The president proposed a 25% tariff on steel and aluminium imports, reviving concerns about inflation and supply chain disruptions. However, investors remained focused on corporate earnings and the Federal Reserve’s stance on interest rates, with markets showing resilience despite potential economic headwinds.
Nasdaq Climbs as Tech Stocks Lead the Charge
Despite looming trade barriers, the Nasdaq climbed 1%, driven by strong performances from major technology firms such as Nvidia. Investors largely brushed off the tariff threats, a reaction reinforced by past instances where Trump softened or reversed similar trade measures. While some sectors reliant on imported metals saw modest declines, overall market sentiment remained optimistic (source: Reuters).
Steel and Aluminium Producers Surge on Tariff News
The announcement had an immediate impact on steel and aluminium producers, with companies like Nucor and Cleveland-Cliffs seeing their stock prices surge. Meanwhile, industries heavily reliant on these raw materials, such as automotive and manufacturing, faced selling pressure as investors weighed the potential cost implications (source: AP).
Federal Reserve’s Policy in Focus Amid Inflation Risks
The Federal Reserve’s stance on interest rates will play a crucial role in shaping the market’s longer-term response to these tariffs. Rising import costs could add to inflationary pressures, potentially influencing future policy decisions and injecting more uncertainty into the economic outlook. Traders will be watching closely for any signals from Fed officials on inflation and the possibility of rate adjustments.
Long-Term Market Impact: Uncertainty Looms Over Trade Policies
While markets have largely shrugged off the new tariff risks, the long-term impact on the broader economy and the technology sector remains uncertain. Investors will be watching closely to see how these trade policies evolve and whether they lead to sustained market volatility. For now, strong corporate earnings and optimism in tech stocks continue to support the Nasdaq’s upward momentum.
Nasdaq Price Action: Market Session Breakdown
Asian Session: Third Consecutive Weekly Gap Down
The Asian session opened with a third consecutive weekly gap down, with price swiftly dropping below the 2025 yearly VWAP and breaking last week’s value area low. The session low was set at 21,418, marking the day’s bottom before buyers stepped in. This move followed Donald Trump’s announcement of a 25% tariff on steel and aluminium imports, a policy shift that initially rattled markets. However, unlike in previous weeks, the sell-off was more contained, and buyers quickly stepped in to fill the gap.
European Session: Buyers Regain Control After Initial Rejection
During a muted European session, the market retested last Friday’s New York value area high (VAH), facing a brief rejection before regaining momentum. Buyers gradually took control of this key technical level, where price consolidated, suggesting a potential continuation into the New York open.
New York Open: Bullish Momentum Meets Consolidation
At the New York open, bullish momentum continued as price swiftly retested last week’s VAH. The session high was established at 21,894, but with no fresh catalysts despite anticipation for comments from Trump, price remained in consolidation for the rest of the session.
Key Technical Levels: Range-Bound Market Awaits Breakout
The higher time frame chart remains range-bound, with traders closely watching 21,400 as key support and 21,900 as major resistance. With elevated headline risk, larger players may stay on the sidelines until conditions stabilise. Meanwhile, several high-impact economic events are on the calendar this week, including Fed Chair Jerome Powell’s testimony on Tuesday, February 11, and key CPI data set for release on Wednesday, February 12. A breakout in either direction could set the tone for the next major move.
