Closing Recap 

US stocks finished a volatile week with a mixed performance, as the Nasdaq edged higher while the Russell 2000 slipped. Persistent tariff concerns and mixed economic data kept investors on edge. At the same time, the US Dollar and Crude Oil prices saw weekly gains.

Key Takeaways 

• Tariff Uncertainty: The looming April 2nd deadline for reciprocal tariffs between the US and other nations dominated market sentiment, creating headwinds for equities and boosting safe-haven assets. 
• Stagflation Fears: Data points, including the Philadelphia Fed Manufacturing Index, hinted at a potential stagflationary environment, with slowing growth indicators and rising prices. 
• Fed Watch: Fed officials’ comments suggested a cautious approach to future monetary policy, with rate cut expectations pushed out slightly, although markets still anticipate easing in the coming years. 
• Gold’s Retreat: Gold prices pulled back from recent highs, influenced by a stronger dollar and profit-taking, but remained supported by geopolitical risks. 
• Oil’s Resilience: Crude oil prices managed a weekly gain despite demand concerns, supported by potential supply disruptions and ongoing geopolitical tensions. 
• Dollar’s Strength: The US Dollar saw weekly gains against the Euro.

Market Overview:

This week was characterized by a tug-of-war between cautious optimism and significant anxieties. The primary driver of market sentiment was the escalating trade tension, with the April 2nd deadline for potential reciprocal tariffs casting a long shadow. Investors are grappling with the potential economic fallout of these trade barriers, which could simultaneously dampen growth and fuel inflation – a classic stagflationary scenario.

Index	Up/Down	%	Last
DJ Industrials	31.94	0.0008	41985
S&P 500	4.56	0.0008	5667
Nasdaq	92.43	0.0052	17784
Russell 2000	-11.65	0.0056	2056

Fed speakers, including Goolsbee and Williams, adopted a cautious tone. While Goolsbee hinted at lower rates in the longer term (12-18 months), Williams emphasized the increased difficulty in forecasting and the Fed’s lack of urgency in making the next policy decision. This messaging, coupled with the economic data, led to a slight recalibration of market expectations for rate cuts, pushing them out slightly, though a decline to around 3.4% by June 2026 is still anticipated. 

The Fear & Greed Index remained firmly in “Extreme Fear” territory (20/100), reflecting the pervasive uncertainty in the market. It’s worth noting that historically, five-week losing streaks in the S&P 500 have often been followed by positive returns in the subsequent year, but the current environment presents unique challenges.

Commodities, Currencies, and Treasuries:

Crude oil markets presented a mixed picture. WTI crude futures managed a small gain, settling at $68.28, while Brent crude also edged higher to $72.16. Both benchmarks were caught between opposing forces. On one side, concerns about weakening demand due to potential tariffs and a possible recession weighed on prices. On the other side, potential supply disruptions arising from geopolitical tensions, particularly in the Middle East, and the impact of US policies on Venezuelan and Iranian oil production provided support.

Gold, often considered a safe-haven asset, experienced a pullback. April gold futures declined by $22.40 to settle at $3,021.40, ending a three-week winning streak. A stronger US dollar and some profit-taking after recent record highs contributed to the decline.

In currency markets, the US dollar showed strength. It posted its first weekly gain against the euro this month, with the EUR/USD pair falling to 1.0819. This was partly due to investors booking profits after the euro’s recent gains and partly due to increased caution ahead of the April 2nd tariff deadline. The dollar also strengthened against the Yen. The yield on the 10-year US Treasury note rose slightly to 4.246%. The bond market’s movement reflected a complex interplay of factors, including slightly adjusted expectations for Federal Reserve rate cuts (pushed further into the future), ongoing concerns about inflation, and the general uncertainty surrounding the economic outlook.

Asset	Up/Down	Last
WTI Crude	0.21	68.28
Brent	0.16	72.16
Gold	-22.4	3021.4
EUR/USD	-0.0032	1.0819
USD/JPY	0.41	149.19

Economic Data 

• Philadelphia Fed Manufacturing Index: This key regional manufacturing survey provided a worrying snapshot of the potential impact of trade tensions.

• Headline Index: Declined, indicating a contraction in manufacturing activity in the region. New Orders: Dropped significantly, signaling weaker demand for manufactured goods. This is a crucial forward-looking indicator. 
• Six-Month Outlook: Both the general business outlook and the outlook for new orders in the next six months deteriorated, reflecting growing pessimism among manufacturers.
• Prices Paid: Jumped sharply to the highest level since July 2022, highlighting the inflationary pressures stemming from supply chain disruptions and potential tariffs. This is the most concerning element, feeding into stagflation fears. 

• Other Implicit Data: The market’s reaction to Fed speakers and the shift in rate cut expectations also provide indirect economic data. The fact that the market is still pricing in rate cuts, albeit further out, suggests underlying concerns about economic growth, even if not explicitly stated in a single data release. The pricing of a 3.4% implied rate by June 2026 reveals the markets longer term outlook.

Looking Ahead 

The coming week is packed with crucial economic data releases that will provide further clarity on the global economic landscape and potentially influence central bank decisions. Key events include: 

• US PCE (Personal Consumption Expenditures) Price Index: The Fed’s preferred inflation gauge will be closely watched for signs of easing or persistent price pressures. 
• Global PMIs (Purchasing Managers’ Indices): These surveys will offer insights into the health of manufacturing and services sectors across major economies. 
• UK CPI (Consumer Price Index) and Spring Statement: The UK’s inflation data and budget update will be critical for assessing the Bank of England’s policy path. 
• Australian CPI: Australia’s inflation data will inform the Reserve Bank of Australia’s next steps. 
• Central Bank Speeches.
• PBoC MLF Announcement 

The interplay between these data releases and the ongoing tariff situation will likely determine the direction of markets in the near term. Investors should brace for continued volatility and remain vigilant in monitoring developments on both the economic and geopolitical fronts. The uncertainty surrounding trade policy remains the dominant factor, and any shifts in this area could trigger significant market moves.