US stocks experienced a volatile trading session on Monday, resulting in a significant drop. 

This occurred as the White House maintained a defiant stance following the implementation of unexpectedly high tariff rates on major US trading partners, which triggered a market meltdown.

Additionally, US President Donald Trump threatened to impose additional tariffs on China as the trade war between the two countries became more intense. 

Investors were briefly relieved earlier today by a false report suggesting a potential delay in US tariffs. 

However, the White House promptly denied the report, causing markets to fall back into decline. Global markets have been turbulent since April 2, when the new US duties were announced.

At the time of writing, the Dow Jones Industrial Average was down 2.3% or nearly 900 points.

The benchmark had slid more than 1,000 points earlier in the day. The S&P 500 index slumped 1.6%, while the Nasdaq Composite was down 0.7% on Monday. 

The sell-off was a continuation of the decline that began after the close last Wednesday.

“Investors have been in panic mode ever since. Recession fears have increased, while expectations of sharp rate cuts from the Federal Reserve and other central banks have soared,” said David Morrison, senior market analyst at Trade Nation. 

The market is currently pricing in a 25 basis point rate cut by the Fed at its upcoming meeting next month.

Additionally, the CME’s FeedWatch Tool suggests that the Fed Funds rate will decrease to a range of 3.00-3.25% by the end of the year.

Traders were looking to ‘buy the dip’, as the S&P 500 and NASDAQ had already pulled back from their respective record highs hit in mid-February.

Morrison said:

But anyone expecting clarity after Wednesday’s announcement was left disappointed. The tariffs were far more aggressive than anticipated, and it’s become painfully apparent that Trump is completely indifferent to a collapsing stock market.

Restaurant stocks fall

Restaurant stocks fell in morning trading due to investor concerns over weaker consumer spending and a potential recession.

Shares of restaurant companies, including McDonald’s, Chipotle, Darden Restaurants, and Starbucks, fell as the markets reacted to the Trump administration’s tariffs.

Industry analysts predict that the new tariffs won’t significantly impact restaurants directly. 

However, they do anticipate that higher prices on other goods will decrease consumer spending and overall confidence. 

For instance, Starbucks may experience slightly higher costs for coffee beans, but the bigger concern is potentially lower demand for their drinks, especially as their US business is already working to increase customer traffic.

Shares of McDonald’s dropped over 1%, while Chipotle slumped 4%. Starbucks’ stock plunged more than 5% on Monday. 

Apple stock sees sharp 6% drop

Shares experienced a sharp 6% drop to session lows following Trump’s Truth Social post, where he threatened to impose an additional 50% tariff on Chinese goods unless Beijing removed its retaliatory tariffs on US products.

The president announced on Truth Social that if China does not remove the 34% counter-tariff it imposed late last week, the US will impose an additional 50% tariff on Chinese goods.

“Additionally, all talks with China concerning their requested meetings with us will be terminated!,” Trump wrote.

Tesla stock drops 7%

Tesla’s stock experienced a significant drop of nearly 7%, mirroring the broader market downturn. 

This decline was further fueled by Wedbush analyst Dan Ives, a well-known Tesla optimist, revising his price target downwards. Ives attributed this adjustment to “self-created brand issues” that Tesla is currently facing.

These brand issues could encompass a range of factors, including recent controversies surrounding Tesla’s Autopilot feature, concerns about build quality and service issues, and Elon Musk’s unpredictable behavior on social media. 

These issues may have negatively impacted consumer sentiment and investor confidence, contributing to the stock’s decline.

Despite these challenges, Tesla remains a dominant player in the electric vehicle market, with strong brand recognition and a loyal customer base. 

The company’s innovative technology and ambitious expansion plans continue to attract investors, even amidst market volatility and brand concerns.

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China has issued a stern warning to the United States, condemning threats to escalate tariffs and pledging to retaliate if Washington follows through.

This uncompromising stance intensifies the ongoing trade war between the world’s two largest economies, dimming hopes for a swift resolution.

“The US threat to escalate tariffs on China is a mistake on top of a mistake, which once again exposes the extortionate nature of the US,” the Chinese Ministry of Commerce said in a strongly worded statement on Tuesday.

If the US insists on its own way, China will fight to the end.

