Last week, against the backdrop of intensified global trade disputes and continued inflationary pressures, the economic growth prospects of many countries faced severe challenges and the risk of recession was approaching. In the coming week, the market will usher in a number of important economic data and central bank decisions, which will provide important market direction guidance. Last week, when the global market continued to be deeply trapped in Trump's massive tariff storm, China suddenly announced that it would impose a 34% tariff on all US imports. A new round of risk aversion swept the world, US stock futures fell further, European stocks continued to fall, the US dollar rebounded sharply in the short term, gold rose in the short term to a new historical high of $3,167 and then plummeted to $3,015, approaching the psychological mark of $3,000, and the decline in crude oil prices widened to nearly 10.0%.

The market is bleeding, and as this escalating trade war threatens to push the US economy into recession, more pain is clearly coming, and it is not surprising that China will retaliate. But this will inevitably lead to a recession because the damage has been done - unless Trump withdraws.

In addition, market expectations for the Fed's possible rate cut in 2025 have increased, reflecting investors' concerns about slowing economic growth and rising inflation. Therefore, traders should pay close attention to upcoming economic data and comments from Fed officials to evaluate future market trends and policy directions.

Review of market performance last week:

The U.S. stock market suffered an "epic" plunge. Before last weekend, the U.S. stock market evaporated more than $5 trillion due to U.S. President Trump's tariff war. The three major U.S. stock indexes all fell by more than 5.5%, all of which were the largest single-day declines since 2000. The Dow Jones Industrial Average plunged more than 2,000 points into the correction zone, and the Nasdaq fell into a bear market. Federal Reserve Chairman Powell warned for the first time that Trump's tariff policy may exacerbate inflation and drag down economic growth. The Dow Jones Industrial Average plunged 2,231.07 points, or 5.50%, to 38,314.86 on Friday; the Nasdaq plunged 962.82 points, or 5.82%, to 15,587.79; and the S&P 500 plunged 322.44 points, or 5.97%, to 5,074.08. The Dow Jones Industrial Average plunged 7.86% in a week, the Nasdaq fell 10.02%, and the S&P 500 fell 9.08%.

Gold prices continued to fall last Friday, plummeting to a seven-day low of $3,015, and then recovered slightly. The decline was due to a speech by Federal Reserve Chairman Powell, suggesting that tariffs could cause inflation to re-accelerate. Because Federal Reserve Chairman Powell turned hawkish at a meeting in Virginia and warned that tariff-driven inflation could continue, hitting hopes for a recent rate cut. Last week, international gold prices staged a "roller coaster" market. Spot gold continued to climb from Monday to Thursday, and hit a record high of $3,167.60/oz on Thursday, but plummeted by more than $75 on Friday (April 4), a drop of 2.44%, and finally closed at $3,038.34/oz, narrowing the weekly decline to 1.53%.

Silver prices plunged last Friday as financial market turmoil continued for a third day after US President Trump decided to impose reciprocal tariffs. China then retaliated, raising concerns about a global economic slowdown. Silver/USD traded at $29.55, down more than 7%. Similarly, the weekly line also recorded the largest weekly decline since September 2020 (-13.34%), falling below $30 to around $29,200, a low of about a month, mainly due to profit-taking pressure.

Before the weekend, the US dollar rebounded after the release of some strong non-farm payrolls data, and the market was looking forward to the speech of Federal Reserve Chairman Jerome Powell. Meanwhile, China retaliated against U.S. tariffs by imposing a 34% tariff on all U.S. goods from April 10, the day after the U.S. tariffs were implemented.

The U.S. dollar index rebounded from a six-month low of 101.27 last week to trade slightly below 103.00. The swing of the U.S. dollar index is strong on the left and weak on the right. The left side is the strength of the U.S. dollar for many years, which is regarded as the market standard. However, since the beginning of March - Germany's defense budget spending bill and U.S. President Donald Trump's inauguration - the swing of the U.S. dollar index has changed. Once the impact of tariffs on the U.S. economy begins to be felt, the weakness of the U.S. dollar may intensify. As concerns about stagflation and recession increase, the U.S. dollar index may easily fall below 100.00 later this year.

