(Reuters) – U.S. President Donald Trump’s fast-changing tariff decisions have super-charged market volatility and investor uncertainty, with little respite in prospect in the days ahead.
There is potential for another Trump surprise on anything from tariffs to geopolitics, alongside the usual set events such as U.S. inflation data.
And investors are keenly watching one market that has had its best start to the year in a decade versus Wall Street.
Here is your look at the week ahead from Rae Wee in Singapore, Lewis Krauskopf in New York, Danilo Masoni in Milan and Naomi Rovnick and Marc Jones in London.
1/ TALKING TARIFFS
Markets were cheered by Trump’s decision to suspend tariffs on Mexico and Canada hours before they were due to come into force. But investors are not sure if the tariff talk is brinksmanship to extract concessions or will act to deepen global rivalries and intensify economic attacks on the U.S.
Columbia Threadneedle chief EMEA economist Steven Bell said Trump negotiating some tariffs away may not prevent him from threatening them again. Bell warns of a possible trade war that could upend the established world order.
Deeper global rivalries could also intensify efforts by China, Brazil, Russia and Iran to weaken emerging nations’ reliance on the U.S. currency for trade, which some economists say represents a growing challenge to dollar hegemony.
2/ PRICE POINTS
Release of a key gauge of monthly U.S. consumer prices is set to test investor nerves after Trump’s tariff threats triggered warnings from several Fed officials of the risk of an inflation pickup.
January’s consumer price index on February 12 is expected to show a 0.3% monthly increase, a Reuters poll shows.
Last month’s report showed core CPI, which excludes the volatile food and energy components, moderated after barely budging for four straight months, encouraging investors.
But the monetary policy outlook remains uncertain after the Fed paused easing last month and Trump’s tariff push began.
3/ FACE OFF
Round two of the Sino-U.S. trade war has only just begun, and investors are gearing up for a prolonged tit-for-tat between the world’s two largest economies.
Near-term focus remains on whether a highly anticipated conversation between Trump and Chinese President Xi Jinping actually happens, and if the U.S. President could grant some sort of deferment, as he did with Mexico and Canada.
But China has enough problems on its own.
The wait for further stimulus measures from Beijing is proving futile and the road to recovery is seemingly a long and arduous one, meaning more investors are avoiding a market that was once a must-have in their portfolios.
And Chinese consumer price data on Sunday is likely to underscore reasons to keep those bearish bets on China for now.
4/ EUROPE POWERS UP
Europe Inc is ticking all the boxes: cheap valuations, earnings growth and momentum. Investors are pouring in.
Powered by gains in Frankfurt, London, Milan, and Paris, the STOXX 600 has marked its best performance since 2015 against Wall Street over the first six weeks of 2025.
However, given its history of short-lived outperformance, the question remains: will this rally last, or is it just a flash in the pan?
There are several potential catalysts for more near-term gains. Tariffs are a wild card, but if the stars align, Germany might loosen fiscal policy and Ukraine tensions may ease.
European earnings growth is forecast at 7.9% in 2025, from 1% last year and after a 3.9% fall in 2023. U.S. earnings will grow at a slower rate, but still above Europe.
5/ DON’T GO AWAY
Ecuador’s elections are rarely boring, but Sunday’s vote promises to be particularly pivotal.
President Daniel Noboa’s main challenger is Luisa Gonzalez, whom he defeated in 2023’s snap elections. The leftist lawyer is vying to be Ecuador’s first woman president.
Opinion polls suggest banana-business heir Noboa could win outright, although many think a second round run-off vote in April will be required.
The key issue remains tackling the country’s violent drug gangs and avoiding another debt crisis after a severe drought last year caused widespread power blackouts.
Noboa is the market’s favoured ‘continuity candidate’, but it is complicated. He has had a very public falling-out with his Vice President Veronica Abad over who he left in charge during his unpaid campaign leave. He also just beat Trump to the punch by slapping 27% tariffs on Mexico.
(Compiled by Amanda Cooper; Graphics by Vineet Sachdev, Sumanta Sen, Kripa Jayaram, Prinz Magtulis and Carolina Mandl; Editing by Dhara Ranasinghe and Alexander Smith)
