Trade War Spooks Sharp Equity Market Sell-off

*China set to impose retaliatory tariffs on the U.S., igniting global trade tension.

*Global equity markets, including Wall Street, European markets, and Asian markets, have faced significant selling pressure as the global trade war has escalated.

*Safe-haven currencies, including the Japanese Yen and Swiss Franc, gain as the market seeks shelter amid high trade tensions.

Market Summary

The global trade war appears to be in full swing after the U.S. government took the lead with sweeping tariffs on its major trade partners. In a swift response, China announced a retaliatory move, slapping a 34% tariff on all U.S. imports, effective April 10. The escalation sent shockwaves through global markets, triggering a broad selloff from Wall Street to European and Asian bourses.

At the open of the week, both the China A50 and Hong Kongs Hang Seng Index gapped down by nearly 10%, a stark indication of investor panic and heightened uncertainty. As risk sentiment deteriorated, safe-haven assets saw strong inflows. Gold surged over 2%, climbing past the $3,000 mark as investors flocked to the traditional store of value. Similarly, the Japanese Yen and Swiss Franc appreciated sharply, while the U.S. dollar—now at the center of geopolitical and economic stress—lost significant ground. With the trade war still in its early stages, market volatility is expected to persist, likely keeping safe-haven currencies and gold well-supported in the near term.

In the digital asset space, the total cryptocurrency market cap dropped to its lowest level since President Trumps re-election last November, reflecting broad-based risk aversion. Yet, Bitcoin (BTC) managed to hold above the $78,000 threshold, signaling relative resilience and growing perception as a digital safe-haven amid market turmoil.

Current rate hike bets on 7th May Fed interest rate decision: Source: CME Fedwatch Tool

0 bps (63.5%) VS -25 bps (36.5%)

Market Movements

DOLLAR_INDX, H4

The U.S. Dollar Index staged a strong rebound from recent lows after Fed Chair Jerome Powell delivered a relatively hawkish tone in his post-NFP remarks last Friday. Powell emphasized that the Federal Reserve must remain vigilant and be prepared to respond to any resurgence in inflation—particularly in light of the inflationary risks tied to President Trumps sweeping tariff policy. Technically, the Dollar Index is currently hovering near the 61.8% Fibonacci retracement level, a key zone often watched by traders for potential reversals or breakout confirmation.

The Dollar Index saw a technical rebound from its recent low but faced a strong resistance level at near 103.15. A break above should be a bullish trend reversal signal for the index. The RSI rebounded from the oversold zone, while the MACD has a golden cross at the bottom, suggesting that the bearish momentum has eased.

Resistance level: 104.70, 106.10

Support level: 101.75, 100.00

XAU/USD, H4

Gold prices swung wildly in the last session, reflecting heightened market uncertainty and shifting risk sentiment. After briefly plunging due to intense profit-taking and panic selling, the precious metal quickly regained traction following China's announcement of retaliatory tariffs on the U.S.—a direct response to Washington's sweeping protectionist measures. Despite the rebound, technical indicators suggest caution: a bullish structural break earlier signals that gold may, in fact, be shifting into a bearish phase.

Gold prices have turned bearish after the metal dipped below its previous low level and the critical psychological support level at the $3,000 mark. The RSI is approaching the oversold zone from the top, while the MACD has dropped below the zero line, suggesting that a bearish momentum is forming.

Resistance level: 3055.00, 3090.00

Support level: 3000.00, 2955.00

NZDCHF, H4:

The NZD/CHF pair has slumped to its lowest level in over a decade, pressured by a confluence of bearish drivers that continue to weigh on the New Zealand dollar. As a proxy for Chinese economic sentiment, the Kiwi has come under renewed pressure after China unveiled a fresh round of retaliatory tariffs against the United States. The move not only escalates global trade tensions but also threatens to further strain China‘s already fragile economic recovery—an outcome that has direct spillover effects on New Zealand’s export-driven economy. At the same time, growing expectations of a 25 basis point rate cut by the Reserve Bank of New Zealand (RBNZ) at Wednesday‘s policy meeting have added further downside pressure. The anticipated move underscores the RBNZ’s dovish stance amid weakening domestic data and heightened global headwinds.

The NZDCHF has gotten to its decade low, suggesting a bearish bias for the pair. The RSI is rooted in the oversold zone, while the MACD has diverged after dropping below the zero line, suggesting that the bearish momentum is gaining.

Resistance level: 0.5615, 0.5665

Support level: 0.5544, 0.5465