Stock index futures fell and Asian stocks declined cautiously at the start of the week after US President Donald Trump announced a 30% tariff on goods from the European Union and Mexico, intensifying trade tensions.
The S&P 500 index futures dropped by 0.5%, while European stock market futures fell by 0.6%. Asian stock markets declined slightly by 0.1%, with the Japanese stock market leading the decline. The Japanese yen strengthened against the US dollar. Gold rose for the fourth consecutive day, driven by demand for safe-haven assets. Silver prices increased, approaching their highest level since 2011. Bitcoin’s trading price broke through $119,000 after setting a new all-time high over the weekend.
Trump’s latest tariff threats are testing the market’s resilience. Previously, the US leader last week intensified trade measures against all countries including Canada, Brazil and Algeria. Despite warnings to investors not to be complacent, so far investors seem to still expect the president to make concessions as they have witnessed policy reversals by the Trump administration before. The S&P 500 and MSCI World indices have both hit new highs this month.
Brian Jacobsen, chief economist at Annex Wealth Management, wrote in an email: “Investors should not expect Trump to be bluffing when he threatens to impose a 30% tariff on EU goods.” “Such a tariff would be punitive, but it could hurt them more than it would hurt the US, so time is of the essence.”
Financial markets have been struggling to digest the intermittent tariff offensive launched by Trump during his second term. Although the market’s response to the “Liberation Day” statement on April 2nd was to sell off risky assets and even US Treasuries, these moves have now almost all reversed as the president has postponed many of the threatened tariffs.
The EU has been trying to reach a preliminary agreement with the US to avoid tariff hikes, but Trump’s letter has dashed Brussels’ recent optimism. However, the US president did leave room for further adjustments. According to informed sources, the EU is currently preparing to step up its contacts with other countries affected by Trump’s tariffs.
Win Thin, global market strategist at Brown Brothers Harriman, wrote in a note to clients: “After seeing how Mexico and Canada have been treated a few years after signing the USMCA, which country would want to strike a trade deal with the US?” “At some point, the markets will react to the continued erosion of the US policy credibility that we have witnessed.”
In addition, Trump and his allies have intensified their criticism of Federal Reserve Chair Jerome Powell’s handling of the costly renovation project at the Fed’s headquarters. Some government officials are trying to remove Powell from the Federal Reserve Board.
Later on Sunday, Trump again criticized Powell and said that if the Fed chair resigned, it would be a “good thing”.
George Saravelos, a strategist at Deutsche Bank, said that the risk of Powell being fired is significant and underestimated, which could trigger a sell-off in the US dollar and US Treasuries.
Saravelos said that if Trump forced Powell to step down, the trade-weighted dollar could fall by at least 3% to 4% within the next 24 hours, while fixed-income products would also be sold off by 30 to 40 basis points.
Technical analysis:
Gold: The new operation we provided through the plugin last Friday was to continue buying at a stop after the breakthrough of 3336. The result was a great success. So far, we have achieved a profit-to-loss ratio of nearly 6 times. The price may continue to rebound after a pullback and sweep the liquidity within the day, but the upside space should not be expected to be too far. For detailed positions, please consult the plugin.
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note “666” in the message.
The Nasdaq: The impact of tariff negotiations has limited the further upward potential of prices. The upcoming earnings reports and inflation data also prevent most bulls from entering rashly. The market continues to maintain the recent channel consolidation trend. Therefore, we will temporarily keep the low-long strategy after the liquidity sweep unchanged. You can leave the opportunities to other varieties with better patterns. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg and note “666” in the message.
Crude oil: We clearly stated in our article last Friday that 67.70/68 was the key level for bulls and bears on that day. If it was recaptured, we should start considering a bullish signal. The actual movement was exactly as we expected. Today, we will focus on the retest of the above level for confirmation and look for a low-buy signal if it attempts to fall back. For detailed positions, please consult the plugin.
(Crude oil 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note “666” in the message.
Key economic data and events to focus on today:
US President Trump plans to make a “major statement” on Russia at an undetermined time.
