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Chart of the Week:
Mixed Data and Tariff Ruling Drive Volatility in Equities and Bonds
During the Lunar New Year, U.S. data were mixed. Nonfarm payrolls beat expectations and CPI was softer, but Q4 GDP fell sharply due to the government shutdown, while PCE rebounded. The mixed signals left equities and bonds trendless.
Major Events 1:
U.S. Court Invalidates Tariffs; Watch Implications for Growth and Fiscal Outlook
In a 6–3 ruling, the U.S. Supreme Court said IEEPA does not authorize presidential tariffs, voiding the reciprocal and fentanyl-related measures. Trump then announced a 15% temporary global tariff under Section 122 of the 1974 Trade Act. The focus may shift to strategic goods and supply chains, with markets watching for new tariff tools and refund developments.
Major Events 2:
Takaichi Rally Lifts Japanese Equities; Foreign Inflows Stabilize Yen and JGBs
In early February, Japan’s lower house election delivered a decisive win for the LDP led by Sanae Takaichi, securing 316 seats—above the two-thirds threshold for constitutional amendments. The strong mandate boosted reform expectations. TSMC’s 3nm expansion in Japan also lifted semiconductor stocks, pushing the Nikkei 225 to a record high before consolidating during the Lunar New Year.
Q4 Earnings:
Tech Remains the Primary Driver of Overall Index Earnings Growth
As of February 20, around 85% of S&P 500 companies have reported 4Q25 results. Overall earnings growth for the index has been revised up from 10.9% at the end of January to 13.9%. Except for Consumer Staples and Utilities, most sectors have seen upward revisions in earnings growth. The Technology sector continues to deliver growth above 30%, reflecting sustained investment and commercialization momentum in AI services and cloud infrastructure. Although overall S&P 500 earnings momentum may moderate slightly in 1Q26, Technology sector growth is expected to accelerate toward the 40% level.
