USD Slides to 3-Yr Low as Wall St Tumbles, Gold Surges Amid Trump-Fed Tensions, Aussie Property Market Reacts
US stocks declined on Wall Street Monday as investors weighed the economic fallout of President Trump’s unpredictable trade war and rising concerns over the Federal Reserve’s independence.
Worries intensified after Trump labelled Fed Chair Jerome Powell “a major loser” for not cutting rates.
“There can be a slowing of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump posted on social media, deepening market unease.
Last week, Trump said Powell’s “termination cannot come fast enough,” as White House advisor Kevin Hassett confirmed the president is exploring ways to remove him.
Equities gave back a chunk of the prior week’s strong gains, as rising trade tensions with China and Fed Chair Jerome Powell’s remarks about tariffs pushing up inflation and slowing growth reignited uncertainty over the Fed’s next move on interest rates.
At the close in New York, the Dow Jones Industrial Average dropped 971.82 points, or 2.48%, to 38,170.41.
The S&P 500, a key global benchmark, slid 124.50 points, or 2.36%, to 5,158.20, while the tech-rich Nasdaq Composite fell 415.55 points, or 2.55%, to 15,870.90.
All 11 major sectors of the S&P 500 ended in the red, with consumer discretionary and technology stocks posting the steepest losses.
The US dollar index dropped to 98.20, down from 99.40 last week, hitting a three-year low amid ongoing trade uncertainties.
Attention now turns to the first-quarter earnings season, which picks up this week with dozens of key firms reporting.
In other news, China warned on Monday that it would retaliate against nations aligning with US trade deals that would harm its interests.
The Trump administration, which imposed a 145% tariff on Chinese goods, says it's in talks with dozens of countries.
Turning to the "Magnificent Seven," weakness persisted as AI giant Nvidia slid 4.5%, following reports that Huawei Technologies is preparing to start mass shipments of high-end AI chips to Chinese customers as early as next month.
Meanwhile, Tesla tumbled 5.8% after news emerged that the production rollout of its lower-cost Model Y variant had been postponed.
Other 'Mag Seven' Amazon and Meta Platforms both dropped about 3%. Apple, Microsoft, and Alphabet were each down about 2%.
In bonds, crypto and commodities
The 10-year Treasury yield, which influences mortgage rates and other key loans in the US government bond market, settled at 4.40%.
The policy-sensitive two-year yield, which closely tracks Federal Reserve interest rate adjustment expectations, closed at 3.77%.
Bitcoin, the flagship cryptocurrency, traded higher, reaching US$88,280, up from a daily low of US$85,150.
As the volatility continues, attention remains focused on key support levels between US$72,000 and US$76,000, with traders on the lookout for signs of a potential breakout or further pullback.
However, a close below US$72,000 would warrant a reassessment of market conditions.
Ethereum mirrored Bitcoin's volatile price movement, fluctuating between a daily range of US$1,566 and US$1,655 before settling at US$1,580.
Although the market has demonstrated weakness since breaking through US$1,600, the US$1,100 area remains exposed. Reassess from there.
Spot gold surged over 3% in late trading, reaching a record high just above $3,444, as investors flocked to the precious metal for safety, while silver closed at $32.70.
In the energy sector, Brent crude settled higher at $67.00 a barrel, while US West Texas Intermediate crude (WTI) closed at $63.00.
Meanwhile, the US Dollar Index (DXY), which tracks the greenback against a basket of currencies, was lower at 98.20.
The Eurodollar was 1.1490, and the British pound finished at 1.3374. The Japanese yen ended at 140.78, and the Australian dollar was at 0.6412.
Interest Rates Hold the Key – Confidence Follows
Turning our interest to the Australian property market, things took an interesting turn last week with the Coalition considering making owner-occupier loans tax-deductible for first-time buyers of new properties.
Labour is proposing a plan allowing first-time buyers to purchase homes with just a 5% deposit on properties worth up to $1.5 million.
These proposals have led to an improvement in buyer sentiment, fuelling fresh momentum in the housing market as Sydney property prices continue to rise.
Amid Trump's tariff proposals, markets are now pricing in the Reserve Bank of Australia (RBA), potentially lowering interest rates to around 2.8% by December 2025, which is about 1.5% lower than the current rate.
However, this data could change as conditions evolve.
Bottom line? The market looks poised for some significant moves ahead.
If you're in a position to act, positioning yourself before these changes unfold could help you navigate the shifts more smoothly.
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