Recession fears rattle markets as tech takes a hit

David Morrison

SENIOR MARKET ANALYST

11 Mar 2025

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Wall Street was gripped by recession fears yesterday, resulting in broad losses of 2% or more for the major indices. Tech stocks bore the brunt once again, driven by Tesla’s slump following a downgrade from UBS. The Nasdaq suffered its worst day since September 2022, falling 4% and closing below its 200-day moving average, while the Dow tumbled 900 points.

Trump’s weekend interview on Fox didn’t help sentiment either, as markets struggled to find a positive narrative amid mounting economic concerns.

Asia recovers some losses, Europe set to open higher

Despite the weakness across Wall Street, Asian Pacific markets managed to pare some of the early damage, though most major indices still closed lower. China was the outlier, recording modest gains despite the prevailing risk-off sentiment.

European stock indices were a touch higher soon after the open, with Volkswagen reporting a 15% drop in profit but projecting stronger sales in 2025. Investors will be watching to see if this positive outlook helps lift broader sentiment in the region.

Dollar struggles as safe havens surge

The dollar continued to falter as recession worries intensified.  Investors shunned the usual safe-haven currencies, the Japanese yen and Swiss franc, and bought euros and sterling instead. The EURUSD has soared since the end of February, topping 1.0900 to trade at levels last seen just after Trump’s election victory in early November. It’s a similar story for the British pound as the GBPUSD closes in on 1.3000. 

Gold holds steady, oil on the ropes, crypto struggles to rally

Gold and silver made modest overnight advances, and gold has pushed back up above $2,900 to make back all of yesterday’s losses. There’s some light resistance around $2,930, but if it can break above that, then it should be able to break to new highs just above $2,950.

Crude oil was a touch firmer in early trade this morning. It sold off yesterday, with front-month WTI coming within a few cents of support around $65. But it bounced off here and has pushed back above $66 per barrel.  Weak demand and ample supply continue to weigh on crude prices. Meanwhile, natural gas prices remain elevated, reflecting ongoing concerns around supplies of this in-demand energy source.

Crypto staged a rally, with Bitcoin clawing back above $80,000, although Ether remains below the key $2,000 level. Despite the bounce, the move lacked conviction, as risk aversion continues to dominate sentiment. Many still believe the bears are in control, with some questioning whether the market is merely forming a temporary bottom.

Volatility remains elevated as data looms

The VIX pushed up to 25, reinforcing expectations that volatility could remain a central theme in the days ahead. With key inflation data on the calendar for Wednesday and Thursday, as well as JOLTS job data due today, the market remains highly sensitive to any economic indicators that could sway sentiment.

In corporate news, Oracle missed earnings forecasts after hours but raised its dividend, while Delta Air Lines took a hit on disappointing forward guidance. Goldman Sachs also cut its US growth forecast, citing the ongoing impact of tariffs. Barclays noted that recent policy updates and market moves are unlikely to shift the Fed’s stance next week. The US central bank is expected to keep its Fed Funds rate unchanged in a range of 4.25-4.50%.

Market outlook

Investors remain on edge as recession fears drive market sentiment. The dollar is struggling to find a footing, while oil shows no clear sign of reversing its recent decline. The bears are still in control for now. But upcoming data releases may allow the bulls to regroup if there’s a positive surprise.

With inflation figures and job data looming, volatility is likely to persist. Traders should stay nimble and cautious, as any unexpected data point could trigger another sharp move in either direction. The mood remains tense for now, and the path of least resistance appears to favour the bears.


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