Market Overview: Sharp Losses Across US Equities
US equity markets closed sharply lower on Monday amid mounting concerns over the Federal Reserve’s independence and persistent trade tensions. President Trump escalated his criticism of Federal Reserve Chair Jerome Powell, publicly urging immediate interest rate cuts and even suggesting Powell’s dismissal. This unprecedented rhetoric raised fears of political interference in monetary policy and spurred a widespread selloff in equities.
The Dow Jones Industrial Average dropped 2.5% to close at 38,170, while the Nasdaq Composite fell 2.6% to 15,870. The S&P 500 declined by 2.4% to 5,158, marking its fourth consecutive session of losses. The technology and consumer discretionary sectors were hit hardest, with prominent tech names such as Nvidia, Amazon, Tesla, Alphabet, Apple, Microsoft, and Meta all retreating. With this latest slide, the S&P 500 now stands 16% below its record high from February, approaching bear market territory.
Investors Flock to Safe Havens Amid Volatility
In response to rising uncertainty, investors shifted their focus to safe-haven assets. The US dollar slumped to a three-year low against major global currencies, while gold prices soared to a record high, surpassing $3,400 per ounce. The surge in gold reflects growing concern over potential trade tariffs and the unpredictability surrounding the Fed’s policy direction.
Bond Yields Rise as Rate Cuts Anticipated
In the bond market, yields edged up modestly, with the 10-year Treasury yield reaching 4.41%. This movement reflects market expectations of three to four Federal Reserve interest rate cuts beginning in June. However, the Fed’s own “dot plot” projects only two cuts this year. While the recent end to quantitative tightening may help support bond prices and keep yields in check, continued budget deficits and inflation uncertainty are likely to restrict any significant decline in yields.
The Conference Board’s Leading Economic Index fell by 0.7% in March, driven by weaker consumer expectations and equity market declines. Despite this drop, the index does not currently indicate an imminent recession. Although growth appears to be slowing due to tariff tensions and political headwinds, pro-growth measures such as deregulation and tax cuts may help boost the economy later in 2025.
Asian Markets Show Caution on Trade and Fed Headlines
On Tuesday, most Asian equity markets traded within a narrow range as investor sentiment remained cautious. This followed renewed US-China trade concerns and President Trump’s continued criticism of Federal Reserve Chair Powell. China’s markets were largely flat, while Hong Kong’s Hang Seng Index dipped by 0.5%. Japan’s Nikkei also declined slightly, pressured by the prospect of US tariffs and the strength of the yen. Broadly, Asian markets displayed mixed performance ahead of key economic data and earnings releases due this week.
US Futures Rebound Amid Corporate Optimism
Despite recent volatility, US equity futures rebounded overnight. Dow futures gained nearly 200 points, while S&P 500 and Nasdaq futures also moved higher. This optimism was partially driven by anticipation surrounding upcoming earnings reports from major companies like Tesla, even as trade tensions and monetary policy uncertainties continued to linger.
Currency Movements: Dollar Weakens, Euro Gains Strength
The US dollar hovered near a three-and-a-half-year low against the euro, trading around $1.1502 after touching $1.1573 on Monday-its strongest level since November 2021. Ongoing criticism of the Fed by President Trump has cast doubt on US monetary policy stability, weakening investor confidence in the dollar. In contrast, the euro has strengthened significantly, appreciating approximately 11% against the dollar this year.
Oil Prices Recover on Supply Concerns
Oil prices bounced back this morning following a 2% decline in the previous session, as markets remained cautious amid global economic uncertainty driven by US tariffs and concerns over the Fed. Brent crude futures rose 0.8% to $66.80 per barrel, while WTI crude increased 1% to $63.02. The recovery was largely driven by short-covering, following developments in US-Iran nuclear talks that raised fresh concerns over potential supply disruptions. However, the overall demand outlook remains uncertain due to the broader macroeconomic environment.
