United States
Wall Street endured a sharp selloff on Wednesday as Federal Reserve Chair Jerome Powell delivered a sobering message that deflated investor hopes for near-term policy easing. His remarks triggered renewed volatility, sending major US indices into a broad-based retreat and driving investors into traditional safe havens. The S&P 500 slumped 2.2%, while the tech-heavy Nasdaq 100 bore the heaviest losses, tumbling 3.0%. The Dow Jones Industrial Average also closed firmly in the red, shedding 1.7%. Powell, addressing the Economic Club of Chicago, poured cold water on expectations of a so-called “Fed put”—a perception that the central bank would intervene to stabilise markets in the face of turbulence. He emphasised that policymakers remain in wait-and-see mode, unwilling to act until they have greater clarity on how tariffs and broader trade disruptions will impact the economy. “We don’t know that yet,” Powell said, cautioning that without more information, the Fed cannot make informed decisions.
Technology stocks led the decline, particularly semiconductor names, which were caught in the crosshairs of fresh US-China trade tensions. Nvidia shares plunged 6.9% after the company warned it would take a US$5.5 billion writedown related to unsold inventory and export restrictions on its H20 chip. The Trump administration has imposed new curbs on chip exports to China, escalating tensions and complicating global supply chains. ASML Holding also added to the pressure, with its shares tumbling 7.2% after reporting a sharp drop in new orders and warning that the full impact of tariffs remains unclear. The Philadelphia Semiconductor Index slid 5.5% as the entire sector came under heavy selling pressure. In the eyes of many investors, Powell’s insistence on prioritising price stability over the employment mandate marked a decisive shift. “If you’re waiting for a Fed put, set your sights on a lower strike price,” said Adam Phillips of EP Wealth Advisors. “Don’t expect monetary policy to ride to the market’s rescue anytime soon.”
Bond markets responded swiftly to the risk-off tone, with yields falling across the curve. The yield on the benchmark 10-year Treasury note dropped five basis points to 4.28%, reflecting investor caution and a flight to safety. Gold surged 3.3% to a fresh record high of US$3,337.90 per ounce, while the US dollar weakened. The Swiss franc gained, underscoring the broad move into haven assets. In the digital asset space, Bitcoin eked out a 0.3% gain to trade at US$84,308, while Ether dipped 0.4%. Amid the turmoil, concerns around stagflation are resurfacing, with Powell warning that persistent volatility in financial markets could pose longer-term risks to inflation expectations and real economic activity.
Europe
In Europe, equities followed the US lower in early trade but managed to recoup most losses after reports suggested China may be open to renewed trade negotiations—provided the US shows a more consistent and respectful tone. The Euro Stoxx 600 finished the session down 0.2%, having recovered from a 1.4% intraday slide. Technology shares lagged, reflecting US-linked pressures. ASML was among the worst performers after its weak earnings update. Meanwhile, Heineken bucked the trend, rising 5% after reporting smaller-than-expected volume declines despite a subdued Easter period. Investor caution remains high, with market strategists warning that expectations for corporate earnings may still be too optimistic in light of escalating trade frictions and slowing global growth. “Markets got ahead of themselves after last week’s snapback rally,” said Philipp Lisibach from LGT Private Banking, adding that incoming data points are beginning to challenge earlier bullish assumptions.
All eyes are now on the European Central Bank’s policy decision tonight, with the Governing Council widely expected to announce a 25 basis point cut to the deposit rate, bringing it down to 2.25%. This anticipated move comes amid mounting concerns over slowing eurozone growth, persistent trade tensions, and a recent dip in inflation to 2.2% in March. Economists suggest that further rate reductions may follow in June and later in the year, as the ECB navigates a complex economic landscape marked by external pressures and internal challenges. The central bank has emphasised a data-dependent approach, indicating that future policy decisions will hinge on evolving economic indicators and the effectiveness of monetary transmission mechanisms.
Australia
Closer to home, Australian investors are bracing for a subdued open, with ASX 200 futures down 24 points, or 0.3%, to 7,762. The local market closed modestly lower on Wednesday, slipping 2.8 points to 7,758.9. While gains in financials provided some support, they were offset by weakness in energy and mining stocks. Five of the eleven major sectors managed to end in positive territory. Gold producers were standout performers, lifted by record-breaking bullion prices. Genesis Minerals led the gains, surging 8.4% to close at a new high of $4.39. Investors also rotated into the major banks, perceived as relative safe havens amidst growing global uncertainty. Commonwealth Bank climbed 0.8% to $159.32, while Westpac rose 1.5% to $31.22. “It’s about the devil you know,” said Infinity portfolio manager Dom Mlcek, pointing to the relative stability of the domestic macro outlook compared to the unpredictability of global trade tensions.
Elsewhere on the ASX, Zip shares soared 16.2% to $1.72 after the digital payments firm upgraded its full-year earnings guidance, citing better-than-expected customer growth. Bank of Queensland also impressed, rallying 5.5% to $6.86 after projecting improved earnings margins in the second half. However, not all news was positive. Rio Tinto declined 2.7% to $103.37 following a disappointing quarterly update from its flagship Pilbara iron ore division, which reported its weakest start to the year in a decade due to extreme weather disruptions. The company estimates a $150 million hit from remediation efforts.
Looking ahead, investors will be closely watching today’s domestic earnings reports, with BHP, Pilbara Minerals, South32, Alcoa, Challenger, AMP, and Transurban all set to release quarterly updates.
Commodities
Gold continued its record-breaking ascent, closing at US$3,334.30 per ounce, up 3.59% on the day. This surge is attributed to escalating U.S.-China trade tensions and a weakening U.S. dollar, which fell to its lowest level since April 2022. Analysts at Goldman Sachs have raised their year-end gold price forecast to US$3,700, citing strong central bank demand and rising recession concerns.
Brent crude oil experienced volatility, trading at US$64.66 per barrel. HSBC has revised its 2025 Brent price forecast down to US$68.5 per barrel, reflecting concerns over global oil demand amid trade tensions.
Iron ore prices remained under pressure, with 62% Fe CFR China futures trading at US$100.19 per tonne. The market is grappling with oversupply concerns and weakening demand from Chinese steel mills.
The Australian dollar strengthened, trading at US$0.6378. This appreciation is linked to the U.S. dollar’s decline and increased demand for commodities
Economic Calendar
Australia:
- Employment (MoM Mar) 11:30
Eurozone:
- ECB Rate Decision 22:15
United States
- Business Inventories (MoM Feb) 00:00
- NAHB Housing Market Index (MoM Apr) 00:00
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
