A look at the day ahead in U.S. and global markets from Mike

Dolan

As a hectic January ends, world markets continue to brace for

U.S. import tariff rises as soon as this weekend - lifting the

dollar in anticipation as interest rates in Europe tumble.

Despite the currency market anxiety, stocks pushed higher -

with index futures adding to Thursday's Wall Street gains as the

world's most valuable company Apple rallied 4% ahead of today's

bell. Apple's upbeat outlook overnight impressed even in the

face of a slight quarterly earnings miss.

But U.S. President Donald Trump stole the show again late

yesterday as he kept markets guessing about the extent of

promised 25% import tariffs on Canada and Mexico on Saturday.

"We may or may not. We're going to make that determination

probably tonight," Trump said, when asked whether the tariffs

would cover Canadian and Mexican oil.

Aiming to push the two largest U.S. trading partners to take

action to halt illegal migrants and shipments of fentanyl, Trump

said the level of North American duties "may or may not rise

with time."

The Canadian dollar hit near five-year lows after

losing 1% in a week of another Bank of Canada rate cut. The

Mexican peso steadied from its steep fall from the

previous session but remained on track for its worst weekly

performance since October with a drop of almost 2%.

The dollar was higher more broadly, with the euro

hitting 10-day lows following the European Central Bank's

expected quarter-point interest rate cut on Thursday.

Even as the Federal Reserve paused its rate cut campaign

this week, the rationale for ECB easing was underlined by news

of a contraction in German and French economies in the final

quarter of last year, and January inflation readings from France

and the main German states were also below forecasts.

ECB sources said another rate cut is likely to go through in

March without much resistance among policymakers before the

debate between them on further easing becomes more heated. Other

reports said the central bank may stop describing its monetary

policy stance as "restrictive" after the March decision.

European stocks, however, continued to push higher

to new records in the thick of the earnings season there - with

Novartis up 2.4% after the drugmaker posted a hefty

quarterly income beat.

Euro zone stocks' near 8% gain for January in

dollar terms is more than twice that of the S&P500.

Back on Wall Street, the earnings deluge and this week's

curve ball from China on the DeepSeek artificial intelligence

model have distracted from the macro and political picture to

some degree.

Alongside the positive reception to Apple's update

overnight, Intel also rallied overnight after its

report. Even though Microsoft lost 6% on Thursday amid cloud

computing worries, another standout earnings-day gain was the

13% jump in IBM ( IBM ) - its biggest daily percentage gain

since 1999.

Big Oil tops Friday's corporate updates. Chevron ( CVX )

reported earnings below estimates as weak margins pushed its

refining business into a loss for the first time since 2020.

With the Fed on hold, there was a mixed economic data

picture. Fourth-quarter gross domestic product growth slowed to

2.25%, broadly as expected after the prior day's trade report,

but weekly jobless claims fell more than forecast too.

Friday brings a December readout on the Fed's favored

personal consumption expenditures (PCE) inflation gauge. The

annual 'core' PCE inflation rate is expected to have held steady

at 2.8%.

Elsewhere, Treasury yields were a touch higher

above 4.5%.

Gold hit a record high - and was set for its best

month since March 2024 as investors sought the safe-haven metal

due to heightened U.S. tariff concerns.

Key developments that should provide more direction to U.S.

markets later on Friday:

* US December personal consumption expenditures (PCE) inflation

gauge, personal income and spending, Q4 employment costs,

January Chicago business survey

* Federal Reserve Board Governor Michelle Bowman speaks

* US corporate earnings: AbbVie, Exxon, Chevron ( CVX ), Colgate

Palmolive, Aon, Franklin Resources, WW Grainger, LyondellBasell,

Revvity, Broadridge, Church & Dwight, Phillips 66, Charter

Communications

(By Mike Dolan, editing by William Maclean

[email protected])