Market Watch by Craig Farley, chief investment officer at TEAM Asset Management
Sponsored content
MAJOR stock markets ground higher this week following Friday’s landmark judgment from the US Supreme Court that overturned President Trump’s sweeping global tariff policies in a six-three majority decision.
The ruling states that the International Emergency Economic Powers Act of 1977, a statute that gives the US President a “legal toolkit” to handle national emergencies, does not authorise “The Donald” to impose sweeping tariffs on global trading partners.
Taken at face value, the judgment invalidates roughly half of all tariffs imposed under the Trump and team MAGA administration. It includes “reciprocal” tariffs on almost every American trading partner, and tariffs imposed on China, Canada and Mexico relating to fentanyl production and fentanyl trafficking into the United States. In nominal terms, the decision potentially puts around $175bn of US tariff revenue at risk of repayment.
Markets are trying to reprice this additional layer of policy uncertainty. The challenges are multifaceted, including if, and how, any tariff refunding would work in practical terms, clear timelines on refunding payments and establishing eligibility for refunds. Perhaps most importantly, who ultimately bears the cost?
A sign of the headaches facing the administration arrived on Monday from global delivery company FedEx, which delivers parcels, packages, documents and heavy freight for businesses and individuals across the world. It has wasted little time in moving to the front of the rebate line, becoming the first major US company to officially sue the US government for a “full reimbursement” of the tariffs it has paid to date.
What is clear is that the judgment does not signal the end of the road for Trump’s tariff agenda. Au contraire. Just hours after the Supreme Court ruling, “The Donald” announced new global tariffs of 10% (subsequently raised to 15% at the weekend), effective immediately, for a period of 150 days. The legal basis can be found in section 122 of the 1974 Trade Act. This move will act as a “stopgap” to keep duties in place while his team looks to impose more permanent, legally durable, tariff policies under other laws.
Outside the ongoing tariff tribulations, escalating tensions between the US and Iran have reached a critical “brinkmanship” phase. The Trump administration is seeking to exert maximum pressure on Iran to force a new, stricter, nuclear deal, imposing a “ten-day deadline”, which gives Iran until early March to agree to “zero enrichment” of nuclear material or face potential military strikes. Betting giant Polymarket is currently pricing 60%+ odds of a US military strike on Iran before the end of this quarter.
Meanwhile, the ongoing themes of “dispersion” and “disruption” continue apace.
“Dispersion” refers to the fact that while the US large-cap bellwether S&P 500 index is essentially flat in price return terms so far this year, there is a lot more activity going on underneath the hood. For example, 94 constituent members of the index have moved up or down by over 5% in price terms so far this year, while 117 constituent members of the index have moved up or down by over 20% in price during the same period. Extraordinary.
Turning to “AI disruption”, the tornado that has ripped through large parts of the market including software, private credit and real estate service sectors, engulfed cyber-security stocks this week. The catalyst was Anthropic’s announcement of a new security feature it has embedded into its Claude AI model. The new tool scans codebases for security vulnerabilities and suggests targeted software patches for human review, a move that is forcing investors to reassess the long-term business viability of incumbent cyber security players.
Staying with AI, it is a little over one year since China announced DeepSeek-R1, the breakthrough reasoning model that directly competed with US top-tier models like OpenAI and Google. Rumours abound that China is close to launching version four of the DeepSeek model, which is purportedly 50 times cheaper than US competitors while delivering far superior operating performance metrics across a range of programming tests.
Finally, in the commodities space, precious metals have seemingly resumed their status as haven assets and crucial portfolio diversifiers amid rising geopolitical uncertainty and big-tech fatigue. Physical gold closed the week comfortably over $5,200 per ounce, while silver closed the week at over $87 per ounce.
Turning to the week ahead, market watchers will be eagerly anticipating results and guidance from market darling Nvidia, the poster child, and clear winner so far, of this AI semiconductor chip cycle. On the macro front, US housing price data and American consumer confidence gauges may provide investors with a read on sentiment across the country.
