MARKET SNAPSHOT

The U.S. struck last-minute deals with Mexico and Canada to delay new tariffs. U.S. stocks closed lower, on a day of huge swings in global markets. Treasury yields settled mostly higher, indicating concerns that inflation could get stickier in the short term, while long-term growth could suffer. The dollar strengthened, while oil finished higher amid concerns that tariffs would reduce U.S. crude imports. The uncertainty that surrounds the tariff plans led gold to another record high.

MARKET WRAPS

EQUITIES

The Trump administration's proposed tariffs jolted global markets, driving huge swings in stocks around the world and sending the dollar higher.

But by midday, many of the trades had reversed after the U.S. and Mexico struck a last-minute deal to delay new levies for a month. After markets closed in the U.S., a smiliar agreement with Canada was also announced.

The Dow Jones Industrial Average closed down 0.3%, the S&P 500 slipped 0.8%, while the tech-heavy Nasdaq Composite shed 1.2%.

"People are pretty optimistic that either the tariffs don't happen or they're much more tamped down," said Danny Kirsch, head of options at Piper Sandler. Investors are wearing "rose-tinted glasses right now."

Earlier Monday, Hong Kong shares ended flat, with the Hang Seng Index little changed. Market sentiment had been weighed by Trump's announcement on additional tariffs on Chinese goods. Among major stocks, gaming companies led the decline after Macau reported its gaming revenue fell for a second-straight month.

Markets in mainland China were closed for the Lunar New Year celebrations.

Japan's Nikkei Stock Average declined 2.7% as risk-aversion gathered steam following President Trump's tariff announcement. Auto stocks fell sharply as Japanese automakers not only produce cars at U.S. plants or import from Japan but also make them in Mexico and import to the U.S.

In Australia, the S&P/ASX 200 Benchmark Index declined 1.8%, snapping a three-day winning streak.

New Zealand's NZX-50 index lost 1.4% as U.S. tariffs on Canada, Mexico and China reverberated around the world.

COMMODITIES

Oil futures finished with a gain as Trump's tariff announcements over the weekend sparked worries over U.S. crude imports. Upside was limited, however, by concerns that a trade war would dent demand.

At a regularly scheduled meeting, ministers from members of OPEC+ left its existing oil production plans unchanged, even as Trump last month called on the group to lower oil prices.

West Texas Intermediate crude for March delivery rose 0.9% to settle at $73.16 a barrel on the New York Mercantile Exchange.

April Brent crude, the global benchmark, tacked on 0.4% to $75.96 a barrel on ICE Futures Europe.

March natural gas surged 10.1% to $3.35 per million British thermal units as forecasts of much colder U.S. weather added to the tariff turmoil.

Front-month gold finished up 0.8% to $2,833.90 a troy ounce, setting a new record-high. The uncertainty that surrounds tariff plans appears to be driving investors toward gold as a safe-haven asset, with traders speculating that physical metal prices have room to travel higher.

"With supply chain constraints mounting, both gold and silver prices are on the rise, and physical metal premiums could soon follow," said Alex Ebkarian of Allegiance Gold.

TODAY'S TOP HEADLINES

U.S. Pauses Tariffs on Mexico, Canada. China Levies Are Still Happening-for Now.

President Donald Trump is pausing plans for 25% tariffs on goods from Mexico and Canada after separate meetings with the leaders of both nations.

Canada Prime Minister Justin Trudeau said in a social media post on Monday afternoon that the threatened tariffs had been paused for "at least" 30 days.

Earlier, Trump announced a similar pause on tariffs for Mexico imports after talks with Mexican President Claudia Sheinbaum Pardo.

Trump Signs Order to Create U.S. Sovereign-Wealth Fund

President Trump on Monday signed an executive order to create a U.S. sovereign-wealth fund and suggested the fund could be used in unlocking a deal to keep TikTok operating.

"I think in a short period of time, we'd have one of the biggest funds. And you know, some of them are pretty large," Trump said, referring to Saudi Arabia's Public Investment Fund. "I think it's about time that this country had a sovereign-wealth fund."

Trump didn't explain what role the fund would play in a potential purchase of TikTok. "TikTok, we're going to be doing something, perhaps with TikTok, and perhaps not; if we make the right deal, we'll do it," Trump said. "But I have the right to do that, and we might put that in the sovereign-wealth fund."

Fed interest-rate cuts might not come anytime soon, two top officials say

Two senior Federal Reserve officials said Monday that they are in no rush to cut interest rates further given the uncertainty surrounding the U.S. economic outlook and the White House's new policies, including tariffs.

"In my view ... it's really appropriate for policy to be patient, careful and there's no urgency for making additional adjustments, especially given all of the uncertainty," said Boston Fed President Susan Collins in an interview with CNBC.

Atlanta Fed President Raphael Bostic echoed Collins's sentiments in a moderating discussion at the Rotary Club of Atlanta. Noting that the Fed cut interest rates by 100 basis points over three meetings starting last September, Bostic said he wanted to see what this easing "translates to in terms of the economy."

Palantir Earnings Demolish Wall Street Expectations. The Stock Is Zooming.

Palantir Technologies posted a big beat in its fourth-quarter results on Monday afternoon. Shares rose in after-hours trading.

Earnings per share were up annually by 75% to 14 cents, compared with Wall Street's consensus estimate of 11 cents, according to FactSet. Revenue for the quarter reached $828 million, above expectations of $776 million and up 36% on the year.

Palantir's revenue outlook for the first quarter came in well above expectations at $858 million to $862 million, up 36% from 2024 at the midpoint versus a $799 million analysts' estimate.

L'Oreal to Sell $3.1 Billion Stake in Sanofi Back to Pharma Group

L'Oreal will sell part of its stake in Sanofi back to the French pharmaceutical company for 3 billion euros ($3.11 billion), bolstering its balance sheet while the beauty industry is undergoing a slowdown.

The deal will diversify the French beauty giant's funding sources and represent a big chunk of Sanofi's 5 billion-euro buyback program set out last week, the companies said Monday.

The maker of Garnier shampoo and Lancome cosmetics products has for decades been one of top shareholders in the different iterations of Sanofi, and analysts have in the past said that selling the stake would allow L'Oreal to fund potential acquisitions or buybacks.

Expected Major Events for Tuesday

21:00/SKA: Jan International Reserves

21:45/NZ: 4Q Household Labour Force Survey

21:45/NZ: 4Q Labour Cost Index (Salary & Wage Rates)

21:45/NZ: 4Q Quarterly Employment Survey

22:00/AUS: Jan Australia Services PMI

22:00/AUS: Dec Australian PMI

22:00/AUS: Jan Australian PMI

22:00/AUS: Dec Australian PCI

22:00/AUS: Jan Australian PCI

23:00/SKA: Jan CPI

23:30/JPN: Dec Provisional Labour Survey - Earnings, Employment & Hours Worked

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(END) Dow Jones Newswires

February 03, 2025 17:01 ET (22:01 GMT)

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