Hello traders, welcome to Tuesday, where global markets are under pressure following escalating trade war tensions and a sharp reversal in risk assets. Yesterday’s key economic data and political developments have set the tone for today's trading, with a strong risk-off sentiment dominating the markets.
Trade War Heats Up: Trump Imposes New Tariffs, China Retaliates
Once again, Donald Trump’s policies are shaking the markets. On Monday, President Trump confirmed 25% import tariffs on Mexican and Canadian goods and added additional tariffs on Chinese imports. In response, China announced overnight that it would impose additional tariffs of up to 15% on some U.S. goods, further escalating the ongoing trade war.
This renewed trade war rhetoric is weighing heavily on investor sentiment, causing global equities to slide and safe-haven assets to strengthen.
Market Reaction: Indices Reverse Gains, Risk-Off Mood Dominates
Despite an initial upswing in global indices on Monday, the market reversed sharply to the downside, erasing all gains. As a result, European indices opened in the red, with U.S. futures also struggling ahead of the Wall Street session. The uncertainty surrounding tariffs is creating a nervous trading environment, leading to broad market weakness.
Currencies: Safe-Haven Currencies Strengthen
On the forex market, the Japanese Yen and Swiss Franc are showing significant strength, confirming a risk-off sentiment as investors flee toward safe-haven assets. Meanwhile, the U.S. Dollar is mixed, as traders assess the impact of tariffs and upcoming economic data.
Commodities: Oil Drops, Gold and Silver Rally
The commodities market is reflecting the risk-off sentiment, with gold and silver climbing higher as investors seek safe-haven hedges. Meanwhile, oil prices are struggling, with year-to-date losses now exceeding 5%. The drop in crude prices is also hurting oil-related stocks, including Saudi oil giant Aramco, which reported a decline in full-year profit due to weaker oil prices.
Crypto Market Drama: Trump’s Crypto Reserve Proposal Sparks Controversy
Over the weekend, Donald Trump proposed placing some cryptocurrencies in a special "crypto reserve", which initially triggered 10-20% price surges in Bitcoin and Ethereum. However, these gains have completely reversed, and both major cryptocurrencies are now struggling significantly.
Adding further controversy, there is widespread speculation of insider trading, as some traders appeared to anticipate the announcement ahead of time, triggering suspicions in the crypto community. While no formal evidence has been presented yet, the uncertainty has cast a shadow over the cryptocurrency market, adding to the bearish sentiment.
Summary: A Volatile Market with High Uncertainty
Tuesday begins with high uncertainty and a strong risk-off tone, as trade war tensions escalate, global equities struggle, and safe-haven assets gain traction. Oil remains under pressure, while cryptos face renewed selling pressure after Trump's proposal turned into a speculative mess.
Traders should expect volatility to remain elevated, with tariff developments and economic data likely driving further price swings throughout the session.