This week, global financial markets moved in response to central bank decisions, tariff disruptions, and ongoing tech sector volatility. While Europe reacted to the European Central Bank’s rate cut with mixed equity moves, the US market was rattled by Fed Chair Powell’s hawkish stance and President Trump’s sweeping tariff overhaul.
Asia-Pacific markets attempted to decouple from Western anxiety, buoyed by strong corporate earnings and a more accommodative policy tone. Investor sentiment remained deeply bifurcated, optimism fueled by dovish monetary shifts clashed with recession fears ignited by trade policy shocks and high bond yields. Here's how the markets played out across the board.
Equities Roundup
Equity Markets React to ECB Rate Cut and Tech Volatility
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US: Wall Street slid sharply as Fed Chair Powell warned of inflation risks amid tariff tensions. The S&P 500 fell 2.24%, Nasdaq plunged 3.07%, nearing bear territory. Dow lost 1.73%. Nvidia dropped 6.9%, dragging tech lower.
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Europe: The ECB cut rates by 25 bps, bringing the deposit rate to 2.25%. While Stoxx 600 ended just 0.1% down, Germany’s DAX and France’s CAC 40 both declined 0.5%. Siemens Energy surged 10% on upbeat earnings. Hermès dropped 3.2% after a narrow revenue miss.
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Asia: Mixed momentum. Japan’s Nikkei rose 1.35% as tech rebounded. India’s Nifty 50 and Sensex both jumped over 1.6%. South Korea’s Kospi climbed 0.94% after the central bank held rates. Taiwan, however, fell for a second session on chip weakness.
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IPO/Earnings: TSMC beat Q1 estimates (profit +60%), but warned of tariff headwinds. Investors await earnings from Alphabet, Tesla, and Boeing next week.
Commodities Check
Oil Climbs While Gold Finds Support
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Crude Oil: Brent jumped 3.2% to $67.96, WTI up 3.54% to $64.68 - logging the first weekly gain in 3 weeks. Hopes of a US-EU trade deal and fresh sanctions on Iran tightened supply outlook.
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Gold: Continued rally, now up 25% YTD. Safe-haven demand is rising due to geopolitical tensions, persistent inflation, and central bank accumulation. MCX/COMEX prices hit record highs.
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Industrial Metals: Mixed. Copper saw slight recovery on Chinese stimulus hopes. Aluminum remains under pressure due to muted demand forecasts from Europe.
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Key Levels: WTI has support at $63; gold maintains strong support above $2,300 amid volatility.
Currency & Forex Snapshot
Dollar Strengthens Amid Trade Worries and Rate Uncertainty
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USD Index: Rose 0.2% to 99.575, as investors rotated to safety.
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EUR: Slightly weaker after ECB’s dovish cut; uncertainty over growth persists.
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GBP: Flat, trading cautiously ahead of BoE's May meeting.
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JPY: Slid 0.59% to 142.66/USD. Japan grapples with export weakness and trade negotiations with the US.
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INR: Strengthened as Indian markets rallied, but outlook remains cautious due to rising crude and rate cut uncertainty.
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Asian FX: Mixed; Korean Won down 0.47%, SGD and THB dipped, while AUD strengthened 0.3%.
Bond Yields & Interest Rates
Yields Rise on Hawkish Fed Talk, ECB Signals Policy Flexibility
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US Treasuries: 10-year yield rose to 4.5%, signaling investor discomfort post-tariff announcement. The 30-year yield approached 5%, a rare spike attributed to policy uncertainty.
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ECB: Cut deposit rate to 2.25% (from 4% in 2023), citing weak growth and easing inflation.
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Eurozone Bonds: German 10Y yield hovered near flat; France 10Y yield also softened post-decision.
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India: 10Y yield hit a 2-year low (6.374%) ahead of RBI’s bond buyback plan.
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Key Takeaway: Despite dovish tones in Europe and Asia, US yields remain elevated—keeping borrowing costs high and weighing on equity valuations.
Crypto & Alternative Assets
Bitcoin Holds $85K as Altcoins Struggle in ‘Crypto Winter’
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BTC: Trading just above $85,000 but still below the 200DMA.
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Altcoins: Market cap (ex-BTC) fell 41% since December 2024. Coinbase Institutional warned of a new "crypto winter" phase.
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Sentiment: Bearish but hopeful - expectations for recovery in Q3 2025 driven by global liquidity and pro-crypto regulation under Trump.
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Innovation: USDi, a new inflation-indexed stablecoin, is gaining attention as a hedge against CPI inflation, signaling evolution in digital assets.
Global Events & Macro Trends
Trade Tensions Mount; US Volatility Returns as Recession Fears Rise
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Key Data:
- Japan exports up just 3.9% in March - below expectations
- Singapore’s NODX rose 5.4% YoY, but down MoM
- Australia added 32,200 jobs in March, below forecast
- China’s youth unemployment dipped to 16.5%, while manufacturing remained sluggish
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Macro Events:
- ECB’s third rate cut this year reflects growth concerns
- Taiwan extended short-selling bans amid market turbulence
- U.S. FDA halted food safety tests due to budget cuts - raising concerns about food regulation capacity
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Recession Watch:
- Reuters poll raises U.S. recession risk to 45%
- VIX ("Fear Index") hovers near 30—double the long-term median
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Geopolitics: Trump’s tariffs on China and Japan dominate global trade discourse. Talks continue, but retaliation from China and Europe fuels market volatility.
Closing Thoughts
Looking at the broader picture, markets appear to be at an inflection point, with trade policy upheavals anchoring sentiment more than rate guidance or earnings. While commodities and safe-haven assets like gold surged—signaling investor caution—equity markets faced sectoral rotation and volatility, especially in tech and cyclicals. Meanwhile, bond markets sent a clear warning signal: rising yields and muted confidence in US debt point to growing discomfort with macroeconomic uncertainty.
Sectors like energy and industrials showed resilience, supported by rising oil prices and strategic shifts in supply expectations, while tech stocks bore the brunt of global selloffs, particularly after Nvidia’s plunge. European luxury and banking names revealed cracks beneath the surface, despite occasional rallies on earnings beats. The divergence in regional outlooks—US grappling with fiscal instability, Europe easing policy, Asia cautiously optimistic—underscores the fragmented nature of recovery narratives.
Heading into next week, all eyes will be on US corporate earnings and ongoing trade talks. Will the tariff pause soothe markets or are we just in the eye of the storm?
With volatility still elevated and global liquidity yet to fully recover, this may be a good time to watch from the sidelines—or bet strategically on overlooked value sectors. For bold investors, Asian credit and select commodities could offer surprising upside as the dust settles.