US markets tumble as recession and tariff worries persist

Overnight, Asian markets bounced back, closing out the week on a more positive note. Hong Kong and China led the way, showing resilience despite the turbulence across global markets. European futures also point to a positive start, with some bargain hunting likely at play.

However, not all news was upbeat—BMW reported a sharp drop in annual profits and warned of subdued Chinese demand, casting a shadow over the broader European outlook. In the UK, GDP data came in at -0.1% versus the expected +0.1%, missing forecasts and sending sterling lower. The euro remained flat, pulling back from its recent highs north of 1.09.

The dollar appeared to find some support at lower levels and attempted to claw back some lost ground as sentiment improved a touch. Meanwhile, the yen came under pressure as the USDJPY climbed towards resistance around the 149.00 area. The greenback’s recovery could reflect some improvement in risk appetite, but sustained upside momentum remains in question.

Gold came tantalizingly close to the key, but elusive, $3,000 per ounce mark, topping out at $2,994 before retreating slightly. The demand story remains strong, as ongoing uncertainty fuels safe-haven buying. Silver followed gold’s lead, spiking higher yesterday before flattening out today.

Oil pushed higher, trading north of 67 as risk appetite returned, driven by hopes of stabilisation in global markets. Gas also traded higher but remained below recent peaks. The bounce reflects a more optimistic tone, but concerns about oversupply and weak demand continue to cast a shadow.

Crypto markets rallied sharply overnight, benefiting from the broader risk-on sentiment. Bitcoin and Ethereum both posted significant gains, with traders cautiously optimistic about sustaining the upward momentum. However, the recent volatility leaves room for doubt as the sector remains sensitive to shifting risk perceptions.

The VIX hovered just below 24, indicating that volatility remains elevated despite the bounce in equity markets. Today’s main data points are Consumer Sentiment and Inflation Expectations at 14:00 GMT. These could provide insight into consumer confidence amid economic uncertainty.

Looking ahead, next Wednesday’s Federal Reserve meeting is the standout event, with no change in rates expected. However, the FOMC’s quarterly Summary of Economic Projections will offer important guidance on the committee’s forecasts for economic growth, unemployment, inflation and the Fed Funds rate for the rest of this year and beyond.

US stock index futures are pointing higher as investors cautiously search for a bottom or look to dip-buy as valuations rebase at lower levels. Despite the improved sentiment, tariffs and geopolitical risk continue to loom large, keeping market participants on edge. The dollar’s recovery from recent lows hints at some stabilisation, while oil also seems to have found temporary support.

Gold’s failure to breach the $3,000 mark may indicate that the rally is running out of steam. The overnight crypto surge still needs stronger follow-through to establish momentum. Overall, the bears continue to keep control. But a sharp bounce remains a possibility as US stock indices look very oversold, and as investors assess whether sentiment has hit rock bottom.