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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.

The post General Markets Analysis – 04/04/25 first appeared on IC Markets | Official Blog.

Japan finance minister Kato says has no comment on forex

• warns tariffs could have a significant impact on trade systems
• also impact on economies

This article was written by Eamonn Sheridan at www.forexlive.com.

Japan February 2024 household spending data:

-0.5% y/y

• expected was -1.7%, prior +0.8%

+3.5% m/m

• expected +0.5%, prior -4.5%

Yen is swinging around so far on the session, traders are jittery after the hug moves in response to Trumpo’s tariffs.

This article was written by Eamonn Sheridan at www.forexlive.com.

Whirlpool Corp. will lay off 651 workers from its Amana manufacturing facility effective June 1

• company cites reduced consumer demand for its refrigeration products

More here.

ps. this is not breaking, it was out Thursday US time ICYMI.

This article was written by Eamonn Sheridan at www.forexlive.com.

The New Civil Liberties Alliance (NCLA), a conservative legal group, has filed the first lawsuit challenging Trump’s new tariffs on Chinese imports.

• The suit claims Trump exceeded his legal authority by imposing tariffs under the International Emergency Economic Powers Act (IEEPA).

• It was filed in federal court in Florida and targets both the April 2 sweeping tariffs and those from February 1.

• The NCLA argues Trump has misused emergency powers, violated the Constitution’s separation of powers, and overstepped Congress’s authority on tariff policy.

• The lawsuit seeks a court order to block the tariffs’ enforcement and reverse changes to the U.S. tariff schedule.

• The White House has not yet commented on the case.

This article was written by Eamonn Sheridan at www.forexlive.com.

Morgan Stanley raising around 100 billion yen for Japan-focused real estate fund

• Morgan Stanley fund is due to close in June

Headlines via Reuters citing unnamed sources

This article was written by Eamonn Sheridan at www.forexlive.com.

Earlier post on this is here:

• Trump would consider deal where China approves TikTok sale in exchange for tariff relief

The Financial Times following up now with similar:

This is also relevant:

• Flip flop time – Trump says he is open to deals on tariffs

This article was written by Eamonn Sheridan at www.forexlive.com.

Japanese media (Asahi) says the Japanese government is considering what actions to take over the new tariffs, including an extra budget.

Nissan, meanwhile, says its pausing order for the US market for its Infintia branded QX50 and QX55 vehicles.

This article was written by Eamonn Sheridan at www.forexlive.com.

JPM analysts say Trump’s combined tariff hikes amount to a 22% increase—comparable to the largest U.S. tax rise since 1968. As a result, the bank has raised its estimated risk of a global recession to 60%, up from 40%.

The note highlights concerns that the economic impact could be worsened by potential retaliation, supply chain disruptions, and a hit to business confidence. JPMorgan also warns that ongoing trade restrictions and reduced immigration could lead to long-term supply-side issues that dampen U.S. growth.

Still, the bank notes that both the U.S. and global economies remain fundamentally strong and should be able to absorb a moderate shock, though it expects further policy developments in the near future.

info via Reuters report

This article was written by Eamonn Sheridan at www.forexlive.com.

With mainland and Hong Kong markets out today, trading linked are also closed. ,

What are these ‘trading links’?

Shanghai-Hong Kong Stock Connect is one:

• a mutual market access program through which investors in each market can trade shares on the other market directly
• launched in 2014
• Northbound Trading allows international and Hong Kong investors to trade eligible shares listed on the Shanghai Stock Exchange via the Hong Kong Stock Exchange.
• Southbound Trading allows mainland Chinese investors to trade eligible shares listed on the Hong Kong Stock Exchange via the Shanghai Stock Exchange.
• The Shanghai-Hong Kong Stock Connect allows foreign investors to access China’s A-shares market (shares in mainland China-based companies that were previously difficult for foreign investors to access) and it allows mainland Chinese investors to access the Hong Kong market.

In addition to the Shanghai-Hong Kong Stock Connect, there is also the Shenzhen-Hong Kong Stock Connect

• launched in 2016
• links Shenzhen Stock Exchange with the Hong Kong Stock Exchange in a similar way

This article was written by Eamonn Sheridan at www.forexlive.com.

IMF chief Georgieva

• Says U.S. tariff measures represent a ‘significant risk to the global outlook’ at a time of sluggish growth

• Says it is important to avoid steps that could further harm the world economy

• We appeal to the U.S. and its trading partners to work constructively to reduce tensions

This article was written by Eamonn Sheridan at www.forexlive.com.

• All instruments are on the table to respond
• Perceived trade imbalances do not take into account digital services
• Indirect consequences of tariffs may lead other countries in Asia to boost exports to Europe
• The US economy and consumers will become poorer and weaker
• We will react in organised and unified manner
• Response to Wednesday’s announcement of US tariffs will be more massive than previous response
• If Europeans work together in their response to US tariffs, we will succeed in dismantling US tariffs
• Europe must react to tariffs industry by industry
  US diagnosis is correct but tariffs are wrong answer, Western economies need to be more productive
• Decarbonisation of economy will contribute to reducing Europe trade deficit

The goal here appears to be ‘dismantling’ tariffs but I’m not sure that’s a possibility anymore.

This article was written by Adam Button at www.forexlive.com.