Global financial markets are under pressure again this week as trade issues between the United States and China heat up again.
As investors await the US retail sales report scheduled for tonight, news of new tariffs from the White House adds to uncertainty, especially for the technology and semiconductor sectors.
Trade Tensions Cause Worry Despite Strong US Economic Data
Although the Empire State Manufacturing Index recorded better-than-expected readings, the market did not seem to react much to the news.
The main focus remains on President Donald Trump's latest move to impose national security tariffs on semiconductors and electronics, which is seen as a move that could further complicate trade relations between the US and China.
Market reactions were swift. Gold surged to new highs while the Swiss Franc continued to strengthen, indicating that investors are beginning to seek protection from risk, despite the depreciation of the US dollar.
In the stock market, investors appeared to be struggling to find a clear direction, as policy news was fluctuating and made short-term trading strategies difficult.
Nvidia Issues Shake Tech Sentiment
Washington's decision to revoke previous export breaks for Nvidia Corp., and impose tighter restrictions on chip sales to China, has rattled tech markets.
The move not only marks a sharp shift in the tone of US policy, but also reflects the White House's willingness to 'tool' the supply chain as a geopolitical weapon, a development that could have a major impact on the global economy.
US Retail Sales Data: This Week's Focus
Now, all eyes are on the US retail sales report due out tonight. Investors are expecting 1.3% growth from the previous month, compared with just 0.2% in February.
If the data is better than expected, it could ease concerns about a slowdown in household spending, a key component that contributes more than 60% to US Gross Domestic Product (GDP).
However, if the data disappoints, it could reinforce cautious sentiment, accelerate expectations of Fed easing and push investors toward defensive assets.
Trump’s Tariff Policy: Still Uncertain
A recent investigation into proposed tariffs on key minerals shows that policy risks remain elusive and difficult to hedge.
For investors, the challenge lies in inconsistent messaging from the White House, as in the case of Nvidia’s sudden shift.
This makes it difficult for institutional investors to make long-term commitments, especially in cyclical sectors such as technology and industrials that are exposed to trade risks.
Powell’s Speech: Key Market Focus
Federal Reserve Chairman Jerome Powell is scheduled to speak today, a key moment as monetary policy is at a crossroads.
Markets are already pricing in several rate cuts by the end of the year, driven by weakening economic data and growth risks from trade tensions.
The tone of Powell’s speech is expected to provide important clues about how much room for monetary policy remains, and how the Fed will balance managing inflation with supporting growth.
MARKETS STRATEGIC VIEW
The US dollar remains under pressure amid policy uncertainty and investor flight to safe havens such as gold and ‘haven’ currencies.
The short-term bond market remains data-dependent, but if retail sales are weak, expectations of a rate cut could push the yield curve steeper at the front end.
Stay nimble in the tech and semiconductor sectors — the risk of sudden news is high, and White House policy is increasingly difficult to predict.
Watch Powell closely — any dovish tone could see the US dollar weaken further and support riskier assets in the near term.
TRADER GUIDE
Current volatility is more event-driven than systemic. Traders need to be more alert to macroeconomic developments and reactive to current data.
With cross-asset correlations tightening, the window of opportunity is getting shorter.
This week’s retail sales data and the Fed statement will be key to the direction of FX, bond and equity markets in the near term.