EUR/USD fell below the 1.10 mark to around 1.0940-1.0945 at the end of last week; after setting a new high of 1.1147, the current overbought indicators ushered in a correction. If Powell expresses concerns about the economic outlook after the tariff decision, it may lead to further weakening of the US dollar; on the contrary, if he emphasizes the inflation outlook more and reiterates his willingness to be patient with further policy easing, the US dollar may stabilize. USD/JPY fell to a 6-month low of 144.55 last week. It then rebounded and closed slightly below 147. The yen was the best performing currency in the G7, rising more than 1.90% against the US dollar for the week.

GBP/USD fell sharply by more than 1.60% before the weekend as China announced tariffs on US products, which led to a deterioration in risk appetite and triggered a response from US President Trump. GBP/USD fell below the 1.2900 mark before the close, trading at 1.2886, having hit a six-month high of 1.3207 in the middle of the week. AUD/USD fell below the key psychological level of 0.60 to 0.5986 during the US session last Friday, hitting a five-year low. However, the main catalyst for the collapse of the Australian dollar stems from a new round of US tariffs announced by President Trump, which has raised concerns about global economic growth and sparked market speculation that the Reserve Bank of Australia may take a series of aggressive interest rate cuts this year.

International oil prices plunged nearly 8% last week, hitting their lowest level since the middle of the 2021 epidemic, as China announced a 34% retaliatory tariff on US goods, exacerbating the escalation of the Sino-US trade war and triggering deep market concerns about a global recession. Brent crude oil fell below $66 to close at $65.77, a drop of 9.13%; WTI crude oil approached the $60 mark and closed at $62.10, down 9.79% for the week. The cumulative decline in the prices of the two major benchmark crude oils this week will be the largest single-week decline in more than two years.

Bitcoin prices fluctuated violently after US President Trump announced large-scale tariffs on April 2. The cryptocurrency market was also hit. Bitcoin fell 5.8% in the short term to $81,732. Bitcoin initially surged to $88,000 on market rumors that tariffs could be delayed, but eventually fell back to around $82,000. As of April 4, Bitcoin was trading at around $82,750, and the entire digital asset market was down more than 4% in the past 24 hours.

The 10-year Treasury yield fell more than 16 basis points to 3.89%, falling to its lowest level since October last year. Earlier this year, the yield broke through 4.8% on hopes that Trump could boost the U.S. economy through tax cuts. The 2-year Treasury yield extended its decline to its lowest level since September 2022 at 3.5205%.

Since last week's close, the 10-year Treasury yield has fallen sharply to around 4.25% on concerns that the trade war could push up prices and tip the economy into recession.

Market Outlook for this Week:

An epic trade war has begun, and global financial markets are preparing for more turbulence

After Trump announced a comprehensive increase in tariffs on trading partners, and many countries subsequently introduced countermeasures, an epic trade war has officially begun, and the global financial market has ushered in a "catastrophe". Investors have almost nowhere to escape, and this may only be the beginning.

The sudden escalation of the trade war has intensified the market sell-off. At present, Trump's 10% global benchmark tariff rate has officially come into effect, and the more influential reciprocal tariffs will take effect in the early morning of April 9, which may cause more violent market fluctuations. The response strategy for tariffs is very, very unclear to everyone. Trump's tariffs and retaliatory measures have made things more complicated, and no one knows what the final result will be.

Trump's tariffs have created the highest trade barriers in more than a century, which will have a significant impact on the US and global economies. China has launched a counterattack against Trump's tariff measures and will impose a 34% tariff on all goods imported from the United States.

That has led traders to cut their economic and earnings forecasts, with JPMorgan analysts raising the odds of a global recession to 60% on Thursday.

