Global Highlights for Next Week: Tariff Storms and US-Iran Tensions - Can Nvidia Save the AI Bull Market Again?

This week, the U.S. stock market rebounded overall, with all three major indices posting weekly gains, including the S&P 500 and the Nasdaq Composite, both rising over 1%.

On Friday during trading hours, the U.S. Supreme Court ruled that the Trump administration’s large-scale tariffs implemented under the International Emergency Economic Powers Act lacked clear legal authorization, boosting market sentiment.

However, over the weekend, Trump announced that the 10% import tariff on global goods would be increased to 15%. He also stated that in the coming months, the U.S. government will determine and announce new, legally permissible tariff measures.

This new uncertainty will need to be digested by the market next week. Shortly before press time, German Chancellor Merkel said she would travel to Washington in a little over a week to hold talks with Trump on tariffs and would engage in dialogue with a coordinated EU stance.

Meanwhile, reports from Iranian and U.S. officials, as well as diplomats from some Gulf and European countries, indicate that as negotiations between the U.S. and Iran reach a deadlock, the risk of military conflict between the two countries is increasing.

In the middle of next week, Trump will deliver the State of the Union address. Previously, White House Press Secretary Karine Jean-Pierre did not disclose whether Trump plans to clarify the objectives and reasons for military actions against Iran in his speech.

On the earnings front, Nvidia remains the focal point, widely regarded as a key indicator of whether the AI boom can sustain itself, potentially guiding the direction of U.S. stocks. Investment bank Oppenheimer expects this earnings report to surpass market expectations.

However, Empower Chief Investment Strategist Marta Norton said, “Markets have been expecting Nvidia to deliver better-than-expected results for years, so when everyone is waiting for a surprise, it actually becomes harder to truly surprise.”

Additionally, Nvidia CEO Jensen Huang’s comments during the conference call could influence the entire AI supply chain, especially cloud computing giants whose stock prices are under pressure due to doubts about capital expenditure returns.

Nick Giorgi, Chief Stock Strategist at Alpine Macro, stated, “Jensen Huang needs to demonstrate confidence to his clients. Nvidia has been boosting confidence for its customers, which is also what investors in the ecosystem want to see.”

Given the intensifying AI impact, the importance of earnings reports from the software industry (especially the S&P Software & Services sector) has also become more apparent.

King Lip, Chief Strategist at BakerAvenue Wealth Management, said, “Next week is critical for the software sector. The overall sell-off may be excessive, but some companies need to find ways to adapt and innovate.”

Despite weakness in tech stocks, sectors such as energy, industrials, and consumer staples continue to support the indices’ performance.

Norton from Empower commented, “This is a confusing market — effective strategies in 2025 may fail in 2026; sectors that were neglected last year are now performing the best this year.”

Important upcoming international economic events next week (Beijing time):

Monday, February 23: Fed Governor Waller speaks, US December factory orders monthly rate, Dallas Fed Business Activity Index for February

Tuesday, February 24: US President Trump delivers State of the Union, ECB President Lagarde speaks, US December FHFA House Price Index monthly rate, Fed Governor Waller speaks, Fed Governor Lisa Cook on AI, US February Conference Board Consumer Confidence Index

Wednesday, February 25: Richmond Fed President Barkin and Boston Fed President Collins participate in a panel, RBA Governor Lowe participates in a fireside chat, Eurozone January CPI final, US weekly EIA crude oil inventories through Feb 20

Thursday, February 26: Bank of Korea announces interest rate decision, St. Louis Fed President Bullard on the Fed’s role, ECB President Lagarde speaks at EU Parliament, Eurozone February Economic Sentiment Indicator, US weekly initial jobless claims through Feb 21

Friday, February 27: France Q4 GDP annualized final, Germany February CPI preliminary, US January PPI annualized

(Source: Caixin)