Tariffs and inflation fears drive market rout

Chris Beauchamp IG

Tariff news and signs of renewed inflation in the US continue to worry stock markets says Chris Beauchamp, Chief Market Analyst at online trading platform IG.

Stock market turmoil continues

As European markets head towards the close, the volatility continues. US markets opened sharply lower, joining the rest of the world in the red as investors opted to crash out of risk assets in favour of the dollar, yen and gold. Trump’s tariffs, and their severity, have caught investors on the hop, but the strong rhetoric coming from all sides suggests that this will not be a short-lived trade war. ISM data this afternoon showed that prices continue to rise in the US, adding fuel to the fire, and increasing fears that the Fed will have to hike rates this year.

US stocks slump, with tech names not immune

All of this is a far cry from the record highs seen in US indices just a couple of weeks ago. Traders around the globe are scrambling to work out the impact of the tariffs on earnings, but much of the impact will be dependent on retaliatory tariffs by Canada and others, and in turn any US retaliation. Faced with these unknowns, it seems probable that richly-valued US stocks like the Magnificent 7 will continue to suffer losses as investors look to book gains and wait out the storm.

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Chris Beauchamp

EUR/USD holds lower ground near 1.1850 ahead of EU/ US data

EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1850 in European trading on Friday. A broadly cautious market environment paired with modest US Dollar demand undermines the pair ahead of the Eurozone GDP second estimate and the critical US CPI data.

GBP/USD keeps losses around 1.3600, awaits US CPI for fresh impetus

GBP/USD holds moderate losses at around 1.3600 in the European session on Friday, though it lacks bearish conviction. The US Dollar remains supported amid softer risk tone and ahead of the US consumer inflation figures due later in the NA session on Friday.

Gold trims intraday gains to $5,000 as US inflation data loom

Gold retreats from the vicinity of the $5,000 psychological mark, though sticks to its modest intraday gains heading into the European session. Traders now look forward to the release of the US consumer inflation figures for more cues about the Fed policy path. The outlook will play a key role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus to the non-yielding bullion.