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[MARKET ANALYSIS] Equity sentiment dampened due to Powell's criminal investigation and Trump's credit card fee cap plan

Powell's criminal investigation and Trump's proposed cap on credit card fees have raised significant uncertainty in the market, particularly impacting US equity sentiment and futures.

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[MARKET ANALYSIS] Equity sentiment dampened due to Powell's criminal investigation and Trump's credit card fee cap plan

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  • European equities are trading mostly on the downside, contrary to APAC which finished mostly firmer. News from the US, following the criminal investigation on Fed Chair Jerome Powell and Trump’s one year 10% cap on credit card interest rates, has created uncertainty in the market, which has also pinned down US equity futures.
  • European sectors are trading mixed, with a negative bias. Leading sectors are Basic Resources (+0.6%), Food Beverage and Tobacco (+0.3%) and Retail (+0.3%). Basic Resources has been underpinned by stronger metal prices, whilst newsflow has been light to explain the uptick in the latter two sectors. On the downside, Autos (-0.9%), Banks (-0.9%) and Travel (-1.4%) lag, with the banking sector pressurised by Trump’s credit card fee cap plan whilst Auto continue to lag despite comments from the Chinese Commerce Ministry saying the EU will release guidance document on submitting price commitment application, regarding talks with the EU on EVs.
  • Movers today include gains in Vallourec (+1.1%) after the Co. announces that it has secured a significant contract with Shell, following a competitive bidding process. BE Semiconductor (+8.3%) is another winner in the early European trading hours after announcing strong Q4 Trading orders. On the downside, Stellantis (-2.6%) is down after CNBC reported that the Co. is reportedly scrapping its plug-in hybrid electric Jeep SUV and Chrysler Minivan due to slowing EV sales, pinning down the Auto sector.
  • US equity futures are lower in the pre-market, with downside in all major indices. Newsflow from the US focuses on Powell’s investigation and Trump’s credit card plan, points that have dampened market confidence, causing futures to slip. Large US banking companies like JP Morgan (-2.4%), Citi (-3.6%) and Bank of America (-1.5%) have seen their shares slide in the pre-market due to Trump's credit card fee cap plan.
  • Looking ahead in the US, highlights include Fed’s Bostic, Barkin and Williams.
Context

This geopolitical backdrop could lead to cautious trading ahead, particularly in financial sectors, as investors assess the implications of potential changes in regulatory and monetary frameworks.

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