Wall St Volatility Lingers as Trump Eyes China Talks, Clashes with Fed's Powell, and Sydney Property Market Watches RBA
After a bumpy ride on Wall Street last week, traders welcomed the Easter break with open arms, taking a pause from market volatility and geopolitical tensions.
However, although the NY stock market was closed, lots of news is still happening, with President Trump signalling openness to trade talks with China this week despite escalating tensions.
On Thursday, he expressed optimism, saying, “We are going to make a very good deal with China,” and hinted at possibly lowering tariffs to protect consumer spending, while on the other hand, Trump goes to war with the US Federal Reserve Chair Jerome Powell.
On Friday, Trump said, "If we had a Fed chairman that understood what he was doing, interest rates would be coming down."
It’s unclear what legal grounds Trump might use, but a Supreme Court case on his authority to fire federal board members is being watched closely.
Powell has said the law doesn’t allow his removal and that he intends to serve out his term as chair through May 2026 and as a board member through January 2028.
He also stated the current case likely doesn’t apply to the Fed.
At a post-meeting press conference last week, Fed Chair Jerome Powell warned that larger-than-expected tariffs could push inflation higher and slow growth, citing weakened consumer and business sentiment.
Last week’s clash isn’t the first time Trump has challenged Powell’s decisions—the two have a history of public clashes dating back to Trump’s first term.
Meanwhile, White House economic adviser Kevin Hassett said Friday that President Trump and his team are still considering whether they can fire Fed Chair Jerome Powell, signalling the option remains under review.
Hassett's comments followed Trump's renewed attacks on Fed Chair Powell, accusing him of "playing politics" and claiming he could remove him "real fast."
Sen. Elizabeth Warren warned Thursday that if President Donald Trump were to fire Federal Reserve Chair Jerome Powell, it could spark a crash in the US stock market.
"Affordability may reignite momentum, but demand isn't going anywhere."
Turning to our local market, buyers remain engaged, keeping a close eye on developments as 2025 unfolds.
The outlook for the Sydney property market presents a mixed picture—balancing opportunity and risk—but could boom if the Reserve Bank of Australia (RBA) follows through with a potential rate cut in May after the federal election.
However, the decision hinges on upcoming inflation data and the evolving impact of Trump’s trade war.
Minutes from the RBA’s April 1 board meeting show underlying inflation may dip below 3% in the March quarter, with CPI data due April 30.
The RBA held rates at 4.1% this month, following February’s cut from 4.35%, as markets await further US tariff announcements.
With housing supply remaining tight across sales, rentals, and new builds, demand is set to rise as interest rates are expected to fall.
Investors, seeking stability, will continue to turn to Australian property.
Even if there is a significant increase in housing supply, which is unlikely in the short term, home values and weekly rents are still forecast to rise over the next 12 to 24 months.
The much-talked-about 0.25% rate cut by the RBA in May may already be priced in.
However, if the board takes a bolder stance with a half percent basis points (0.5%) cut, it could set the stage for the cash rate to eventually drop to 2% over the next 18 to 24 months.
Meanwhile, back on Wall Street, a rebound in US stocks fizzled out following Fed Chair Powell's pushback on the idea of the Federal Reserve stepping in to support markets, frustrating President Trump.
With markets closed for Good Friday, major indexes ended the week lower, giving back last week’s gains.
The S&P 500 fell 1.5%, briefly recovering after Trump mentioned a trade deal with the EU, though without details.
He was more specific about a US-Ukraine minerals agreement, announcing a deal next week.
However, gains evaporated, and the Dow falling 2.7% and the rich-tech Nasdaq ended with a 2.3% loss.
Focusing on the Mega-cap tech stocks, the "Magnificent Seven" were mostly lower across the board, with Nvidia dropping heavily after announcing a $5.5 billion charge due to US restrictions on AI chip exports to China.
Tesla closed lower for the week, while Apple, Microsoft, and Meta Platforms each slipped into negative territory. Amazon and Alphabet also recorded weekly losses.
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 4.33%.
The policy-sensitive two-year yield, which closely tracks Federal Reserve interest rate adjustment expectations, closed at 3.80%.
Bitcoin, the flagship cryptocurrency, traded higher, reaching $85,175, up from a weekly low of $74,524.
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 weekly range of US$1,388 and US$1,816 before settling at US$1,644.
Although the market has demonstrated weakness since breaking through US$1,600, the US$1,100 area remains exposed. Reassess from there.
Safe-haven demand remained thin heading into Easter, though spot gold held near the $3,500 target, hovering near the weekly highs of $3,358 an ounce. Meanwhile, silver closed at $32.50.
In the energy sector, Brent crude settled higher at $68.00 a barrel, while US West Texas Intermediate crude (WTI) closed at $63.60.
Meanwhile, the US Dollar Index (DXY), which tracks the greenback against a basket of currencies, has been weak throughout the week, trading at 99.02.
The Eurodollar was 1.1390, and the British pound finished at 1.3294. The Japanese yen ended at 142.12, and the Australian dollar was at 0.6376.
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