What’s in store for this Global Week Ahead?

U.S. President Donald Trump's fast-changing tariff decisions have super-charged market volatility — and investor uncertainty — with little respite in prospect, in the days ahead.

There is potential for another Trump surprise, on anything from tariffs to geopolitics. (Indeed. Arriving with the Monday, Feb. 10th trading day, the new U.S. President has announced he would impose 25% tariffs on all U.S. steel and aluminum imports.)

This U.S. tariffing tit-for-tat narrative runs alongside the usual set of macro events. Such as the January U.S. consumer price inflation (CPI) data…

Investors are also keenly watching one share market (the European one!). It has had its best start to the year in a decade versus Wall Street.

Next are Reuters’ five world market themes, re-ordered for equity traders—
 

(1) European Share Indices Power Up

Europe Inc. is ticking all the boxes: cheap valuations, earnings growth and momentum. Investors are pouring in.

Powered by gains in Frankfurt, London, Milan and Paris, the STOXX 600 (STOXX) has marked its best performance since 2015 against Wall Street over the first six weeks of 2025.

However, given its history of short-lived outperformance, the question remains: will this rally last, or is it just a flash in the pan?

There are several potential catalysts for more near-term gains. Tariffs are a wild card, but if the stars align, Germany might loosen fiscal policy and Ukraine tensions may ease.

European earnings growth is forecast at +7.9% in 2025, from +1% last year and after a -3.9% fall in 2023.

U.S. earnings will grow at a slower rate, but still above Europe.
 

(2) On Wednesday, U.S. CPI for January Gets Released

The release of a key gauge of monthly U.S. consumer prices is set to test investors’ nerves after Trump's tariff threats triggered warnings from several Fed officials of the risk of an inflation pickup.

January's Consumer Price Index (CPI) on February 12th is expected to show a 0.3% monthly increase, a Reuters poll shows.

Last month's report showed core CPI, which excludes the volatile food and energy components, moderated after barely budging for four straight months, encouraging investors.

But the monetary policy outlook remains uncertain, after the Fed paused easing last month, and Trump's tariff push began.
 

(3) What Happens in a U.S.-China Faceoff?

Round two of the Sino-U.S. trade war has only just begun, and investors are gearing up for a prolonged tit-for-tat between the world's two largest economies.

Near-term focus remains on whether a highly anticipated conversation between Trump and Chinese President Xi Jinping actually happens, and if the U.S. President could grant some sort of deferment, as he did with Mexico and Canada.

But China has enough problems on its own.

The wait for further stimulus measures from Beijing is proving futile and the road to recovery is seemingly a long and arduous one, meaning more investors are avoiding a market that was once a must-have in their portfolios.

And Chinese consumer price data on Sunday is likely to underscore reasons to keep those bearish bets on China. For now.
 

(4) What Do These U.S. Tariff Threats Amount To?

Markets were cheered by Trump's decision to suspend tariffs on Mexico and Canada hours before they were due to come into force.

But investors are not sure if the tariff talk is brinksmanship to extract concessions or will act to deepen global rivalries and intensify economic attacks on the U.S.

Columbia Threadneedle chief EMEA economist Steven Bell said Trump negotiating some tariffs away may not prevent him from threatening them again. Bell warns of a possible trade war that could upend the established world order.

Deeper global rivalries could also intensify efforts by China, Brazil, Russia and Iran to weaken emerging nations' reliance on the U.S. currency for trade, which some economists say represents a growing challenge to dollar hegemony.
 

(5) This Past Sunday, Ecuador Held a Major Election

Ecuador's major elections are rarely boring. But the Sunday Feb. 9th vote promised to be particularly pivotal.

President Daniel Noboa's was the market's favored 'continuity candidate.’

From the Financial Times correspondent in Bogota, Colombia on Monday, Feb. 10th—

Ecuador’s presidential election is set to head to an April run-off between incumbent conservative President Daniel Noboa and leftist former lawmaker Luisa González, the country’s electoral council said.

Noboa gained 44.4% of the vote after Sunday’s first round, compared with González’s 44.1%, with 80% of ballot boxes counted. None of the other 14 candidates on the ballot gained more than 4.8%.

The election took place amid a deepening security crisis as international drug trafficking organizations have violently expanded their presence, driving up murder rates and shocking a country popular with American retirees. Polls in the run-up to the vote had given Noboa an edge.

“If the trend continues, Ecuadoreans will return to the polls on April 13,” said Diana Atamaint, President of the National Electoral Council.

The run-off would be a repeat of the snap election that put Noboa in office in 2023.
 

Zacks #1 Rank (STRONG BUY) Stocks

Here are 3 top large-cap stocks, offering either an A or B in Zacks long-term Growth—

(1) MTU Aero Engines (MTUAY Quick QuoteMTUAY - Free Report) : This is a $170 a share Aerospace-Defense stock, with a market capitalization of $18.5B. I see a Zacks Value score of C, a Zacks Growth score of A and a Zacks Momentum score of D.

