US Markets Fall Again on Trade War Fears – Nasdaq Down 2%
US stocks were hit hard again last night as the escalating global trade war overshadowed cooler US inflation data. The Dow Jones closed down 1.3%, the S&P dropped 1.39%, confirming that it is in a technical correction, and the Nasdaq fell 1.96%. US Treasury yields declined after PPI numbers came in worse than expected, with the 2-year down 3 basis points to 3.956% and the 10-year off 4.4 basis points to 4.268%. Haven flows helped the dollar regain some of its recent losses, with the DXY up 0.23% to 103.84. Oil prices fell sharply again as global growth concerns continued to weigh, with Brent down 1.11% to $70.16 and WTI dropping 1.67% to $66.55 a barrel. Gold surged higher, smashing through resistance to reach new record levels, closing up 1.85% by the New York close at $2,989.82.
Gold Shines as Market Worries Grow
Gold prices surged last night as continued global trade uncertainty and the potential for monetary easing by the Federal Reserve helped push the world’s favourite precious metal to new record levels. Spot gold closed the session up 1.85% yesterday and is now up nearly 15% in 2025, having risen 27% in 2024. Traders now believe it is only a matter of hours, rather than days, before another significant milestone is reached and gold touches $3,000 an ounce. If uncertainty over tariffs continues to dominate the market, investors are likely to keep seeking haven assets, potentially driving gold even higher. However, a sharp change in circumstances—particularly any certainty in the markets or a reduction in tariffs—could trigger a downturn, and given the speed of the recent rise, any corrections could be equally sharp and severe.
Another Busy Trading Day to End the Week
At the start of the trading week, many traders may have expected smoother market conditions, given the relatively quiet macroeconomic event calendar. However, this has not been the case, as frequent geopolitical updates have led to increased volatility across financial markets. Once again, there is nothing of note on the calendar during the Asian session, but early in the European day, attention will be on the UK economy with the release of the latest GDP data. Later in the day, US data will be released, including the University of Michigan Consumer Sentiment and Inflation Expectations figures. However, geopolitical developments and global trade updates are expected to dominate market sentiment through to the New York close today.
