Global Markets Rattled by US-China Tariff Escalation and Economic Uncertainty

Image Source : Krish Capital Pty Ltd

Index Update

S&P 500 and Nasdaq 100 contracts down over 2% and Dow futures falling around 670 points, following Wednesday’s major rally. The drop reflects lingering concerns despite President Trump’s 90-day tariff pause for most trade partners, as steep tariffs on China remain. Market volatility is expected to continue amid economic uncertainty, with investors closely watching the upcoming CPI report for inflation insights. Major tech stocks were down in premarket trading, including Apple, Nvidia, Amazon, and Tesla.

Market Movers

On Wednesday, the top gainers were  Hub Cyber Security Ltd (+13.82%), followed by Nyxoah SA (+6.60%). On the contrary Neogen Corporation (-23.3%) and Calumet, Inc (-7.23%) declined the most the same day.

Commodities Update

Crude oil prices dropped over 2% on Thursday, with WTI falling below $61 and Brent under $64 per barrel, amid renewed US-China trade tensions. President Trump hiked tariffs on China to 125%, prompting China to retaliate with 84% tariffs on US goods. This escalation raised concerns over weaker fuel demand. OPEC+ also agreed to boost output, adding oversupply fears, while the Keystone pipeline remains shut after a spill, deepening market uncertainty.

Gold neared $3,120 per ounce, extending gains on safe-haven demand driven by the tariff standoff. Despite a temporary easing of US tariffs for other countries, investor focus remains on inflation risks and slowing growth, highlighted in recent FOMC minutes. Markets now await key US inflation data, while Q1 saw $21.1 billion in inflows into gold-backed ETFs, signaling strong investor interest.

Macro Update

The US 10-year Treasury yield fell 7bps to 4.28% on Thursday, easing after a sharp spike above 4.5% the day before amid trade war tensions. Wednesday’s surge reflected investor fears that Treasuries were losing safe-haven appeal as positions were liquidated. Yields retreated after President Trump announced a 90-day tariff pause for most trade partners, excluding China. However, concerns persisted as the US raised tariffs on Chinese goods to 125%, with China responding at 84%. The ongoing 10% universal tariff hike remains a major drag on the economic outlook.

Futures Update

U.S. stock index futures rose following a sharp Wall Street rally, driven by President Trump's announcement of a 90-day pause on reciprocal tariffs for most U.S. trade partners. The move, aimed at encouraging trade negotiations, lowered these tariffs to a baseline rate of 10%. However, the pause excluded China, as Trump significantly increased tariffs on Chinese imports to 125%, in response to Beijing raising duties on U.S. goods to 84%. Despite the broader pause, sector-specific tariffs, such as the 25% duty on automobiles, remained in place.

Stocks soared to their largest daily increases in over 16 years following President Trump's announcement of a 90-day postponement of "reciprocal" tariffs on all countries except China. The S&P 500 index surged by 474.11 points (9.51%), closing at 5,456.89. The index encountered support at significant levels and continued its upward trend, suggesting potential for short-term gains, with support identified around 5,267 and resistance at 5,695. Additionally, the 14-period RSI has bounced back from the oversold territory and may continue to rise in the near future.