Equities unsure on direction as Dollar drops on credibility concerns about US policy

EU mid-market update: Tariff bombshell creating immediate confusion with longer term uncertainty; Equities unsure on direction as dollar drops on credibility concerns about US policy; Trump leaning towards initial Iran strikes; Nvidia results this week.

Notes/observations

- European equities opened weaker, with Spain and Italy the exceptions, as markets digested the systemic shock from the U.S. Supreme Court striking down IEEPA-based tariffs and Pres Trump’s rapid pivot to a 15% global tariff under Section 122. This reset raises legal uncertainty, threatens existing trade deals, and shifts relative tariff burdens: China and parts of ASEAN see effective reductions, while the UK and Australia lose their locked-in 10% rates. EU partners condemned the disruption and are delaying ratification of their U.S. trade accord. Asian officials adopted a wait-and-see posture; South Korea stressed chips remain exempt, India paused engagement, and China’s MOFCOM is still assessing.

- Analysts argue the real Section 122 story is not a clever 150-day reset, but whether courts will treat any lapse-and-reissue tactic as an unlawful de facto extension of a statute that Congress designed as a temporary balance-of-payments emergency tool (with the current proclamation expiring at 12:01 a.m. EDT on July 24, 2026), especially given the mismatch between Bretton Woods-era statutory language and modern trade-deficit justifications. The bigger strategic risk is Section 338, a dormant but powerful country-specific tariff weapon that can support up to 50% duties (and even exclusion measures) after discrimination findings - meaning the post-IEEPA fight shifts from headline tariff rates to whether courts allow the executive to rebuild tariff leverage through different, narrower, but still potent statutory pathways.

- Risk assets were mixed. US futures reversed Friday’s optimism; European tech and industrials led declines, with semiconductor names under pressure. Safe-haven demand supported U.S. Treasurys, Bunds and gilts, while broad USD weakness pushed gold above $5,150/oz. Bitcoin and other digital assets dropped 2-4% as tariff ambiguity weighed on risk appetite and ETF inflows softened. Oil pulled back as U.S-Iran talks are set to resume on Friday, reducing the geopolitical premium built into last week’s rally.

- OpenAI reportedly reset investor expectations to a more defined, revenue-linked path - targeting about $600B of compute spending by 2030 (vs earlier $1.4T infrastructure rhetoric), $280B of 2030 revenue after FY25 revenue of $13.1B beat its $10B target - and this comes as hyperscaler stocks have reacted negatively to rising capex plans, making spending discipline and timelines more important for investors. Stargate JV remains a key backdrop with a reported 10GW target stalled at about 7.5GW lined up, limited buildout progress, and OpenAI relying more on leased capacity (Oracle plus a SoftBank-owned Texas site) than fully self-funded data centers.

- Macro data were modestly constructive. Germany’s Ifo index improved slightly, Italian CPI remained steady at 1% y/y, and UK job data signaled labor-market cooling as vacancies hit a five-year low. UBS expects China to target 4.5–5.0% GDP growth for 2026.

- Geopolitical tension remained elevated with reports of the USS Gerald R. Ford carrier group positioning for possible Iran strikes, Hungary blocking EU Ukraine financing, and security disruptions in Mexico’s Jalisco region.

- NYT reports that President Trump reportedly weighs an initial strike on Iran in the coming days, potentially targeting IRGC headquarters, nuclear sites, and/or ballistic missile facilities. The report also says a much larger follow-on attack in the coming months could aim to topple Iran’s leadership, while U.S. and Western officials are monitoring signs Iran may use proxies to launch retaliatory attacks on American targets in Europe and the Middle East.

- Besides Nvidia results this week, Anthropic tomorrow is set to livestream "The Briefing: Enterprise Agents", featuring new product announcements, live demos of Claude’s newest capabilities, and a forward look at what working with Claude may look like in 2026.

- Notable EU corp news: PostNL results, a profit warning from Victoria, solid FY numbers from Almirall and MONY Group, and Enel raising its 2028 EPS guidance. Johnson Matthey and Honeywell revised terms on Catalyst Technologies; Renault acquired full control of Flexis; Sabadell halted its payments-unit sale.

Asia

- South Korea Industry Min Kim: Will continue consultations with the US on tariffs, trade agreement - interview comments in Korea; Chips are Not subject to Trump's new tariffs.

- South Korea Fin Min Koo: South Korea trade with the US is still "valid".

- India officials said to have postponed trip to the US.

- India Finance Minister Sitharaman: Too soon to comment on US tariffs’ impact on Indian economy; No plan to restrict capital outflow.

- China MOFCOM: Making assessment on US SCOTUS tariff ruling.

- According to former policymaker Sakurai, BOJ may raise rates in Mar if the yen resumes decline.

Americas

- Reportedly Vance-Rubio is Pres Trump's "dream ticket" for 2028 with JD Vance on top; Trump described Rubio as more of the diplomat, and Vance as the pugilist - Axios.

- Mexico Econ Min Ebrard: Only some Mexican tariffs are impacted by the US Supreme Court decision.

