Global financial markets are bracing for volatility as investors await President Trump’s announcement of new US tariffs today, Wednesday, April 2nd. Stock markets experienced sharp declines yesterday, particularly in the US, before staging partial recoveries. The S&P 500 briefly dipped into correction territory, falling over 10% from its December 2024 peak, while the NASDAQ 100 posted its worst quarterly performance in three years.
Amid market uncertainty, Gold prices surged to an all-time high of $3,505 per ounce, continuing a 15-month bullish trend before experiencing a minor pullback. Investors are closely watching today’s tariff announcement, as a harsher-than-expected policy could drive further demand for safe-haven assets like gold.
Key Market Drivers
1. President Trump’s Tariff Announcement
President Trump is set to reveal the details of new US tariffs at 9 PM London time. Market expectations include a 25% tariff on automobile and pharmaceutical imports, along with potential levies on imports from Canada, Mexico, and the European Union. The uncertainty surrounding the tariff details has already weakened the US Dollar, a rare occurrence during risk-off periods.
2. Rising US-Iran Tensions
In a major geopolitical development, President Trump has threatened military action against Iran, demanding negotiations over its nuclear program. US forces have amassed on Diego Garcia, a strategic island out of Iran’s reach, raising fears of an imminent conflict. This has fueled Crude Oil price increases, as supply chain disruptions in the Middle East become a growing concern.
Financial Market Reactions
- Gold: After reaching $3,505, gold pulled back slightly but remains bullish as investors seek safety.
- Stock Markets: US indices saw heavy selling before partially recovering, as traders await tariff details.
- Forex Market: The Australian Dollar is the strongest major currency since the Tokyo session opened, while the Japanese Yen is the weakest. However, Forex markets have been relatively quiet ahead of the announcement.
- Crude Oil: Prices continue to climb due to escalating tensions between the US and Iran.
Key Economic Data Releases
- Reserve Bank of Australia (RBA): The central bank held its interest rate at 4.10%, signaling confidence in managing inflation. A rate cut is expected in its next meeting.
- US Economic Data: Reports released yesterday suggest a slowing US economy, increasing the likelihood of Federal Reserve rate cuts in 2025:
- JOLTS Job Openings – Lower than expected.
- ISM Manufacturing PMI – Lower than expected.
- Upcoming Data Today: The ADP US Non-Farm Payroll Forecast, which could provide insights into labor market trends.
What to Expect Next?
With President Trump’s tariff announcement just hours away, markets are on high alert. Stock, Forex, and commodity traders will closely analyze the details, assessing their impact on global trade and economic growth. If tariffs exceed expectations, equities may face another selloff, while gold could continue its rally as a safe-haven asset.
