Stocks paused on Thursday after recent rallies brought European and U.S. benchmarks to the brink of record highs. The Stoxx Europe 600 index was flat, narrowly missing an all-time peak reached Wednesday, with technology shares retreating over 1%, erasing much of the prior day’s gains. Shares of Puma SE plunged after the German sportswear giant reported earnings that fell short of expectations.
In the U.S., equity futures dipped as the S&P 500 hovered near its record high, buoyed earlier by optimism surrounding artificial intelligence and strong corporate earnings. Futures on the Nasdaq 100 dropped 0.4%, while those for the S&P 500 slipped 0.2%.
Mixed Signals from Trump’s Policies
Investors remain cautious as they digest the impact of President Donald Trump’s early decisions. Optimism over his pledge to boost AI investments lifted tech stocks on Wednesday, but his threats of tariffs on key trading partners like Europe and China are keeping markets on edge. While no measures have been implemented yet, the uncertainty lingers.
“We expect short-term volatility as markets react to Trump’s headlines,” said Mark Haefele, Chief Investment Officer at UBS Global Wealth Management. “If tariffs are enacted, they could negatively impact targeted regions. However, we believe U.S. equities can climb higher, driven by sustained growth momentum.”
Yields on 10-year Treasuries held steady at 4.60%, while the U.S. dollar index remained unchanged.
Market Movers to Watch
Thursday’s key events include U.S. jobless claims data, Trump’s highly anticipated address at the World Economic Forum in Davos, and quarterly earnings reports from major corporations such as General Electric, American Airlines, and Texas Instruments.
Meanwhile, in Asia, stocks advanced after Chinese officials reassured investors about their commitment to market stability. The MSCI Asia Pacific index rose for a fourth straight session, marking its longest winning streak in nearly a month. Gains in mainland China drove the CSI 300 index up as much as 1.8% before paring back slightly.
A briefing from China’s securities regulator, encouraging insurers and mutual funds to increase equity holdings, boosted sentiment among local investors. This followed concerns earlier in the week over potential fallout from Trump’s tariff threats.
“This feels like preparing the firewood for a campfire: the setup is there, but we’re waiting for the spark,” said Tai Hui, Chief Market Strategist for Asia-Pacific at JPMorgan Asset Management. “Global investors remain wary of how a deteriorating U.S.-China relationship might impact investment flows.”
Bank of Japan and Commodity Updates
The Bank of Japan is set to raise interest rates to their highest level since 2008 on Friday, signaling steady progress toward policy normalization. This comes as the Federal Reserve and the European Central Bank begin considering pauses in their respective easing cycles.
In commodities, oil prices edged lower after an industry report showed U.S. crude stockpiles rising for the first time since mid-November. Investors are also closely watching for any commitments on global trade in President Trump’s speech. Gold held firm near its highest level since October, reflecting sustained demand for safe-haven assets.
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