US Markets Smashed After Tariff Update – Nasdaq Down 6%
US stock markets were smashed in trading yesterday as investors reacted to President Trump’s sweeping global trade tariffs. Stock markets suffered their worst day for nearly five years as $2.5 trillion was wiped off the market, the Dow dropping 3.98%, the S&P losing 4.84% and the tech-heavy Nasdaq falling 5.97%. Treasury yields took a huge hit as markets priced in Fed rate cuts, the 2-year down 17.8 basis points to 3.681% and the benchmark 10-year down 10.3 basis points to 4.02%. Oil prices collapsed as they took a double hit from global growth concerns and an unexpected increase in OPEC+ production levels, Brent down 6.72% to $69.91 and WTI down 6.64% to $66.95. Gold closed the day slightly lower after a choppy trading session, down 0.65% at $3,112.84 an ounce.
Dollar Smashed After Tariff Update
The dollar ultimately finished yesterday’s trading sessions at its lowest level since November last year as President Trump’s tariff updates pushed up expectations of stagflation and a US recession. But it was not all one-way traffic for the greenback, as the initial reaction against most of the majors – with the exception of the yen – was for the dollar to strengthen. However, once US markets opened and investors piled into bonds, pushing US treasury yields down, the dollar dropped hard, with the DXY losing 1.04% on the day to close at 102.07. The DXY is now sitting just above its support trendline on the daily chart, and if yields take another hit in trading today, traders are expecting to see the dollar sink further, with the next support level down at 101.25.
Non-Farms in Focus Later Today
It is by no means a traditional Non-Farms trading day today as global financial markets continue to react to President Trump’s tariffs and risk continues to take a big hit. However, later today, traders will swiftly change focus from geopolitical concerns and trade war talk to look at key fundamental data when US employment numbers are released. There is little on the dance card in the Asian session and UK traders will pause to see the latest UK Construction PMI data early in the European session, but really the US employment data could be the only thing that will take focus off trade concerns. Market expectation is for the headline Non-Farms number to show an increase of 140k new jobs last month, with the unemployment rate remaining steady at 4.1% and Average Hourly Earnings having a 0.3% month-on-month increase. Canadian employment numbers are out at the same time, but expect them to be superseded by the US data and geopolitical concerns.