This week's international highlights: Trump will deliver the State of the Union address. How will Nvidia's earnings report and the US-Iran situation shake up the market?

Last week, international markets experienced turbulence, with ongoing tensions between Iran and the U.S. pushing oil prices higher. The U.S. Supreme Court overturned the Trump administration’s tariffs, igniting market reactions.

In the markets, U.S. stocks closed slightly higher, with the Dow up 0.25% for the week, the Nasdaq rising 1.51%, and the S&P 500 gaining 1.07%. European major indices performed well, with the FTSE 100 up 2.30%, Germany’s DAX 30 up 1.39%, and France’s CAC 40 up 2.45%.

This Week’s Highlights: The escalating tensions between the U.S. and Iran will continue to be a focus for investors, along with the impact of the Supreme Court’s decision to overturn Trump’s tariffs. Meanwhile, investors will closely watch U.S. economic data to gauge the Fed’s next rate cut. President Trump’s State of the Union address on the 24th will also attract market attention. In Europe, inflation data and confidence surveys will be key. Asian markets will reopen after the Lunar New Year holiday, with South Korea and Thailand releasing economic data and making central bank policy decisions.**

Nvidia Earnings Ahead

The latest Federal Reserve meeting minutes show officials are not strongly inclined to cut rates, with some policymakers even suggesting further rate hikes if inflation remains high. Data indicates that the Fed’s preferred personal consumption expenditures (PCE) inflation index unexpectedly accelerated in December, and January employment growth was robust.

On the other hand, U.S. economic growth in Q4 2025 slowed more than expected, with an annualized growth rate of only 1.4% after seasonal adjustment. London Stock Exchange Group (LSEG) data shows the U.S. money market has fully priced in two 25 basis point rate cuts by the Fed this year, with the first not expected until July. LBBW analysts believe the Fed minutes increase the risk of only one rate cut this year.

On the data front, the Producer Price Index (PPI) for January, due on the 27th, will provide more clues on inflation. HSBC economists expect PPI to rise 0.3% month-over-month, with the annual rate slowing from 3.0% in December to 2.8%. Other key data include the February Consumer Confidence Index from the Conference Board and the December S&P Case-Shiller Home Price Index.

Additionally, the U.S. will auction 2-year, 5-year, and 7-year Treasury bonds this week. Investors will focus on foreign demand, as recent fluctuations in U.S. Treasury yields suggest continued market interest.

As earnings season winds down, Nvidia, the AI giant, will undoubtedly be the biggest focus. Other notable reports include results from S&P 500 companies like Home Depot, Lowe’s, and Berkshire Hathaway, as well as Chinese tech giant Alibaba.

Oil and Gold

Geopolitical tensions pushed oil prices higher. WTI crude futures for near-month delivery rose 5.57% to $66.39 per barrel, while Brent crude gained 5.92% to $71.76 per barrel.

Both contracts hit six-month highs last Thursday amid ongoing concerns over Middle Eastern supply risks. Over the past week, the U.S. and Iran held negotiations in Switzerland to try to break the deadlock over Iran’s nuclear program. Early signs of progress were quickly overshadowed by U.S. accusations that Iran did not respond to core U.S. demands. President Trump later indicated he was considering limited military strikes on Iran to pressure concessions, which kept markets relatively stable. He added that within 10 days, the world would likely know whether the U.S. and Iran could reach an agreement or if military action was imminent.

Morgan Stanley’s chief commodities strategist, Martin Ratz, said despite ample global oil supply, three factors support oil prices: concerns over Iran, large-scale purchases by clients (raising questions about inventory management), and high freight costs. “The most prominent factor is clearly Iran,” he emphasized.

Barclays strategists believe that although markets have so far been unaffected by geopolitical noise, tensions have escalated since U.S. Vice President Vance accused Iran of not discussing a “red line,” and reports of increased U.S. military deployments in the region. “Any strikes are likely to be targeted and limited (against nuclear facilities or ballistic missiles), similar to last summer,” the report states. “Given the upcoming midterm elections and the government’s priority to protect American consumers’ purchasing power, the U.S. is unlikely to tolerate prolonged high oil prices or casualties. If conflict is imminent, it’s likely to be short-lived.”

Precious metals markets strengthened. COMEX gold futures for February delivery rose 0.74% to $1,505.93 per ounce, while COMEX silver futures gained 5.69% to $82.283 per ounce.

Due to the federal government shutdown and soft consumer spending, U.S. Q4 GDP growth slowed sharply to 1.4%. Gold prices rallied late in the session, amid news that Trump plans to introduce a new round of global tariffs following the Supreme Court’s tariff ruling. Independent metals trader Dai Huang said, “It’s hard to imagine Trump stopping here; he’ll try to reimpose tariffs through other regulations, which will increase market volatility.” He added that medium-term uncertainty will not scare off gold bulls.

Furthermore, the Fed’s preferred inflation indicator, the PCE index, rose 0.4% in December, exceeding the 0.3% forecast. RJO Futures senior market strategist Bob Haberkorn said, “The data shows inflation remains present, but weak GDP suggests the economy is not near a turning point. There are still many unknowns and uncertainties in the U.S. economy, supporting gold.”

Bank of England Rate Cut Expectations Rise

Recent economic data have not substantially altered market expectations for ECB interest rates. On the 23rd, Germany’s February IFO Business Climate Index will kick off a week of dense economic data releases, including surveys of businesses and consumers. On the 24th, France’s February business survey will be released; on the 25th, Germany’s GfK consumer confidence and France’s consumer confidence data; on the 26th, Italy and eurozone business and consumer surveys; and on the 27th, the European Central Bank’s consumer expectations survey.

Other key data include Italy’s January CPI inflation on the 23rd, eurozone’s January harmonized CPI final on the 25th, and eurozone M3 money supply on the 26th. France, Spain, and Germany will release preliminary February inflation figures on the 27th. Germany and France will publish Q4 2022 GDP details on the 25th and 27th.

However, rumors about Christine Lagarde’s potential early departure before November 2027 are attracting attention. The final decision will determine whether a German will lead the ECB or if a less hawkish candidate will be chosen to ensure a smooth transition and prevent euro appreciation. If Lagarde leaves early, it would be the first simultaneous appointment or replacement of both the Fed and ECB presidents, adding rare uncertainty to markets.

In the UK, economic data this week are relatively light. Key releases include the February GfK Consumer Confidence Index and Nationwide House Price Index. After recent weak employment data, the likelihood of a rate cut by the Bank of England in March has increased, with markets pricing in a 78% chance of a cut next month, according to LSEG data.

Meanwhile, domestic political developments will be in focus: a by-election in Gorton and Denton on the 26th could challenge Prime Minister Sunak’s leadership if the Labour Party suffers a significant defeat.

This Week’s Focus

(Article source: Yicai)