US futures

Dow future -0.2% at 43327

S&P futures -0.01% at 5994

Nasdaq futures 0.09% at 21312

In Europe

FTSE -0.28% at 8550

Dax  0.28% at 21456

• China responds after the US applied 10% trade tariffs to imports
• US JOLTS job openings & factory orders are due
• Alphabet reports after the close
• Oil falls after China retaliates to US trade tariffs

China raises worries of a trade war

US stocks point to a subdued open as investors remain cautious about fears of a US-China trade war. However,  tech earnings offer some distraction.

China responded to U.S. trade tariffs of 10% on all Chinese imports with retaliatory levies on some US goods. The limited response could be considered an attempt to engage President Trump in talks before moving into an all-out trade war.

Trump paused 25% trade tariffs on goods from Mexico and Canada yesterday, showing that the levy applied over the weekend could still be a negotiating tool. However, the last few days show us that Trump remains highly unpredictable and could still significantly disrupt international trade.

Unsurprisingly, Trump's unpredictability has resulted in volatile swings in the financial markets as investors weigh up developments and implications on growth and the Fed outlook. Gold has risen to an all-time high.

Three Federal Reserve officials warned on Monday that trade tariffs would be carrying inflationary pressures, which may result in slower interest rate cuts. The market doesn't see a rate cut from the Federal Reserve until June, which is priced in at a 62% probability.

On the economic data front, the December JOLTS jobs openings report is due later today and is expected to show 8 million vacancies, supporting the view of a resilient labor market. Factory orders are also due and come after manufacturing returned to expansion after 26 months of contraction.

Corporate news

PepsiCo falls 2% after the soft drinks giant posted modest organic revenue growth as price increases weighed on demand from US shoppers.

Spotify has surged 8% after the music streaming company posted Q4 results that were ahead of expectations and provided upbeat guidance.

Planatir jumped 20% after the data analytics company forecast earnings and revenue forecasts and guided for an upbeat annual revenue fueled by strong demand for its software and analytics services from businesses racing to adopt generative AI

Estee Lauder fell 7% after the cosmetics giant posted a fiscal Q3 outlook that was weaker than expected amid lower retail sale trends in the Asia travel retail business.

Alphabet will report after the close where cloud growth and AI spending under the spotlight. Investors will want to see if huge AI spend turns into strong revenue streams. EPS of £2.12 on revenue of $96.6 billion is forecast.

Nasdaq 100 forecast – technical analysis.

The Nasdaq 100 rebounded from support at 20,700 yesterday, the 100 SMA, last Monday’s low, and the falling trendline. The long lower wick and the recovery above the 50 SMA keeps the position neutral. Bulls will look to rise towards 22k and 22.1k to reach record highs. Sellers will need to take out the 50 SMA to retest 20,750 support. A break below here is needed to create a lower low.

FX markets – USD falls EUR/USD steadies

USD is falling, snapping a two-day winning run, as the market weighs trade tariff developments. The market mood has improved, helping USD safe-haven outflows.

EUR/USD has steadied after six days of losses, but gains could be limited as traders remain wary of trade tariffs being applied to the EU. The economic calendar is quiet. Yesterday, inflation was hotter than expected, with core CPI holding at 2.7%.

USD/CAD is holding steady after wild swings yesterday. The pair settled lower after briefly spiking to a multi-year high, driven by trade tariff news flows. Trump pausing trade tariffs for a month has boosted the mood and raised the prospect of negotiating out of the tariffs.

Oil falls as trade war worries rise

Oil prices are falling, wiping out yesterday’s recovery from easing US-Canada / Mexico trade tensions. However, lingering uncertainty from global trade tensions and worries over a US-China trade war pressurise the energy market.

Oil fell after China imposed retaliatory tariffs on U.S. oil imports, heightening trade war worries. Beijing announced a 10% tariff on US crude, LNG, and various machinery.

Meanwhile, OPEC+ reaffirmed its supply policy on Monday, confirming planned production increases from April. The decision comes amid growing concerns that global demand could suffer due to the ongoing trade conflict and broader economic uncertainties.

Attention is also on US crude inventory data for signs of changing consumption. Create stockpiles are expected to have risen last week, and while gasoline likely declined, a larger-than-expected increase could reinforce the bearish pressures.