A weak JOLTS report reinforced the likelihood of multiple Fed rate cuts this year

At Tuesday’s close, the Dow Jones Index (US30) was up 0.30%. The S&P 500 Index (US500) added 0.72%. The Nasdaq Technology Index (US100) was up 1.26%. Despite China imposing new tariffs on US coal, liquefied natural gas, crude oil and farm equipment in response to Washington’s 10% duties on Chinese imports, market sentiment remained cautiously optimistic. Hopes for a détente on trade increased after President Trump agreed to delay the imposition of tariffs on Canada and Mexico for at least 30 days. Meanwhile, the JOLTS report showed that there were fewer job openings in the US in December than expected, and manufacturing orders fell sharply. Thus, the market continued to bet on multiple Fed rate cuts this year, supporting the position of rate-sensitive assets.

The Mexican peso held near 20.36 per US dollar, supported by US President Trump’s decision to postpone the imposition of 25% tariffs on Mexican imports, easing fears of economic turmoil and dampening risk sentiment that limited demand for the US dollar.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) rose by 0.36%, France’s CAC 40 (FR40) closed higher by 0.66%, Spain’s IBEX 35 (ES35) gained 1.37%, and the UK’s FTSE 100 (UK100) closed negative 0.15%. The European Union is seeking to defuse a looming conflict with the US over steel and aluminum exports that is set to erupt next month. However, early indications are that EU officials have failed to make good contacts in the emerging US administration, so the Eurozone is preparing for a trade fight.

WTI crude oil prices rose to just below $73 a barrel on Tuesday after hitting a session low of $70.65 amid rising expectations that the US will tighten sanctions against Iran. President Trump intends to restore “maximum pressure” on Iran in a bid to halt oil exports altogether and counter its regional influence. The move will include new sanctions and tougher action against violators.

Palladium (XPDUSD) prices fell to $1,030 an ounce, retreating from a three-month high of $1,063 hit on January 31, as problems in the global auto sector reduced consumption of catalytic converters. Declining car sales in China and the EU, combined with the ongoing shift to electric vehicles, have reduced automakers’ demand for palladium. In addition, trade tensions between the US and China negatively impacted industrial demand, particularly in China, where manufacturing activity remains sluggish amid weak export growth and low domestic consumption.

Asian markets were predominantly falling yesterday. Japan’s Nikkei 225 (JP225) rose by 0.72%, China’s FTSE China A50 (CHA50) gained 1.04%, Hong Kong’s Hang Seng (HK50) added 2.83%, and Australia’s ASX 200 (AU200) was negative 0.06%. The Hang Seng Index retreated from a near two-month high reached a day earlier after China imposed tariffs on various US goods in direct retaliation to new 10% duties on Chinese imports announced by President Donald Trump. Meanwhile, the White House said a meeting between Trump and Chinese leader Xi Jinping has yet to be scheduled, adding to market uncertainty. On the data front, a private survey showed China’s services sector grew at its slowest pace in four months in January, further dampening sentiment.