Global Market Turmoil Deepens Amid Escalating Trade War and Recession Fears

Image Source : Krish Capital Pty Ltd

Index Update

U.S. stock futures plunged on Monday, extending the market decline for a third straight session as the White House pressed ahead with aggressive tariffs despite ongoing market turmoil. Dow and S&P 500 futures dropped about 4%, while Nasdaq 100 futures fell 5%. The selloff began Thursday after President Trump announced steep reciprocal tariffs, leading to significant weekly losses: the Dow fell 7.9%, the S&P 500 dropped 9.1%, and the Nasdaq Composite declined 10%. China responded with a 34% tariff on all U.S. imports, and reports suggest Canada and the EU may follow suit. Despite the market reaction, the Trump administration insisted the tariffs would proceed as planned.

Market Movers

On Friday, the top gainers were USA Rare Earth, Inc. (+31.23%), followed by PAMT CORP (+23.76%). On the contrary QuantaSing Group Limited (-15.93%) and Jiayin Group Inc. (-15.91%) declined the most the same day.

Commodities Update

On Monday, WTI crude oil futures fell over 3% to below $60 per barrel, and Brent crude dropped more than 3% to $63.5 per barrel, both reaching their lowest levels since April 2021. The decline follows escalating trade tensions, particularly new U.S. tariffs announced by President Trump and retaliatory tariffs from China. These actions have raised fears of a global economic slowdown and weaker energy demand. Additionally, Saudi Aramco cut oil prices for Asian buyers after OPEC+ announced a larger-than-expected output hike.

Gold prices also fell below $3,030 per ounce, marking a third straight session of losses, driven by profit-taking and margin calls. Broader market sell-offs tied to the trade war, along with warnings from Fed Chair Jerome Powell about inflation and slower growth, have fueled investor anxiety.

Macro Update

The yield on the U.S. 10-year Treasury note fell toward 3.9% on Monday, hitting a six-month low as recession fears grew amid escalating trade tensions. Investors moved toward safer assets like government bonds after President Trump reaffirmed plans for reciprocal tariffs despite market volatility. China retaliated with a 34% tariff on all U.S. imports, and other major economies may follow. These developments raised concerns about inflation and economic growth, complicating the Federal Reserve’s policy outlook. Still, markets are anticipating 100 basis points of interest rate cuts by the end of the year.

Futures Update

U.S. stock futures continued to decline as the Trump administration held firm on its tariff policy, heightening fears of a global recession. The European Union is preparing to retaliate, following China's move last week. Markets remained under pressure, with the banking sector already suffering losses, crude oil prices falling to four-year lows, and Apple facing significant challenges due to its exposure to China. President Trump defended the tariffs as necessary to address financial deficits with major trading partners, despite concerns that the trade war could damage global economic activity.

Tariffs pushed Wall Street deeply into negative territory on Friday, following a substantial drop of 4% to 6% in the previous day's trading—the worst session since 2020. The S&P 500 tumbled by 322.42 points, or 5.97%, closing at 5074.09. The index is experiencing a significant decline, breaking through all its support levels. This situation increases the likelihood of further declines in the near term, with support seen at around 4930 and resistance at 5293. However, the 14-period RSI indicates that the index is in oversold territory, ggesting that a potential bounce back to the upside could be on the horizon.