The Chinese response came just hours after US President Donald Trump vowed to slap additional 50% import taxes on China unless it withdraws its retaliatory tariffs against his earlier levies.

This blunt reaction suggests China intends to resist Trump’s pressure, raising the prospect of a protracted and damaging conflict.

“The rhetoric from China is strong. Without Trump backing down investors may need to prepare for trade decoupling between both countries,” said Michelle Lam, greater China economist at Societe Generale SA, highlighting the potential for a significant shift in the global economic landscape.

Yuan weakens, stocks rebound: market volatility continues

China’s onshore yuan fell to its weakest level since 2023 after the Chinese central bank eased its control on the currency, while a gauge of Chinese stocks listed in Hong Kong rose as much as 3.7% after experiencing its worst day since the financial crisis on Monday, as the nation’s state-backed funds vowed to support the market.

This volatility underscores the uncertainty surrounding the trade dispute and its potential impact on the Chinese economy.

Doubling down: Trump’s cumulative tariff impact

Trump’s latest threat would come on top of the 34% “reciprocal” duty set to kick in on April 9, as well as a 20% levy implemented earlier this year, according to a White House official.

This would bring the cumulative tariff announced this year to a staggering 104%, effectively doubling the import price of any good shipped from China to the US, a move that would likely have significant repercussions for both economies.

The Chinese Ministry of Commerce also called for dialogue to resolve disputes in its statement, although Trump on Monday said “all talks with China” about a meeting will be terminated if Beijing doesn’t take action, without specifying what would be required.

The escalation of tensions is dimming the prospect of any imminent leadership call.

Trump hasn’t spoken with Chinese President Xi Jinping since returning to the White House, marking the longest period without communication between a US president and his Chinese counterpart post-inauguration in 20 years, highlighting the strained relationship between the two countries.

Earlier in the week, the Communist Party’s official newspaper published an editorial declaring Beijing is no longer “clinging to illusions” of striking a deal.

Xi has vowed to boost domestic consumption, recognizing that the tariffs are expected to hurt exports, a sector responsible for a third of China’s economic growth last year.

According to Bloomberg, Ding Shuang, chief economist for Greater China & North Asia at Standard Chartered, predicts that China will respond to any new US tariffs with equivalent measures, arguing that any fresh levies from the US will have a limited impact on the Asian nation.

“The marginal effect of raising tariffs further from the existing level of about 65% will shrink,” he said of additional US tariffs.

Most Chinese exports to the US have already been affected. For goods that are not price sensitive, tariffs won’t work no matter how high they go.

US ‘hegemony’: China defends its interests

In response to the latest US move, China’s embassy in Washington asserted that US threats and pressure are “not the right way to engage” with China and that the nation will defend its interests.

“The US hegemonic move in the name of ‘reciprocity’ serves its selfish interests at the expense of other countries’ legitimate interests and puts ‘America first’ over international rules,” embassy spokesman Liu Pengyu said, signaling China’s determination to protect its economic sovereignty.

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Bankruptcy filings in Japan reached a concerning 11-year high in fiscal 2024, totaling 10,144, according to a report released Tuesday by credit research firm Tokyo Shoko Research (TSR).

The surge in bankruptcies comes amid growing uncertainty surrounding the Bank of Japan’s (BOJ) interest rate hike schedule, adding to the economic pressures facing Japanese businesses.

The data indicates that the number of bankruptcies in the 12 months leading up to March was the highest since fiscal 2013, when 10,536 filings were recorded, and represents a 12% increase from the previous year.

TSR’s analysis revealed that most industries, with the exception of financial and transportation sectors, experienced a rise in bankruptcies compared to the previous year, highlighting the widespread nature of the economic challenges.

Overall debt declines despite higher filing numbers

Despite the increase in filings, the total amount of debt involved in bankruptcies decreased from 2.46 trillion yen in fiscal 2023 to 2.37 trillion yen ($16.08 billion) in fiscal 2024, according to TSR.

This apparent paradox suggests that relatively more small- and mid-sized firms entered bankruptcy, contributing to the higher number of filings while lowering the overall debt burden.

The largest single debtor was the former Mitsubishi Aircraft Corp, which was liquidated last year with a substantial 641 billion yen in debt following the termination of the Mitsubishi SpaceJet commercial airplane project, a major blow to Japan’s aerospace ambitions.