Equities on the Move: Corporate and Regulatory Developments
Several major companies saw notable price movements driven by analyst actions, quarterly results, and regulatory headlines. Amazon Web Services has reportedly paused certain international data centre leasing discussions, signaling a short-term slowdown in demand among large-scale AI infrastructure buyers. This mirrors a similar move by Microsoft, though other hyperscalers such as Meta, Google, and Oracle continue to invest, suggesting a moderation rather than a halt in data centre growth.
In the healthcare sector, Novo Nordisk has submitted a request for US regulatory approval of an oral version of its weight loss drug Wegovy. Clinical trials demonstrated that patients using the oral semaglutide pill lost up to 15% of their body weight over 64 weeks. The new pill offers a more convenient alternative to injections and comes at a time of rising competition, particularly from Eli Lilly’s oral GLP-1 candidate.
Uber Technologies came under fire as the US Federal Trade Commission filed a lawsuit alleging the company enrolled users into its Uber One subscription service without consent and misrepresented the ease of cancellation and the extent of potential savings. Uber denies these allegations, insisting its processes are transparent and lawful, and says it is confident in its legal position.
Meanwhile, Shopify is facing renewed legal pressure after a US appeals court reinstated a proposed class action lawsuit concerning data privacy violations. The court determined that Shopify could be sued in California for allegedly collecting personal data from state residents, arguing the company deliberately targeted the state despite its attempt to shift the case to a different jurisdiction.
Chipotle Mexican Grill announced it will expand into Mexico through a partnership with Latin American operator Alsea Group. This move marks Chipotle’s first entry into Latin America and follows its recent venture into the Middle East. The company expects modest sales growth, tempered by rising input costs and concerns related to tariffs on raw materials from Mexico.
In a significant deal, Nomura has agreed to acquire Macquarie Group’s US and European public asset management operations for $1.8 billion in cash. The transaction is set to close by the end of 2025 and will increase Nomura’s assets under management from $590 billion to approximately $770 billion. Macquarie will retain its Australian operations and plans to collaborate with Nomura on product development going forward.
There was a wave of analyst activity as well. Raymond James downgraded Amazon from “Strong Buy” to “Outperform” and lowered its price target to $195, citing growing investment pressures and margin risks expected in 2025-26. The firm remains optimistic about Amazon’s AI prospects but favors companies like Meta, Uber, and MercadoLibre due to lower capital intensity. DA Davidson downgraded Salesforce from “Neutral” to “Underperform,” reducing its price target to $200 and expressing concerns that the company’s heavy focus on AI is detracting from its core business, which is already experiencing deceleration.
Tesla received mixed coverage from Wedbush analyst Dan Ives, who warned that the company is at a critical juncture. He urged CEO Elon Musk to steer clear of politics and cryptocurrency distractions like DOGE, stating that Musk’s actions have damaged Tesla’s brand. While remaining optimistic about Tesla’s long-term potential, Ives noted weakening demand and lowered earnings expectations.
On a more positive note, Loop Capital upgraded Norwegian Cruise Line to “Buy” from “Hold” after a nearly 40% drop in share price, highlighting strong onboard spending, resilient pricing, and clear earnings visibility with the launch of its new ship, Aqua. Similarly, Baird upgraded Adidas to “Outperform,” pointing to a 25% share decline and expressing confidence in the brand’s momentum across both performance and lifestyle segments. The firm cited conservative guidance and minimal tariff exposure, forecasting potential earnings of more than €11 per share by 2026. Barclays initiated coverage of Abercrombie & Fitch with an “Equal Weight” rating and a $71 price target, acknowledging strong growth potential but warning of margin pressures and sector volatility.
Upcoming Data and Events to Watch
Investors are closely watching a series of key events that could influence short-term market dynamics. Scheduled speeches from Federal Reserve officials Patrick Harker and Neel Kashkari, upcoming US Treasury auctions, and fresh oil inventory data are expected to provide valuable insights into monetary policy and commodity market trends. Meanwhile, earnings reports from several high-profile firms, including Intuitive Surgical, Tesla, Capital One, Chubb, and SAP, are likely to be market-moving.
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