Some investors remain hopeful that Trump will negotiate deals with some countries in the coming days to roll back some tariffs. But most are skeptical that Trump will make any concessions. Trump posted on Truth Social on Friday that his "policies will never change." While Trump has a chance to change course, they are well aware that the window of opportunity is shrinking and that consumer and business confidence has been damaged to a certain extent, regardless of the final outcome of the negotiations.

A pessimistic sign: Wall Street's fear gauge, the VIX index, surged 46% to 45.31 on Friday, its highest closing level since April 2020.

Thursday's CPI report could provide a reference point to help us understand what the level of inflation in the United States was before the tariffs were implemented. After the tariff announcement, traders increased their bets on rate cuts this year, believing that the Federal Reserve will have to take action to boost the economy. According to CME, the market expects the Federal Reserve to start cutting interest rates aggressively in June, and by the end of this year, the Fed will cut interest rates by at least 100 basis points. But Fed Chairman Powell said on Friday that Trump's tariffs will push up inflation and reduce economic growth, but it is "too early" to adjust monetary policy.

It is crucial for the market to show some stability in the next few days this week. Last week, there were just two extremely turbulent trading days. The last thing investors want to see is that such violent fluctuations begin to trigger a vicious cycle, thereby undermining the stability of the entire financial system.

This market catastrophe may be just the beginning. If the largest tariff action since the 1950s in the United States leads to an economic contraction, there is still a lot of room for U.S. stocks and U.S. Treasury yields to fall.

The dollar's Jedi counterattack cannot hide its decline; safe-haven currencies are the biggest winners

Last week, the market bet on the Federal Reserve to cut interest rates four times this year, and the U.S. dollar index once fell to a nearly eight-month low of 101.27; before the weekend, Powell admitted that Trump's tariff policy would increase inflation and downplayed the urgency of rate cuts. The U.S. dollar index rebounded 0.93% to 102.90 in a single day.

Key drivers in the short term: 1. The Fed's policy expectations are swaying. The 228,000 new non-farm payrolls in March (expected to be 135,000) showed economic resilience, but Powell warned that tariffs could lead to "inflation rising and growth slowing at the same time", and the market's probability of a rate cut in June fell from 70% to 50%. 2. The trade war hit liquidity. After the trade situation heated up, risk currencies such as the Australian dollar plummeted, and the US dollar was briefly supported by safe-haven buying. Inflation concerns caused by tariffs are reshaping the Fed's reaction function.

Therefore, I maintain my forecast that the Fed will not cut interest rates until the fourth quarter, and believe that "inflation stickiness will limit the room for policy easing"; the US dollar may test the 100 mark in the short term, but geopolitical risks may provide phased support.

Gold prices may fall, but the downside is limited as the US economy deteriorates

While the possibility of a correction in gold prices from uncertainty-driven highs cannot be ruled out, it is clear that economic confidence has deteriorated and gold's appeal is more durable in this environment, which means that gold prices should remain high. The deterioration of the real economy will force the Fed to abandon its neutral stance and cut interest rates, triggering a new round of gains in gold prices. The gold market continues to experience greater volatility as investors react to President Trump's global import tariffs. While gold prices may still fall, the downside risks are limited.

From a macro perspective, gold prices remain overvalued in the short term, and the uncertainty driving gold prices higher is inherently uncertain. While the possibility of gold prices correcting from uncertainty-driven highs cannot be ruled out, it is clear that economic confidence has deteriorated and gold's appeal is more durable in this environment, which means that gold prices should remain high.

As investors hedge against falling stock markets, economic contraction will drive safe-haven demand for gold. Consolidation will help attract new investment capital. Investors, while generally bullish on gold, may feel underinvested or not, but are hesitant to increase exposure at historical highs. If a period of consolidation materializes, these funds will help gold prices stabilize on the downside.

The crude oil market suffered a "black week"; could the two crude oils drop to $58/55?