BOJ watch: bankruptcy data as a key economic indicator

Bankruptcy data is one of the key indicators closely monitored by BOJ policymakers to assess the overall health of the Japanese economy.

Governor Kazuo Ueda has stated that the central bank will continue to raise interest rates if sustained wage increases, including those at smaller firms, support consumption-led economic growth, making the current surge in bankruptcies a potential cause for concern within the BOJ.

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Amid growing uncertainty surrounding US–Ukraine relations, a steadfast commitment to the war-torn nation remains in the form of informal ties forged over three years of conflict with Russia.

Leading this charge is Howard G. Buffett, a Republican philanthropist and son of legendary investor Warren Buffett, who is making his 18th visit to Ukraine since Russia’s full-scale invasion in 2022.

This visit comes as the new US administration led by President Donald Trump explores a potential temporary ceasefire between Russia and Ukraine, casting a shadow over the future of US support for the country.

“We’re on Track”: Buffett’s billion-dollar commitment to Ukraine

“It doesn’t change anything we do. We’re on track,” Buffett told The Associated Press, underscoring his unwavering dedication. He stated that his foundation is on track to surpass $1 billion in aid to Ukraine this year.

Buffett also expressed skepticism about the prospect of a lasting peace deal, stating the prospect is “impossible.”

“Putin doesn’t want it, and he won’t respect it,” he said.

There’s no easy way to end the war. So, we’ll stick with it as long as we need to.

Buffett’s partnership with Ukraine’s economy minister

The Associated Press caught up with Buffett aboard a train alongside Ukraine’s Economy Minister Yuliia Svyrydenko on Saturday.

Their shared focus on humanitarian demining brought them together in 2023, and they have maintained close contact since. Svyrydenko lauded Buffett as “one of the greatest friends of Ukraine.”

Buffett stands alongside numerous Americans from across the US political spectrum who support Ukraine’s war effort, be it through financial assistance or volunteer military service.

These individuals believe that the US has not done enough to help Ukraine defeat Russia over the past few years.

During this visit, Buffett and Svyrydenko traveled to the country’s northern Sumy region, where the situation has significantly deteriorated following Ukrainian forces’ loss of ground in Russia’s Kursk region.

They visited the villages of Popivka and Bobryk, which, like much of the region, lie within a high-risk zone for land mines. Parts of the area were occupied by Russian forces in 2022 and are now considered potentially contaminated.

They also visited a local school that had been relocated to a basement, where children now study during extended air raid alerts, bearing witness to the realities of life in a war zone.

Focus on humanitarian needs: demining and infrastructure

Buffett’s foundation, which concentrates on addressing humanitarian needs such as agriculture, infrastructure and mine clearance, has contributed approximately $800 million to Ukraine since the start of the full-scale invasion, including $175 million dedicated to humanitarian demining.

Svyrydenko’s ministry is responsible for overseeing Ukraine’s humanitarian demining infrastructure, making the partnership between the two a vital one.

“He understands very well that if a country that can feed 400 million people cannot clear its fields and loses at least $12 billion of GDP every year due to mined land, it’s a major challenge,” Svyrydenko said of Buffett, emphasizing the long-term impact of landmine contamination.

The scars of war: landmines and economic losses

According to Ukraine’s Ministry of Economy, the country’s agricultural sector has lost 20.5% of its farmland since the invasion as a result of land mines, occupation and ongoing fighting.

A staggering 139,000 square kilometers (53,670 square miles) of Ukrainian land — an area roughly the size of the state of New York — are potentially mined.

Two-thirds of that territory consists of fertile farmland where generations of Ukrainians have cultivated wheat.

Since the beginning of the war, 335 people have been killed and 823 wounded in mine-related incidents, underscoring the immediate danger posed by these deadly remnants of war.

An estimated 6.1 million people live in areas considered at risk of landmine contamination, a constant reminder of the conflict’s enduring impact.

Despite rocky relations and growing uncertainty within the United States, Buffett expressed his belief that many US lawmakers still uphold the principles of freedom and democracy and will not abandon Ukraine as it fights for its sovereignty.

“At the end of the day, I think the US will do the right thing, but it may be a painful process and there may be a lot more Ukrainians that die,” he said.

The Buffett Foundation funded several bipartisan US congressional delegations to Ukraine in 2023 and plans to bring another group in May, aiming to foster a deeper understanding of the situation among American lawmakers.