- House Speaker Johnson (R): Congress and the White House will find a new path for tariffs in the coming weeks - X post.

- Reportedly US unveils a new platform that seeks to bypass internet censorship in countries like China, Europe and Iran - Fox News.

- USTR Greer: Having active conversations with partners in trade deals, none have said they will withdraw; Don't expect trade situation to affect Trump's meeting with Pres Xi - Fox News interview.

- Mexico tourist town of Puerto Vallarta in lock-down and US airlines cancel flights amid local cartel - Mexico security forces live fighting in the streets; Follows Mexico security forces taking out head of the region's Jalisco drug lord, Cervantes "El Mencho" on Sunday.

Europe

- German Chancellor Merz is reelected as CDU Chair with 91% backing his tenure - press.

- Hungary will reportedly block €90B loan to Ukraine until oil flow resumes - press.

- German Auto Association VDA: Main tariffs affecting the car industry were not subject to SCOTUS ruling; US tariffs of 15% on cars and parts continue to pose a significant challenge for the German car industry.

- Germany's VDMA Union: US Pres Trump has several legal alternatives for imposing global tariffs.

- Swiss industry group Swissmem: Urges Swiss Govt to conclude deal on trade agreed with the US in 2025 so as to have secure legal footing because it is expected that the Trump admin will invoke other laws to legitimize tariffs.

- ECB Chief Lagarde said to have received €140K from BIS despite payment bank for ECB staff - FT.

- Hungary Foreign Min: What Ukraine is doing is blackmail; Believe Druzhba oil pipeline can technically operate.

Trade

- (Fri) Supreme Court strikes down Trump's admin IEEPA tariffs (as expected); Vote was 6 to 3 in favor of striking down tariffs; SCOTUS does not address eligibility for tariff refunds.

- (Fri) Trump: Effective immediately will impose a new 10% global tariff on top of existing tariffs, using Section 122 powers.

- (Sat) Trump raises the global tariff to 15% from 10% announced yesterday; Will use the 150 days the temporary tariff is allowed to work on issuing other "legally permissible" tariffs - press.

- US Customs confirms to halt collection of duties under IEEPA at 12:01am EST/ 05:01am GMT on Tue, Feb 24th.

Tensions/conflicts

- USS Gerald Ford aircraft carrier group has entered the Mediterranean Sea, expected to be in position to strike Iran within days - press.

- Reportedly Gerald R. Ford Aircraft Carrier is south of Italy and will soon be off the coast of Israel as Pres Trump is leaning toward conducting an initial strike on Iran in the coming days - NYT.

- Fresh round of US-Iran talks expected Friday if Iran sends nuclear proposal 'soon' - Axios, citing senior US official.

- EU Foreign Policy Chief Kallas: Ministers to discuss Ukraine loan today; Strong statements from Hungary indicate they won't change their stance on Russian sanctions today.

- German Chancellor Merz: Russia Pres Putin will not end his military campaign if the war in Ukraine ends.

Speakers/fixed income/FX/commodities

Equities

Indices [FTSE -0.1%, DAX -0.5%, CAC-40 +0.1%, IBEX-35 +0.9%, FTSE MIB +0.7%, SMI +0.2%, S&P 500 Futures -0.2%].

Market focal points/key themes: European indices opened mixed with a downward bias and failed to gain momentum in the early part of the session; Cyprus and Greece closed for holiday; market showing caution amid fallout of SCOTUS ruling on tariffs; outperforming sectors include financials and utilities; among underperforming sectors are technology and industrials; Johnson Mathey and Honeywell agree to long stop date extension; Renault takes full control of Flexis from Volvo and CMA-CGM; Novacyt acquires Southern Cross Diagnostics; earnings expected in the upcoming Americas session include Dominion Energy.

Equities

- Healthcare: Novo Nordisk [NOVOB.DK] -10.0% (trial data).

- Consumer discretionary: Pernod Ricard [RI.FR] -3.0% (analyst downgrade).

- Industrials: Airbus [AIR.FR] -1.5% (analyst downgrade).

- Materials: Eramet [ERA.FR] +5.0% (fire at extraction unit), Johnson Matthey [JMAT.UK] - 15.0% (agreed reduced £1.3B sale of catalyst technologies to Honeywell).

- Tech: ASML [ASML.NL] -2.0% (Oracle-OpenAI-Softbank Stargate JV plans said to have stalled; OpenAI also said to have given investors more modest spending expectations).

- Utilities: Enel [ENEL.IT] +6.0% (CMD presentation).

Speakers

- Fed's Logan (2026 voter): There's now more uncertainty on tariffs following SCOTUS ruling; Uncertainty in the economy continues, with one of the biggest uncertainties coming from the tech sector- Fed's Goolsbee (non-voter): More comfortable that the labor market is stabilizing.

- Treasury Sec Bessent: We cannot compromise on economic security.

- Treasury Sec Bessent: The American people suffered a setback due to SCOTUS ruling; Nothing has changed on tariff revenue and trade deals; SCOTUS has taken away Trump's leverage.

