Markets Drop as Gold Hits Record; Tariff Fears Fuel Volatility

Global equity markets declined as safe-haven gold hit a record high following U.S. President Donald Trump’s announcement of broad-based tariffs, heightening fears of a global trade war and potential recession. While Wall Street initially dropped, the Dow and S&P 500 recovered, closing higher on gains in consumer staples, financials, materials, and energy stocks. The Nasdaq ended slightly lower, with all three major indexes posting both monthly and quarterly losses. 

Investors remain cautious as April 2 approaches, when Trump is expected to unveil a new round of tariffs targeting at least 15 countries. Reports suggest a potential flat 20% tariff on all nations with which the U.S. has a trade deficit. This follows Trump's recent move to impose a 25% tariff on non-American auto imports, effective April 3. White House press secretary Karoline Leavitt confirmed that while the tariffs will be country-based rather than sector-specific, Trump remains committed to imposing targeted duties on key industries. 

Meanwhile, concerns over inflation and sluggish consumer spending intensified market jitters, with investors closely watching Friday’s payroll report. The March nonfarm payrolls report is expected to show a slowdown in job creation. Analysts warn of stagflation, which could erode corporate earnings while inflation pressures squeeze valuations. 

Economists warn these policies could fuel inflation and hinder economic growth. Goldman Sachs has raised the probability of a U.S. recession to 35%, up from 20%, citing higher trade barriers and declining business confidence. The bank expects tariff rates to rise to 15% in 2025, pushing core PCE inflation to 3.5%, well above the Federal Reserve’s 2% target. Analysts also forecast GDP growth slowing to 1% next year. 

The stock market has already exhibited volatility in anticipation of these tariffs. The S&P 500 and Nasdaq posted their worst quarterly performances since 2022. The S&P 500 fell 4.6% in Q1, the Nasdaq plummeted 10.5%, and the Dow declined 1.3%. The "Magnificent Seven" tech stocks, which previously drove market gains, saw steep selloffs, with Tesla plunging nearly 36% and Nvidia dropping 20%. However, energy stocks gained 9.3% over the quarter, while financials outperformed, with Discover Financial Services and Capital One rising amid merger speculation. 

Tesla is expected to report Q1 delivery data this week, with projections indicating a 7% decline due to market backlash against CEO Elon Musk’s political activities and intensifying EV competition. Meanwhile, CoreWeave, backed by Nvidia, fell over 7% after its IPO, and Moderna slid 8.9% following regulatory concerns. Rocket Companies' acquisition of Mr. Cooper Group lifted the latter’s stock by 14.5% but sent Rocket’s shares down 7.4%. 

Despite market turbulence, analysts note that corrections like this historically precede rebounds, with the S&P 500 often recovering in subsequent quarters. BTIG analysts highlighted that historically, April has rebounded following steep March declines of over 3%, with an average 5.92% gain. Despite short-term volatility, Goldman Sachs maintains an 11% upside projection for the S&P 500 by year-end, as economic and earnings growth stabilize. 

Adding to market uncertainty, Trump has threatened new secondary tariffs of 25%-50% on Russian oil buyers in response to President Putin’s criticism of Ukrainian President Zelenskiy. This marks a shift in Trump’s stance, as he had previously praised Putin while criticizing Zelenskiy. 

As a result, if fears of a trade war intensify, the Dow Jones Industrial Average (US30) could face downside pressure, with key support levels at 41,500 and 41,000. A break below 41,000 could lead to a deeper correction toward 40,500. Conversely, if economic data, particularly the March nonfarm payrolls report, surprises to the upside and investor sentiment remains resilient, US30 could attempt to break above 42,200. A sustained rally could push the index toward 42,500, though uncertainty over tariffs and inflation remains a key risk factor.

Data for Technical Analysis (1D) CFD US30 DJIA

Resistance : 42119.7, 42353.8, 42732.6

Support : 41362.1, 41128.0, 40749.2                

1D Outlook

Source: TradingView                                

Buy/Long 1 If the support at the price range 40882.1 - 41362.1 is touched, but the support at 41362.1 cannot be broken, the TP may be set around 42327.8 and the SL around 40642.1, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 42119.7 - 42599.7, TP may be set around 43115.0 and SL around 41122.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 42119.7 - 42599.7 is touched, but the resistance at 42119.7 cannot be broken, the TP may be set around 41336.1 and the SL around 42839.7, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 40882.1 - 41362.1, TP may be set around 40480.0 and SL around 42360.0, or up to the risk appetite.       

Pivot Points Apr 1, 2025 02:37AM GMT