Markets Dive on Tariffs, China Retaliation and Recession Fears (7 – 11 April, 2025)

The dollar index stayed above 102, supported by strong U.S. jobs data but pressured by rising trade tensions. China’s new 34% tariff raised recession fears and increased Fed rate cut expectations.

The euro hovered near $1.10 with markets expecting an ECB cut in April. The pound dipped below $1.29. The yen firmed to 145, while the Australian dollar slid to $0.60 as markets priced in a possible 100 bps rate cut this year.

Gold fell 2.5% to $3,020. Silver dropped below $30, losing 12% this week as trade tensions triggered broad selling. China’s tariffs added pressure despite higher COMEX inventories. Brent crude declined 6.5% to below $66 after OPEC+ increased May output. Oil is set for a 10% weekly loss.

Bond yields declined as risk-off sentiment deepened. The U.S. 10-year yield fell to 3.97%. Germany’s yield dropped to 2.57%, and Japan’s slid to 1.17% after retreating from a multi-year high.

German CPI (Mar)

Germany’s inflation slowed to 2.2% YoY in March 2025, the lowest since November 2024, matching forecasts. The drop was led by services (3.4% vs 3.8%) and energy (-2.8% vs -1.6%), though food inflation rose to 2.9%. Core inflation eased to 2.5%, its lowest since June 2021. Monthly CPI rose 0.3%, down from 0.4% in February.

Chicago PMI (Mar)

Chicago PMI rose to 47.6 in March from 45.5, topping the 45.2 forecast. Activity still contracted for a 16th month but at the slowest pace since Nov 2023. Production increased, with small gains in jobs and orders. Supplier deliveries declined.

RBA Rate Decision (Apr)

The RBA held rates at 4.1%, as expected, after February’s 25bps cut. The bank sees inflation easing toward its 2–3% target but flagged global and domestic uncertainties, especially around U.S. tariffs. The Exchange Settlement balance rate remains at 4.0%.

ISM Manufacturing PMI (Mar)

The ISM Manufacturing PMI dropped to 49 in March from 50.3, below forecasts of 49.5, signaling contraction. New orders, backlogs, and jobs declined further. Prices jumped to 69.4, the highest since June 2022. Inventories rose; deliveries slowed slightly.

JOLTS Job Openings (Feb)

Job openings fell by 194K to 7.57M in Feb, below the 7.63M forecast. Declines were seen in retail (-126K), finance (-80K), hospitality (-61K), and manufacturing (-31K). Hires and separations held at 5.4M and 5.3M. Quits and layoffs were steady.

ADP Employment Change (Mar)

U.S. private payrolls rose by 155K in March, beating the 105K forecast. Services added 132K jobs, led by business services (+57K) and finance (+38K). Goods-producing sectors added 24K. Wages rose 4.6% for job-stayers and 6.5% for job-changers.

Initial Jobless Claims (Mar 29)

Initial claims dropped to 219K, beating the 225K forecast. Continuing claims jumped 56K to 1.903M, the highest since Nov 2021. Federal claims dropped by 257 to 564, though severance packages are delaying benefit applications.

ISM Non-Manufacturing PMI (Mar)

The ISM Services PMI fell to 50.8 in March from 53.5, missing forecasts. New orders, inventories, and employment all slowed. Prices eased to 60.9. Backlogs contracted for the 7th time in 8 months. Tariff concerns are rising, but the outlook remains mixed.

Nonfarm Payrolls (Mar)

U.S. jobs rose by 228K in March, beating the 135K forecast. Gains were strongest in healthcare (+54K), retail (+24K), and transportation (+23K). Federal jobs fell to 4K. January and February figures were revised down by 48K total.

Unemployment Rate (Mar)

Unemployment rose to 4.2%, the highest since November, slightly above the 4.1% forecast. The labor force grew to 163.51M and participation ticked up to 62.5%. The U-6 rate dipped to 7.9% from 8.0%.

Average Hourly Earnings (Mar)

Wages rose 0.3% MoM to $36.00, matching forecasts. Nonsupervisory pay rose 0.2% to $30.96. Yearly wage growth slowed to 3.8%, slightly below the 3.9% estimate.

Currencies

The dollar index held near 102 after strong U.S. jobs data, though trade tensions rose as China imposed a 34% tariff on all U.S. goods. Markets now expect up to four Fed rate cuts in 2025.

The euro stayed near $1.10 with ECB cut bets rising. The pound fell below $1.29 on growth concerns, while the yen climbed to 145 as a safe haven. The Aussie dropped to $0.60 amid recession fears and expectations of RBA rate cuts.

Commodities

Gold fell 2.5% to $3,020 and silver slid below $30, down 12% for the week, as broad market selling intensified.

Brent crude dropped 6.5% to under $66 after OPEC+ raised output. Oil is set for a 10% weekly loss despite being excluded from U.S. tariffs.

Equities

U.S. stocks posted sharp weekly losses amid Trump’s tariff shock. The Nasdaq fell 9%, the S&P 500 dropped 8%, and the Dow lost 7%. Apple fell 13%, Nvidia 14%, and Amazon 10%. Automakers globally were hit hard.