As March comes to a close, markets are closely monitoring economic signals, central bank guidance, and global trade tensions. Concerns over US tariff policies have sparked a risk-off sentiment, driving gains in precious metals like gold, while oil and stock markets in the US and Europe saw notable declines.
KEY INDICATORS
US economic data
The core PCE price index for February exceeded market expectations in both annual and monthly terms.
This has led traders to continue betting on two interest rate cuts from the Federal Reserve this year, with the first cut expected in July.
Fed’s Daly on future rate cuts
Federal Reserve’s Daly suggested that two rate cuts in 2025 would be a reasonable expectation.
She emphasised the need to adopt a wait-and-see approach to monetary policy, allowing industries time to adjust to tariffs.
Trump’s remarks
Greenland: Trump reiterated that he would not rule out the use of military force to acquire Greenland.
Relations with Putin: He expressed anger over Putin’s recent criticisms of Ukrainian President Zelensky but still maintains good relations with Russia and plans to communicate with Putin again this week.
Russia sanctions: Trump threatened to impose secondary tariffs on Russian oil, ranging from 25% to 50%, if no agreement is reached with Russia.
Iran: Trump warned that if Iran does not reach a nuclear deal with the US, military action and secondary tariffs on Iranian products would follow.
MARKET MOVERS
XAU/USD
Price action has resulted in a new all-time high of 3127.8.
There are no clear signs suggesting that the upward trend is nearing its end.
The risk/reward ratio is unfavourable for entering a buy position at the current level.
Concerns over a potential US recession shifted market focus towards spending data rather than inflation metrics last Friday.
Despite positive PCE data, the US dollar index fell by 0.26%, closing at 104.01.
The 10-year US Treasury yield ended at 4.2390%, while the 2-year yield, which is more sensitive to monetary policy changes, finished at 3.9220%.
US equities declined across the board, with the Dow Jones dropping 1.69%, the S&P 500 falling 1.97%, and the Nasdaq sliding 2.7%.
Major tech stocks continued their downward trend for the third consecutive trading day: Google fell 4.8%, Meta lost 4.2%, Tesla dropped 3.5%, and Apple declined 2.6%.
Commodities react to trade war concerns
Trump’s recent tariff policies heightened fears of a global trade war, driving a shift towards risk-off sentiment.
Gold surged 0.94% to a record high of USD 3,084.33 per ounce, marking its 18th all-time high this year.
However, silver declined by 0.77%, closing at USD 34.11 per ounce, as investors took profits.
Fears of a US-led tariff war triggering a global recession put downward pressure on oil prices.
WTI crude dropped 1.25% to USD 68.97 per barrel, while Brent crude fell 1.23% to USD 72.40 per barrel.
Global equity markets follow downward trend
European stock indices mirrored US losses, with Germany’s DAX 30 down by 0.96%, the UK’s FTSE 100 falling by 0.08%, and the Euro Stoxx 50 declining by 0.92%.
The Nasdaq Golden Dragon China Index, which tracks US-listed Chinese stocks, dropped by 3.11%.
Baidu fell 5.1%, while Bilibili declined 4.6%, contributing to the broader market weakness.
