could put further pressure on the Bank of Canada to cut its benchmark interest rate by 25 basis points this week. Additionally, crude oil prices, a key driver for commodity-linked longs, extended their decline as Trump threatened tariffs against China, Canada and Mexico, raising concerns about global economic growth and oil demand.

The Mexican peso (USD/MXN) rose to 20.2 per US dollar, hitting a 1-month-high, driven by easing tariff fears amid a lack of immediate tariff action from US President Trump that had previously driven the currency to three-year lows. The country’s economic activity grew at an annualized rate of 0.5% in November, down from an upwardly revised 0.8% in October and below estimates of 0.6%, though it marked the fifth straight month of growth.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) fell by 0.08% (week-to-date +2.36%), France’s CAC 40 (FR40) closed higher by 0.44% (week-to-date +2.66%), Spain’s IBEX 35 (ES35) fell by 0.07% (week-to-date +0.46%), and the UK’s FTSE 100 (UK100) closed negative 0.73% (week-to-date -0.03%). The French Index marked its ninth consecutive session of gains and remains at its highest level in more than seven months. Companies such as Ryanair, ASML, LVMH, Shell and Roche are all due to report last quarter’s results this week.

WTI crude prices fell to $74 a barrel on Monday, recording the first weekly drop this year, as President Donald Trump stoked trade concerns and demanded OPEC+ cut oil prices. He also warned of sanctions on Russia if it doesn’t strike a deal to end the war in Ukraine. However, OPEC and its allies, including Russia, have yet to respond in any way to Trump’s call, with OPEC+ delegates instead pointing to a plan to increase production from April.

Silver prices (XAG/USD) fell by 1% on Monday, reversing gains from the previous session as the dollar recovered after US President Donald Trump’s threat to impose tariffs and sanctions on Colombia renewed fears of a broader trade conflict. Trump’s warning came after Colombia blocked two US military planes carrying deported migrants as part of a crackdown on illegal immigration. Market sentiment was also worsened by data showing that manufacturing activity in China, the world’s biggest silver consumer, unexpectedly contracted and growth in the services sector slowed sharply.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) added 3.26%, China’s FTSE China A50 (CHA50) was down 0.59%, Hong Kong’s Hang Seng (HK50) was up 1.32%, and Australia’s ASX 200 (AU200) was positive 1.19%.

The New Zealand dollar slid to $0.568 on Monday, retreating from a five-week high, as traders reacted to weak PMI data from China, New Zealand’s largest trading partner. China’s manufacturing output contracted for the first time since last September, the sharpest decline in five months, while services growth slowed sharply from a nine-month high. Domestically, softer Q4 2024 inflation data in New Zealand reinforced expectations of further rate cuts. Swap markets now estimate a 90% probability of a 50bp rate cut next month, with the RBNZ expected to cut rates by 100bp in 2025.