Tariff Volatility Rocks Markets – Nasdaq Down 1.2%
Updates on tariff implementation from the US have led to a significant increase in market volatility over the last few sessions. Over the weekend, announcements that tariffs against Canada, Mexico, and China would commence today—followed by a subsequent pullback from President Trump—have triggered sharp movements across financial products. All three major US indices ended in the red, with the Dow down 0.28%, the S&P falling 0.76%, and the Nasdaq dropping 1.20%.
The dollar experienced a rollercoaster ride, rallying over 1% before fully retracing those gains later in the day on updates regarding tariff delays. The DXY ultimately finished down 0.1% at 108.41. US Treasury yields pushed higher, with the 2-year yield gaining 5.2 basis points to 4.249% and the 10-year yield rising by 1.4 basis points to 4.553%.
Oil prices were also volatile but ended the session close to flat, with Brent down 0.21% at $75.51 and WTI falling 0.14% to $72.15. Gold, meanwhile, continued its upward trajectory, reaching fresh record highs as market uncertainty persists, finishing the day up 0.59% at $2,814.50.
Trump 2.0 Is a Lot Like Trump 1.0
Traders with long market experience are beginning to feel a sense of déjà vu. Donald Trump’s second stint in the White House is shaping up to resemble his first, with market volatility increasing as he delivers strong initial statements before dramatically reversing course a day later.
Over the past few days, tariff-related updates have triggered large swings in the market, as the President initially adopts a hardline stance on trading partners before offering a reprieve. The market has no choice but to react strongly to both updates, given their potential impact on global growth and underlying economic data. Traders now expect similar patterns going forward and are adjusting their strategies accordingly. Long-term trend followers are likely to struggle until greater certainty returns to the market—something that does not appear imminent.
Geopolitics to Dominate on a Thin Calendar Day
Geopolitical developments are set to dictate market movements today, given the lack of major economic data releases. Asian traders will be closely monitoring Chinese markets as they fully return from a week-long holiday and react to US tariff threats.
With little on the economic calendar in the early trading sessions, geopolitical events—particularly those related to tariffs—will likely drive market sentiment. However, the New York session does feature the first of four key jobs reports this week: the JOLTS Job Openings data. This report will provide traders (and the Federal Reserve) with tier-one employment data to analyse. Expectations suggest job openings will have declined slightly, from 8.10 million to 8.01 million. While unlikely to move the market significantly unless it deviates sharply from expectations, this report has previously been the first indicator of a shifting labour market.
