‘Tariff man’ was back in action and Nvidia's reception was lukewarm

Markets attempted a shaky rebound on Wednesday, but ‘Tariff Man’ was back in action, and his latest salvo sent tremors rippling through an already fragile sentiment. With risk appetite on life support, hopes had been pinned on one potential saviour—Nvidia (NVDA). Investors were praying that the AI juggernaut’s earnings report could throw a much-needed lifeline to a teetering market on edge.

Did it deliver? Not quite.

Yes, Nvidia’s stock is ticking higher—barely. The lukewarm reaction speaks volumes. The company managed to soothe some of the market’s worst fears with what it said about its next-gen product line, but this wasn’t another blockbuster beat. It wasn’t the kind of blowout that had become standard fare in the AI-fueled rally. And in a market that’s already on edge, ‘good enough’ isn’t always good enough.

With Nvidia failing to reignite the euphoria, the market remains on thin ice. Add in Trump’s tariff tremors, lingering growth fears, and a consumer that’s showing signs of fatigue, and the stakes just keep getting higher. The AI trade still has legs—but the bar for upside surprises is climbing fast.

From a correlation perspective, the market’s correlation price action was the tell. While Wall Street attempted a brave face, clawing back some of its losses on Wednesday, Treasuries didn’t budge—and that’s a telling signal. The equity bounce had all the hallmarks of a short-covering relief pop, not a fundamental shift in sentiment, while bonds stood their ground, refusing to validate any newfound optimism.

The real fireworks came after Trump reignited the tariff firestorm. Yields resumed their downward march, signalling that fixed-income traders see the escalation in trade tensions as a growth risk rather than an inflation driver—at least for now.

The broader takeaway? Markets aren’t fearing runaway inflation—they’re bracing for economic fallout. If bond markets continue calling for slower growth while equities cling to hope, this divergence will become a pressure point for risk assets. Something has to give.

Here’s the problem—markets can digest lousy news; what they can’t handle is a fog of uncertainty. Right now, forward-looking survey indicators are flashing bright red, signalling that consumers and businesses are finally catching on to the economic whiplash that broad-based tariffs—essentially stealth consumer taxes—could unleash. The feedback loop is undeniable: higher costs squeeze spending, sentiment sours, and growth takes a hit.

But this isn’t just a consumer-driven narrative. Inside corporate boardrooms, the buzz isn’t about expansion—it's about survival in an increasingly volatile policy landscape. The sheer unpredictability of Washington’s tariff war is forcing executives to second-guess major investment decisions. Capital expenditures? Delayed. Hiring plans? On ice. The risk hiding in plain sight is a full-scale corporate pullback, potentially freezing the economic engine that has powered markets higher.

Investors are still clinging to hope, but the clock is ticking. Markets can stomach a lot, but sustained uncertainty? That’s the ultimate dealbreaker. If Washington doesn’t get its act together soon, expect sentiment to shatter —and when it does, the fallout won’t be subtle.

One of the biggest concerns is that broader markets have resigned themselves to trading what Trump does, not what he says. But when the moment comes where actions finally speak louder than words, we could see an all-out scramble—a brutal game of “Yours” and “How Are You Left?” aka Do you want to buy more?

If traders are caught off guard when tariffs shift from rhetoric to reality, liquidity will vanish faster than a risk-on rally in a rate hike cycle. The market's complacency could turn into a feeding frenzy, with those positioned incorrectly left holding the bag. Right now, the focus remains on speculation, but when the execution orders hit, it won’t be about who wants to trade—it’ll be about who has to.

Asia markets

As traders, we sometimes get too locked in on the pass-the-baton trade—the idea that Asia will shadow Wall Street’s moves. But that script is being rewritten, with AI mania leading the charge in Asia, carving out its market narrative.

That said, today feels like the moment of truth for risk appetite in the region. The stage is set for a red open as investors scramble for cover after another tariff-induced wobbly session in the U.S. The telltale signs? Treasuries are climbing, and the dollar is catching a bid vs key trading partners ( as is the Yen) —textbook flight-to-safety moves. When safe-haven plays take center stage in New York, Asia usually gets caught in the downdraft.

One thing to watch closely is whether China’s stock sentiment will continue to run brightly in the long term amid trade war hiccups. The game changed when DeepSeek made its mark, and the real question now is whether Asian traders will mirror the same AI-driven hype cycle that took Wall Street by storm.

At this point, the old playbook on Chinese consumer spending feels outdated. Whether shoppers splurge on discretionary goods matters far less than the unstoppable march of AI, cloud computing, and automation. These aren’t just trends but tectonic shifts in China's stock markets. If China follows the U.S. AI mania, we could look at a whole new driver of market momentum.

Forex markets

All the macro noise right now? It's just a temporary distraction before trade tensions retake center stage. The tariff saga is about to explode back into the headlines, with the March 4 deadline looming for tariffs against Canada and Mexico.

And let’s be crystal clear—this isn’t even the big one. This round of tariffs is tied to border security demands, not the steel and aluminum duties set to drop on March 12, nor the broader reciprocal tariff retaliation likely to hit in April. That means we’re staring down a three-phase escalation, each with the potential to rattle markets in ways we haven’t seen since the peak of the last trade war.

For now, markets are still fixated on tariff risk, not the impact. Absolute volatility begins when investors fully price these tariffs' inflationary and/or growth ripple effects. The dollar, bonds, and equities are about to enter the trade war vortex again, and positioning will be everything.

CAD is acting as the FX market’s pressure valve for tariff anxiety, venting volatility as trade war risks ebb and flow. But don’t get too comfortable—CNH and EUR are lurking in the wings, ready to take center stage if tensions with China or Europe escalate. If trade friction moves to the boiling point, the real fault line could shift, unleashing a far more significant market shake-up.

Right now, the market is feeling out the edges of the tariff narrative, gauging whether Trump’s next moves will be posturing or policy. But if the rhetoric turns into action—especially against China or Europe—we could be looking at a seismic shift in FX flows, where CAD volatility is just the opening act before the real fireworks begin.

Gold market

Gold is starting the week on shaky ground, bucking the usual script where sinking U.S. yields would light a fire under the metal. But here’s the kicker—the February contract settlement risk has vanished precisely as we flagged last week.

With transatlantic arbitrage chaos now cooling, gold has been freed from the settlement-driven volatility that had traders scrambling. The result? A reset in price action and a market that’s now shifting back to the real drivers: trade war risks, geopolitical uncertainty, and much lower growth expectations.

With the focus now turning to April contracts, the game is changing. The big question: Will the tariff escalation trifecta inject fresh fear into the system and reignite gold’s rally? If so, expect fireworks. If not, gold could stay stuck in the churn zone until the next volatility trigger lands. Buckle up—this could get wild.