Markets spent 13–19 January in a tug‑of‑war between strong US earnings, fresh geopolitical tariffs, and political noise around the Federal Reserve’s independence. President Trump’s new 25% tariff on any country doing business with Iran lifted energy and safe‑haven demand, while solid US bank results and stronger‑than‑expected GDP momentum helped keep risk appetite intact even as rate‑cut hopes for 2026 were pared back.
FX Market Reactions
- The US dollar advanced slightly on the week (DXY up about 0.2%), helped by safe‑haven flows after Iran‑related tariff headlines and lingering concerns over Fed leadership, even though softer core CPI initially boosted cut expectations.
- The euro underperformed among G10 currencies as growth worries and dovish expectations weighed on EUR crosses.
- Commodity‑linked currencies such as AUD and NZD gave back recent gains as the dollar firmed and geopolitical tensions undermined risk sentiment, while the yen stayed soft as markets continued to doubt how far the Bank of Japan can tighten.
Commodities Market Reactions
- Hard assets dominated: gold, silver, and copper all pushed to fresh highs as investors sought protection against renewed tariff risk, geopolitical tension and fiscal uncertainty.
- Oil prices spiked on the Iran tariff announcement, then eased back as immediate supply risks appeared limited; front‑month crude still finished the week modestly higher.
- Agricultural commodities lagged, pressured by ample supply expectations and improving crop outlooks, in contrast to the strong bid in metals and energy.
Indices Market Reactions
- US equities tested, and in some cases broke, record levels again: the S&P 500 and Dow Jones were driven higher by robust earnings from major US banks and resilient tech, even as headlines about a potential 10% cap on credit‑card interest rates weighed on parts of the financial sector.
- The ASX 200 rode strong demand for industrial and precious metals, with its materials sector up nearly 10% month‑to‑date and support from energy names and the big four banks.
- In Europe, equities added small gains, with miners and chipmakers benefiting from the metals rally and upbeat semiconductor news, while China‑led Asia saw a recovery as deflation fears faded.
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