Gold rises to record highs and stock markets decline everywhere as markets await the unveiling of new US tariffs tomorrow.
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- Stock markets sold off quite strongly yesterday, especially in the USA, before mostly recovering. The S&P 500 Index traded in correction territory for a while, down more than 10% from its record high made in December 2024. The NASDAQ 100 Index had its worst quarter in three years. The standout asset is Gold, which has continued its strong bullish trend of the last 15 months as it breaks out to new all-time high prices above $3,505. Trend and momentum traders will be looking to trade long here. The sour sentiment has two immediate causes:
- President Trump has promised to implement new tariffs tomorrow Wednesday 2nd April, with markets expecting a 25% tariff on all imports of automobiles, pharmaceuticals, and on almost all imports from Canada and Mexico and possibly the European Union as well. This is weakening the US Dollar, so is unusual for a risk-off period in that sense in the way it affects the Forex market.
- President Trump threatened to bomb Iran and US forces are currently well positioned to do so, with a strong offensive US military buildup on the island of Diego Garcia which is almost certainly safe from any Iranian counter capability. Trump is demanding that Iran begin serious negotiations over its nuclear program, but so far Iran has signaled it is not prepared for direct negotiations.
- Crude Oil has continued to rise strongly as tensions remain high between the USA and Iran, with President Trump threatening to attack Iran if it does not begin to directly negotiate limitations on its nuclear program.
- The Reserve Bank of Australia held a policy meeting earlier today, deciding to maintain its interest rate at 4.10% as expected. The major takeaway was the Bank's expressed confidence on bringing down inflation to its target rate, and a rate cut is expected at the RBA's next policy meeting.
- The Forex market was relatively quiet over the past day. This will be likely to continue until we get news of the details of the new US tariffs.
- German Preliminary CPI (inflation) data released yesterday came in as expected, showing a month-on-month increase of 0.3%.
- There will be two potentially high-impact data releases in the USA today:
- JOLTS Job Openings
- ISM Manufacturing PMI