- US equity markets tumbled due to President Trump’s tariff proposals, raising global growth concerns.
- Federal Reserve Chair Jerome Powell acknowledged tariffs’ impact, emphasizing monitoring inflation and waiting for more data.
- The upcoming week focuses on further tariff developments, US jobs data, and central bank decisions in Australia and New Zealand.
- Technical analysis shows that the Nasdaq 100 has now entered a bear market, down 20% from all-time highs.
Week in Review: Liberation Day Tariffs Send Markets Tumbling
A bloodbath week for US Equity markets and markets as a whole has finally come to an end. Market sentiment soured after President Trump revealed his tariff proposals, which weighed on global growth expectations and sent US stocks tumbling.
On Thursday, hedge funds sold stocks at their highest single-day amount since 2010. At the same time, retail investors bought $4.7 billion worth of stocks, the most in over a decade. Friday, the S&P 500 lost another $1.5 trillion in market value, bringing the total two-day losses to $3.5 trillion.
Friday’s losses came about as China announced it will retaliate against U.S. President Donald Trump by imposing an extra 34% tariff on U.S. goods. This move intensifies the trade war, worrying investors and raising fears of a possible recession.
Source: LSEG, US Census Bureau
Developments this week saw investment bank J.P. Morgan increase their estimates to 60% that the global economy would enter a recession by year-end, up from 40% previously.
Big tech stocks dropped, pushing the Nasdaq closer to a bear market. Companies that rely heavily on China and Taiwan for manufacturing were hit hard, with Apple (NASDAQ:AAPL) falling 6.4% and Nvidia (NASDAQ:NVDA) dropping 7.7%.
The Nasdaq was set to close more than 20% below its record high from December.
It appears that market participants are now looking to the Federal Reserve and Chair Jerome Powell to be the saviour.
Federal Reserve Chair Jerome Powell told a business journalists’ conference on Friday that the tariffs were "bigger than expected" and increased the risk of higher inflation and slower economic growth.
The Fed plans to wait for more data before deciding on monetary policy but will focus on keeping inflation under control if Trump’s tariffs lead to lasting price increases, Powell said.
He didn’t directly comment on the U.S. stock market selloff but admitted that uncertainty is causing businesses to delay decisions.
"People are just waiting for clarity," Powell said. "I can’t say when it will clear up, but it eventually will."
On the FX front, the US dollar strengthened against major currencies like the euro and yen on Friday after Federal Reserve Chairman Jerome Powell discussed the impact of bigger-than-expected U.S. tariffs and took a cautious approach to future rate cuts.
The Aussie Dollar lost ground on Friday and hit five-year lows against the greenback after China announced its tariff stance and retaliation. The Swiss Franc and the Japanese Yen both benefitted this week from safe haven appeal, both gaining significant ground across the board.
Commodities were interesting to observe this week. Gold prices rose immediately after the tariff announcement but have experienced a significant selloff since then. Gold reached a high of 3167 before the selloff saw prices touch a low of 3015 on Friday. The only explanation that I could draw was significant profit-taking and the possibility that the tariffs were largely priced in.
Oil prices struggled this week as OPEC + announced further output increases. That, coupled with tariff fears, sent oil prices to their lowest level since 2021. Friday’s losses were around 8%. For more information on the OPEC + developments read Brent Oil price plummets: OPEC+ output hike & price outlook.
Heading into next week and the tariff picture is far from clear. Market participants will do well to focus on potential deals between the US and other countries which could help sentiment improve. However, if no deals materialize and countries follow the China approach markets could be in for another week of pain.
The Week Ahead: Markets Eye Tariff Developments and the FOMC Minutes
The upcoming week will focus on U.S. President Donald Trump’s plans for new tariffs. Alongside this, markets will also watch U.S. jobs data, an Australian central bank meeting, and a key eurozone inflation report.
Asia Pacific Markets
The main focus this week in the Asia Pacific region will be Chinese inflation and Japanese wage data as the BoJ eyes a rate hike in the coming months.
Next week, China’s low inflation could give the central bank (PBoC) room to cut interest rates. March inflation data, due Thursday, is expected to show consumer prices staying weak, with a slight rise of just 0.1% year-on-year.
Meanwhile, producer prices are likely to remain negative for the 30th straight month as input costs continue to fall. These deflationary pressures and high real interest rates could push the PBoC to lower rates, though it has held off so far, waiting for the right moment.
The Bank of Japan will be watching wage data this week as the central bank eyes another rate hike. Wages are expected to improve gradually. February saw stronger labor cash earnings, helped by solid bonus payouts. However, real cash earnings are likely to keep shrinking as inflation peaked in the same month. Inflation eased in March due to energy subsidies and lower fresh food prices, supporting the outlook for a steady rise in wages over time.
The Reserve Bank of New Zealand will announce its interest rate decision on Wednesday next week. Market participants are expecting the central bank to cut rates by 25 bps. Given the tariff developments and the backdrop of the New Zealand economy, a 25 bps cut seems all but certain at this point.
Europe + UK + US
In developed markets, the US is the major data player next week, with the Euro Zone and the UK enjoying a data reprieve.
The US economy is facing growing challenges as President Trump’s new trade policies spark concerns about higher prices and slower economic growth. Steep tariffs, which are paid by importing companies, could hurt profit margins and reduce consumer spending, especially as worries about job losses grow and stock markets decline. While markets are increasingly expecting the Federal Reserve to cut interest rates, another high core CPI and PPI reading next week might make the Fed cautious about acting soon.
I will also be watching consumer confidence, which could drop further after recent events, and monitoring whether government spending cuts tied to DOGE are improving the fiscal situation.
The UK does not have any high-impact data releases, but I will be keeping a close watch on Friday’s GDP data print. After a slow January, I expect a small rebound in February’s monthly GDP. These figures can be quite volatile, but despite a quieter end to 2024, the outlook for 2025 still seems positive, even with the recent tariff news.
There are still, of course, challenges as evidenced by the Goldman Sachs group, which lowered its UK GDP forecast down to 0.7% from a previous 0.8%.
The UK government is significantly increasing spending this year, which should help support growth. However, weaker economic activity in the US and the eurozone could become a big challenge later this year and into 2026.
Chart of the Week - Nasdaq 100
This week’s focus shifts to the Nasdaq 100 which has now dropped over 20% from its all-time highs, signaling a bear market.
The Nasdaq is currently resting at an area of support around 17304 and finished the week with 3 successive days of losses.
The period-14 RSI is now resting in oversold territory but as we know the RSI can remain in oversold territory for extended periods of time which means the bearish move may not be over.
This will also depend on how tariff developments shake up next week.
Immediate support rests at 17000 before the 16500 and 16000 handle comes into focus.
Resistance rests at around 17737 before the 18361 and 18852 handles come into focus.
Nasdaq 100 Daily Chart - April 4, 2025
Source: TradingView.Com
Key Levels to Consider:
Support
- 17000
- 16500
- 16000
Resistance
- 17737
- 18361
- 18852
Read More: Gold (XAU/USD) tumbles $100+, $3050 support holds firm. What next?