- Fed's Musalem (non-voter): It wouldn't change the outlook if the new tariffs are one-for-one; SCOTUS could introduce a period of uncertainty.

- Fed's Hammack (voter): Inflation has made amazing progress but is still a problem; Fed can be very patient in considering future rate cuts.

Economic data

- (PL) Poland Jan Retail Sales M/M: -17.8% v -19.0%e; Y/Y: 4.4% v 3.1%e; Retail Sales (current prices) Y/Y: 3.9% v 2.2%e.

- (IT) Italy Jan Final CPI M/M: 0.4% v 0.4%e; Y/Y: 1.0% v 1.0%e; CPI EU Harmonized M/M: -1.0% v -1.0%e; Y/Y: 1.0% v 1.0%e.

- (DE) Germany Feb Ifo business climate: 88.6 V 88.3E; Current Assessment: 86.7 v 86.2e; Expectations Survey: 90.5 v 90.0e.

- (IS) Iceland Jan Wage Index M/M: 3.4% v 0.0% prior; Y/Y: 7.4% v 7.0% prior.

- (CH) Swiss Jan Money Supply M3 Y/Y: 5.1% v 4.5% prior.

- (CH) Swiss Jan Producer & Import Prices Y/Y: -0.2% v -0.2% prior; Producer & Import Prices M/M: -2.2% v -1.8% prior.

- (NL) Netherlands Jan House Price Index Y/Y: +1.2% v -0.9% prior; M/M: 5.4% v 5.8% prior.

- (SG) Singapore Jan CPI M/M: -0.5% v 1.5%e; Y/Y: 1.4% v 1.5%e; CPI Core Y/Y: 1.0% v 1.5%e.

Fixed income issuance

- Norway sells NOK2.0B vs. NOK2.0B indicated in 6-month Bills; Avg Yield: 4.05% v 3.98% prior; Bid-to-cover: 4.39x v 4.52x prior.

- Philippines sells PHP37.8B vs. PHP27.0B indicated in 3-month, 6-month and 12-month bills.

- South Korea sells KRW1.5T vs. KRW1.5T indicated in 2.5% 5-Year Bonds; Avg Yield: 3.390%.

Looking ahead

- 05:30 (EU) European Union to sell NGEU Bonds.

- 06:00 (BE) Belgium Debt Agency (BDA) to sell 2033 and 2036 OLO Bonds 6).

- 06:00 (IL) Israel to sell combined IULS3.0B in 2028, 2031, 2033, 2035 and 2052 bonds (7 tranches).

- 06:00 (NO) Norway announcement on upcoming bond issuance (held on Wed).

- 06:00 (BR) Brazil Feb FGV Consumer Confidence: No est v 87.3 prior.

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 07:00 (RO) Romania to sell RON600M in 7.2% Oct 2033 bonds.

- 07:00 (MX) Mexico Q4 Final GDP Q/Q: No est v 0.8% prelim; Y/Y: No est v 1.6% prelim.

- 07:00 (MX) Mexico Q4 GDP Nominal Y/Y: No est v 4.1% prior; 2025 GDP Y/Y: No est v 1.5% prior.

- 07:00 (MX) Mexico Dec GAE Economic Activity Index (Monthly GDP) M/M: No est v -0.2% prior; Y/Y: No est v -0.1% prior.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 07:00 (RO) Romania to sell RON600M in 7.2% Oct 2033 bonds; Avg Yield: % v 6.89% prior; bid-to-cover: x v 1.95x prior (Nov 10th 2025).

- 08:00 (PL) Poland Jan M3 Money Supply M/M: No est v 1.7% prior; Y/Y: No est v 10.4% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Jan Chicago Fed National Activity Index: No est v -0.04 prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €B in 3-month, 6-month and 12-month bills.

- 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision.

- 09:00 (BE) Belgium Feb Business Confidence: No est v -8.8 prior.

- 10:00 (US) Dec Factory Orders: No est v 2.7% prior; Factory Orders (ex-transportation): No est v 0.2% prior.

- 10:00 (US) Dec Final Durable Goods Orders: No est v -1.4% prelim; Durables (ex-transportation): No est v 0.9% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v 0.6% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 0.9% prelim.

- 10:30 (US) Feb Dallas Fed Manufacturing Activity: No est v -1.2 prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 16:00 (KR) South Korea Jan PPI Y/Y: No est v 1.9% prior.

- 16:00 (KR) South Korea Feb Consumer Confidence: No est v 110.8 prior.

- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 77.1 prior.

- 20:00 (CN) China PBOC Loan Prime Rate Monthly Setting.

- 21:00 (KR) South Korea to sell KRW500B in 2.75% 20-Year Bonds.

- 21:30 (HK) Hong Kong to sell 3-month and 6-month bills.

- 22:00 (TH) Thailand Central Bank to sell THB 65B in 3-month bills.

- 22:35 (CN) China to sell 2029 and 2036 Bonds.