Buffett, whose foundation has worked in conflict zones for over two decades, emphasized the importance of witnessing the conditions firsthand to fully grasp the war’s scale.

He recalled a particularly impactful drive from Kharkiv to Borova, near the front line, where he passed through village after village flattened by Russian attacks.

He added that atrocities committed in towns like Bucha, Borodyanka and Irpin, where Russian forces were accused of torturing, raping and executing civilians, are often forgotten outside Ukraine.

That’s why showing up matters. Hearing it from the people living it is the only way to truly understand.

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The bullish case for gold remains strong, and the recent decline in gold prices presents an opportunity for investors to buy, according to experts. 

In the previous trading session, the price of gold experienced a significant decline, falling below the $3,000 per ounce mark. 

This drop represented a new low for the precious metal since March 13 and was primarily attributed to investors liquidating their gold holdings to offset losses incurred in other financial markets. 

“Gold is traditionally a safe haven, but sometimes investors sell it along with other asset classes to cover losses elsewhere,” analysts at ING Group, said in a note. 

We think gold’s selloff will be short-lived as trade and tariff uncertainty continue to bolster its safe-haven appeal.

At the time of writing, the most-active gold contract on COMEX was back above $3,000 per ounce.

The contract was up 1.7% at $3,026.11 per ounce. 

Meanwhile, silver prices on COMEX were up 2% at $30.20 per ounce. 

Growing trade tensions spark safe-haven demand

Even as gold had fallen from its recent peaks, prices have started to consolidate again on Tuesday. 

US President Donald Trump’s threat to impose a 50% tariff on Chinese goods if Beijing did not withdraw its recent 34% tariff increase on American imports reignited safe-haven demand for gold.

China’s Ministry of Commerce promised to retaliate if Washington imposed the new tariffs, escalating anxieties of further economic turbulence and sparking a global risk-aversion sentiment in the markets.

“We believe central banks will continue to buy gold as geopolitical tensions and economic uncertainty push them to increase allocations toward safe-haven assets,” ING analysts said. 

“This should provide a further tailwind to gold prices looking ahead,” they added. 

Growing expectations of Fed rate cuts

The US Federal Reserve’s (Fed) potential resumption of its interest rate-cutting cycle as early as May, with a projected total of five rate cuts in 2025, has fueled risk appetite, put downward pressure on the dollar, and decreased US Treasury bond yields.

Goldman Sachs has revised its forecast for Fed rate cuts in 2025, increasing the projection from 105 basis points to a total of 130 basis points.

Dhwani Mehta, analyst at FXstreet, said in a report:

If the turnaround in global markets extends into the sessions ahead, the greenback could see further weakness, leading to a sustained recovery in Gold price.

Trump urged the Fed to implement interest rate cuts promptly, contending that the US economy was robust.

Fed Governor Adriana Kugler emphasised the Fed’s commitment to the 2% inflation target on Monday. 

She noted that while short-term inflation expectations have increased, they remain well-anchored in the longer term.

Kugler stressed that the central bank’s focus should be on maintaining price stability.

Opportunity to buy

According to Goldman Sachs, the recent sell-off in gold prices could be a buying opportunity for investors. 

Goldman Sachs believes that the recent decline in gold prices is due to short-term technical factors, such as position liquidations caused by the equity market sell-off and some rotation into alternative assets. 

Despite this, the bank maintains that gold will be well-supported over the medium term, according to a Kitco report.

“In an overall risk-off panic such as this, investors are forced to sell everything they can to raise funds, particularly if the purchases were made using leverage,” said David Morrison, senior market analyst at Trade Nation. 

“That gold has been a victim of this move has much to do with its recent surge to record highs. This move encouraged fresh buying, much of it employing leverage,” Morrison added. 

Goldman analysts maintain their year-end gold forecast at $3,300 per ounce, with a forecast range of $3,250-3,520. 

They note that risks to their forecast are skewed to the upside, and continue to see mostly upside risks to investors’ positioning.

In the short-term, Trade Nation’s Morrison believes that gold prices could rise further with consolidation near the $3,020 per ounce. 

If it were able to consolidate around $3,000 for a week or two, this could help to reset the daily MACD back to levels consistent with another move higher.

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