Trade tensions flared after President Trump announced plans to impose 100% tariffs on Chinese imports starting in November, sparking threats of retaliation from Beijing and unsettling global market sentiment. On the geopolitical front, oil prices tumbled following news of a Gaza ceasefire agreement, while central banks faced added uncertainty as key US macro data releases were delayed by the government shutdown. Meanwhile, the Reserve Bank of New Zealand surprised markets with a 50-basis-point rate cut, citing spare capacity and targeting a return to lower inflation by mid-2026.
FX Market reactions
- US Dollar: The dollar rallied midweek then faded, pressured by safe- haven flows into yen and Swiss franc on fresh trade war fears.
- Euro & Sterling: Euro stayed rangebound; sterling remained weak as UK economic surprises failed to drive momentum.
- Japanese Yen & Swiss Franc: Both surged as tariffs and political risks revived demand for classic safe havens—USD/JPY briefly touched 153 before firming later.
- NZ Dollar: NZD lost nearly 2% after the RBNZ rate cut surprised traders and hinted at further easing.
Commodities Market reactions
- Gold & Silver: Both metals soared to historic highs—gold breached $4,000/oz and silver reached $51.2—driven by safe-haven demand and ongoing volatility.
- Oil: Crude prices plunged over 5% to $58.9/bbl, reflecting improved Middle East diplomacy and surging US stockpiles.
- Agriculture and Metals: Supply chain shocks from tariffs kept copper and grains under pressure; rare earth prices spiked on US-China gridlock.
Indices Market reactions
- US Equities: The S&P 500 and Nasdaq hit record highs midweek on AI deal optimism, but reversed sharply as tariff shocks drove tech and chip stocks lower. Volatility spiked, with VIX jumping over 30%.
- Europe: European indices traded unevenly: DAX rallied on tariff protection, CAC 40 fell on politics, and others moved with commodities and cyclicals.
- Asia-Pacific: Hong Kong slumped 3%, China declined after chip restrictions, but Japan’s Nikkei gained nearly 2% on political change and stimulus hopes.
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