Markets tumble as tariff uncertainty and ‘Liberation Day’ approach

David Morrison

SENIOR MARKET ANALYST

31 Mar 2025

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US stocks ended last Friday’s session sharply lower, with markets rattled by escalating tariff concerns and broader uncertainty ahead of April 2nd’s so-called ‘Liberation Day.’ The major indices posted significant losses for the month, with the Nasdaq down 8%, the S&P 500 lower by 6.3%, and the Dow shedding 5.2%. Futures are pointing lower in early trading, signalling further pressure as markets struggle to find stability.

Overnight, Asian Pacific stock indices ended the quarter with a sharply negative session, with losses seen across all the majors. Japan’s Nikkei lost over 4% as concerns over US tariffs continued to weigh on sentiment. Chinese markets fared slightly better, with losses on the Shanghai Composite contained to around 0.5%, as PMI data came in slightly stronger than expected.

European stock indices were sharply lower across the board in early trade as the risk-off tone deepens.

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Yen leads as risk aversion mounts

In currency markets, the Japanese yen remains the standout performer as traders flock to safety amid the escalating trade tensions. Beyond that, FX markets remain relatively subdued. The US dollar continues to consolidate, having fallen significantly so far this year, with little notable movement elsewhere.

Gold hits record highs, oil and gas gain, crypto stumbles

Safe-haven demand continues to drive gold to fresh record highs, with the yellow metal trading just shy of $3,130 this morning as investors flood into the asset. Silver is also seeing gains, tracking gold’s bullish momentum.

In the energy sector, oil posted modest gains, continuing its recent upward trend, while natural gas saw a more pronounced jump as traders reassessed supply and demand conditions.

Meanwhile, crypto markets have taken a hit as risk sentiment deteriorates. Bitcoin remains above $80,000 for now. But Ether, having crashed back below $2,000, is teetering around key support, with traders watching closely and concerned about further downside risk.

Volatility rises as markets brace for key events

The VIX is now trading in the mid-22 range, reflecting heightened market risk and volatility, primarily driven by ongoing tariff uncertainty.

Key market events to watch

  • German CPI data: A crucial release for gauging inflationary pressures in Europe.
  • Chicago PMI: A key measure of US economic activity, set to provide further insight into business sentiment.
  • US jobs report (Later This Week): The standout event, with markets watching closely for signs of labour market strength or weakness.
  • Trump’s tariffs take effect (April 2nd): A major catalyst that could further shape market direction in the coming days.
  • US and European trading hours back in sync: The US trading session now runs from 2:30 PM to 9 PM UK time, following daylight saving adjustments.

Political and economic headlines

  • Trump vs. Putin: US President Donald Trump told NBC News he is “very angry” at Russian President Vladimir Putin, following Putin’s criticisms of Ukrainian President Zelenskyy and his leadership.
  • Goldman Sachs on tariffs: Goldman Sachs analysts warn that Trump’s tariffs could increase inflation risks, stunt economic growth, and drive rate cuts. They now forecast three rate cuts by the Fed this year, alongside three additional cuts from the ECB.
  • Trump on auto tariffs: In response to concerns over rising car prices, Trump dismissed any impact, stating he “couldn’t care less” if foreign automakers raise prices due to tariffs.
  • US VP Vance accuses Denmark of negligence: US Vice President Vance criticised Denmark for failing to ensure the security of Greenland, raising new geopolitical concerns.

Market outlook

For now, Trump and tariffs dominate the market narrative, with bearish sentiment dominating. Gold remains the standout winner as investors continue to seek safety amid the turmoil.

With the last trading day of the month and quarter now here and inflation data, jobs figures, and trade developments all in focus, markets face a crucial week ahead.


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