This week, the international crude oil market suffered the most violent shock since 2021, with both Brent and US WTI crude oil recording the largest weekly decline in more than two years. The wave of trade protectionism and the unexpected increase in production by the oil-producing countries alliance formed a "double blow", coupled with the shadow of economic recession, the global commodity market collectively fell into risk aversion mode.

The current market has shifted from "geopolitical premium" to "recession discount", and the volatility index shows that investors are preparing for more violent shocks. As HSBC said, when the daily demand growth forecast was lowered from 1 million barrels to 900,000 barrels, "every dollar of price fluctuation contains a repricing of the world economy." In the coming week, the market will pay close attention to the actual implementation of tariff policies by various countries and whether OPEC+ will release production adjustment signals. In this eventful spring, the pricing logic of the crude oil market is being completely rewritten.

The view of the institution is: bearish sentiment dominates the market, recession risks and increased supply form a perfect storm, and downward pressure on oil prices may continue until 2026. They lowered their 2025 Brent and WTI target prices to $58.00 and $55.00, respectively.

In the coming week, the market will pay close attention to the actual implementation of tariff policies by various countries and whether OPEC+ will release production adjustment signals. In this eventful spring, the pricing logic of the crude oil market is being completely rewritten.

Conclusion:

With US President Trump's announcement of a comprehensive increase in "reciprocal tariffs", market concerns about soaring corporate costs, depressed profits and the risk of economic recession have rapidly increased. Investors have sold risky assets. After Trump announced comprehensive retaliatory tariffs on major global trading partners on Thursday, major US stock indexes plunged more than 5% that day, triggering market concerns about further escalation of global trade conflicts. The surge in risk aversion has driven money market funds to attract $22.01 billion in net inflows, the second consecutive week of growth, showing that investors are rapidly concentrating on assets with high liquidity and strong security.

Trump's trade policy continues to subvert the global market landscape. With the full implementation of "reciprocal tariffs", the US stock market is facing multiple pressures, and funds are accelerating their flight from high-risk sectors and pouring into safe-haven assets. If tariffs continue to hit corporate profits and consumer spending, the next few weeks may witness a larger-scale asset reallocation. Investor sentiment is shifting from "chasing growth" to "capital protection defense", and the market style may usher in a phased turning point.

Overview of important overseas economic events and matters this week:

Monday (April 7): Germany's February seasonally adjusted trade account, UK's March Halifax seasonally adjusted house price index monthly rate, Eurozone April Sentix investor confidence index, Eurozone February retail sales monthly rate

Tuesday (April 8): Japan's February trade account, France's February trade account, US March NFIB small business confidence index, US March NFIB small business confidence index

Wednesday (April 9): US API crude oil inventory for the week ending April 4, New Zealand Federal Reserve interest rate decision for the week ending April 9, US February wholesale sales monthly rate, US EIA crude oil inventory for the week ending April 4, US EIA strategic petroleum reserve inventory for the week ending April 4, San Francisco Federal Reserve President Daly delivered a speech, New Zealand Federal Reserve Chairman Orr held a monetary policy press conference, Bank of Japan Governor Kazuo Ueda delivered a speech

Thursday (April 10): US 10 years to April 9 Treasury auction, China's March CPI annual rate, US March unadjusted CPI annual rate, US March seasonally adjusted CPI monthly rate, US March seasonally adjusted core CPI monthly rate, US initial jobless claims for the week ending April 5, China's March M2 money supply annual rate, the Federal Reserve released the minutes of the March monetary policy meeting, and the Reserve Bank of Australia Chairman Bullock delivered a speech

Friday (April 11): Germany's March CPI monthly rate final value, the UK's February three-month GDP monthly rate, the UK's February seasonally adjusted goods trade account, the US March PPI annual rate, the US March PPI monthly rate, the US April one-year inflation rate initial value, the US April University of Michigan Consumer Confidence Index initial value, Chicago Fed Chairman Goolsbee delivered a speech at the New York Economic Club, ECB President Lagarde delivered a speech at the Eurogroup press conference, New York Fed Chairman Williams delivered a speech on economic prospects and monetary policy

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