The Japan Times - Stocks mixed as they track tariffs, inflation and earnings

A report suggesting Trump could impose import tariffs more slowly than initially feared provided support and put a cap on the dollar's latest surge.

However, traders remain concerned that his pledges to cut taxes, regulations and immigration will revive inflation.

Traders have slashed their expectations on how many times the Federal Reserve will cut interest rates through 2025 to one.

But some fear the Fed's next move could even be a rate hike owing to still-sticky inflation and concerns over Trump's policies.

Data on Tuesday showed US wholesale inflation for December was lower than expected, with no change in the Producer Price Index over the month when volatile food and energy prices are excluded.

Wall Street's three main indexes all opened higher, but failed to hold onto their early gains, with a rise in US bond yields dragging on sentiment.

Investors will be paying more attention to US and UK consumer price inflation data due on Wednesday.

"With rate expectations now the driving force behind market moves, key inflation data midweek will continue to shape the narrative for the early parts of 2025," noted Matt Britzman, senior equity analyst at Hargreaves Lansdown.

In Europe, Frankfurt and Paris finished the day with gains but London slipped.

In Asia, Hong Kong and Shanghai rallied as China's securities regulator said it was looking at ways to provide more stability to markets.

This followed another run of poor performances sparked by worries over the world number two economy and Trump's threatened tariffs.

- Dollar mixed -

The dollar traded mixed against major peers Tuesday after Bloomberg reported that members of Trump's team were looking at an initially limited increase in tariffs to boost their negotiating hand and tamper inflationary pressures.

Traders had been spooked when he said soon after his re-election that he would impose huge levies on China, Canada and Mexico as soon as he took office.

The pound remained stuck close to lows not seen since the end of 2023. The euro was near its weakest since late 2022, with fears it could return to parity with the dollar.

The yen edged up against the greenback as the yield of Japan's 40-year government bond hit its highest since being launched in 2007, with debate returning to whether the country's central bank will hike interest rates at next week's policy meeting.

Eyes were also on earnings. In London, shares in retailer JD Sports slumped 6.4 percent after it warned on profits.

Energy giant BP shed 2.5 percent on a weak trading update, capping gains on the benchmark FTSE 100 index.

On the upside, Paris was lifted by rising share prices of French banks.

"This earnings season will set the tone for financial stocks in 2025, but the stakes are high," said Charu Chanana, chief investment strategist at Saxo Markets.

"Even with solid fourth-quarter results, the macro backdrop -- characterised by lingering inflation concerns, steeper yields, and recalibrated Fed expectations -- may weigh on sentiment."

- Key figures around 1630 GMT -

New York - Dow: UP less than 0.1 percent at 42,335.87 points

New York - S&P: DOWN less than 0.1 percent at 5,834.16

New York - Nasdaq Composite: DOWN less than 0.1 percent at 19,070.14

London - FTSE 100: DOWN 0.3 percent at 8,201.54 (close)

Paris - CAC 40: UP 0.2 percent at 7,423.67 (close)

Frankfurt - DAX: UP 0.7 percent at 20,271.33 (close)

Tokyo - Nikkei 225: DOWN 1.8 percent at 38,474.30 (close)

Hong Kong - Hang Seng Index: UP 1.8 percent at 19,219.78 (close)

Shanghai - Composite: UP 2.5 percent at 3,240.94 (close)

Euro/dollar: UP at $1.0289 from $1.0224 on Monday

Pound/dollar: UP at $1.2195 from $1.2180

Dollar/yen: UP at 158.05 yen from 157.65 yen

Euro/pound: UP at 84.36 pence from 83.90 pence

West Texas Intermediate: DOWN 0.6 percent at $76.81 per barrel

Brent North Sea Crude: DOWN 0.6 percent at $80.51 per barrel

burs-rl/gv

S.Yamada--JT