Asset Summary – Tuesday, 8 April
GBPUSD is facing downward pressure as the British pound weakens against the US dollar. This decline is attributed to increased risk aversion in the market stemming from worries about a potential global recession fueled by US trade policies. China’s retaliatory tariffs have exacerbated these concerns, prompting investors to anticipate significant interest rate cuts from the Bank of England. The growing expectation of aggressive monetary easing by the BoE, including a high probability of a rate cut in May, is further diminishing the appeal of the pound, thus contributing to the decline in the GBPUSD exchange rate.
EURUSD is likely to experience volatility and potential downward pressure. The escalating trade war, particularly the tariffs imposed by the U.S. and China, is creating economic uncertainty. The anticipation of retaliatory measures from the EU, coupled with President Macron’s call to suspend U.S. investments, signals a weakening of economic ties and potentially slower growth in Europe. This environment increases the likelihood of the ECB easing monetary policy, specifically rate cuts, which would devalue the Euro relative to the Dollar. The market’s expectation of a near-certain rate cut in April and further reductions throughout the year suggests a bearish outlook for the Euro, influencing EURUSD downwards.
DOW JONES experienced a decline in value, continuing a downward trend over the past three sessions amid ongoing market volatility and uncertainty surrounding tariffs. Despite an initial surge driven by tariff pause speculation, which was later refuted, the Dow Jones ultimately closed lower. Investors are closely watching upcoming inflation data, which could significantly impact the Federal Reserve’s monetary policy decisions and, consequently, influence the Dow Jones’s future performance.
FTSE 100 experienced a significant decline, reaching its lowest point in over a year, primarily driven by global market anxieties stemming from escalating trade tensions initiated by US tariffs and subsequent retaliatory actions. Investors are responding to developments regarding tariffs and retaliatory measures from other countries. The prospect of further tariff increases from the US has amplified market uncertainty, contributing to substantial losses in various sectors, with Melrose Industries, RELX, Sage Group and Rentokil Initial being some of the most impacted companies. However, a few companies such as Fresnillo, Entain, Natwest Group and Taylor Wimpey displayed some resilience against the broader downward trend, showing that there are still some companies performing well.
GOLD is experiencing upward price pressure, driven by anxieties surrounding a potential global recession fueled by escalating trade tensions between the U.S., China, and the EU. President Trump’s tariff threats are stoking fears and pushing investors towards safe-haven assets like gold. Market participants are also keenly awaiting upcoming economic data releases, including the Federal Reserve minutes and inflation reports, which could offer clues about future monetary policy decisions and further influence gold’s trajectory. Despite recent pullbacks, gold maintains a strong year-to-date performance, indicating continued investor confidence in its value.