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 flirts with daily highs, retargets 1.1900

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GBP/USD remains well bid around 1.3650

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Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

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Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

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