MTU Aero Engines Holding AG engages in the development, manufacture, marketing and support of commercial and military aircraft engines in all thrust and power categories and industrial gas turbines both nationally and internationally.

The company operates in two segments, OEM business and MRO business.

The OEM business segment designs and manufactures modules and components, and carries out final assembly work on complete engines; and offers commercial and military engine products, spare parts for commercial and military engines.

MRO develops and manufactures industrial gas turbines. It also develops and manufactures engine modules and components, and spare parts; supervises engine final assembly; and provides maintenance support for the military market.

MTU Aero Engines Holding AG is headquartered in Munich, Germany.

(2) Celestica (CLS Quick QuoteCLS - Free Report) : This is a $133 a share Electronics-Manufacturing Services stock, with a market capitalization of $16.7B. I see a Zacks Value score of D, a Zacks Growth score of B and a Zacks Momentum score of A.

Celestica, Inc. is one of the largest electronics manufacturing services company in the world, serving the computer, and communications sectors.

The company provides competitive manufacturing technology and service solutions for printed circuit assembly and system assembly, as well as post-manufacturing support to many of the world's leading original equipment manufacturers.

Celestica's extensive depth and breadth of offerings supports a wide variety of customer requirements from low volume, high complexity custom products to high volume commodity products.

(3) Gold Fields Limited (GFI Quick QuoteGFI - Free Report) : This is a $19 a share Gold Mining stock, with a market capitalization of $16.1B. I see a Zacks Value score of B, a  Zacks Growth score of A, and a Zacks Momentum score of D.

Gold Fields Ltd. is one of the world's largest unhedged gold producers with operating mines in South Africa, Ghana and Australia.
 

Key Global Macro

Fed Chair Powell’s testimony to the U.S. Congress on Tuesday should be a big event.

On Sunday, we get the Mainland China CPI (consensus looks for +0.4% y/y) and PPI (consensus looks for -2.1% y/y) for January.

On Monday, Mainland China Foreign Direct Investment (FDI) for January comes out. The prior annual reading was a lousy -27.1% y/y.

On Tuesday, Fed Chair Powell testifies to Congress.

The Fed’s Hammack, Bowman, and Williams give speeches.

On Wednesday, the U.S. Consumer Price Index (CPI) for January comes out. The consensus is for a +0.3% m/m rise, up from +0.2% m/m the month prior.

The prior DEC broad CPI reading was +2.9% y/y. Ex-Food and Energy core CPI was +3.2% y/y.

The Fed’s influential Waller gives a speech.

On Thursday, U.S. initial jobless claims come out. The prior week’s reading was a tight 219K number.

The U.S. PPI for January comes out. I see a prior +3.5% y/y reading.

On Friday, the Eurozone’s Q4 real GDP growth rate comes out. I see a +0.9% y/y annual real GDP growth mark is consensus, which is in line with the prior +0.9% y/y reading.

Closing out the week, the University of Michigan Consumer Sentiment for February 2025 comes out. The prior January reading was a weak 71.1.
 

Conclusion

Let’s finish up stateside, with a fresh Q-24 S&P500 earnings update.

Zacks Research Director Sheraz Mian’s 4 key EPS points (Done Feb. 5th, 2025):

(1) Total earnings for the 245 S&P500 companies that have reported results are up +11.6% from the same period last year on +5.1% higher revenues.

80.0% beat EPS estimates. 66.9% beat revenue estimates.

(2) The picture emerging from the Q4-24 earnings season continues to be one of strength and an improving outlook.

Companies are not only coming ahead of their earnings estimates, but also providing reassuring guidance for the coming quarters.

(3) For the Info Tech sector, we now have Q4-24 results for 68.3% of the index’s market capitalization in the S&P500 index.

Total earnings for these companies are up +23.2% from the same period last year, on +8.8% higher revenues.

88.9% beat EPS estimates. 77.8% beat revenue estimates.

This is a notably better performance — from these Info Tech companies — relative to other recent periods.

(4) Looking at Q4-24 as a whole, and combining the results for the 112 S&P500 index members that have come out with estimates for the still-to-come companies?

Zacks expects total S&P500 earnings to be up +11.9% from the same period last year, on +5.3% higher revenues.

Note this, share traders and investors: That makes Q4-24 indeed a double-digit EPS growth quarter.

Nearly all 2025 and 2026 quarters need to power up, in the same double-digit EPS fashion, to meet an optimistic forward earnings EPS growth consensus.

Keep that in mind.

Enjoy an excellent trading week!

John Blank, PhD.
Zacks Chief Equity Strategist and Economist