What are the 3 major factors driving global markets lower?
Stocks, crypto pairs, and crude oil prices started another week in the red territory as mounting worries over growing fears of the US recession, Trump’s new tariffs, and Fed rate cut uncertainty weighed heavily on the financial markets.
Stocks, crypto pairs, and crude oil prices started another week in the red territory as mounting worries over growing fears of the US recession, Trump’s new tariffs, and Fed rate cut uncertainty weighed heavily on the financial markets. Wall Street’s main indexes plummeted on Monday due to fears of a potential recession in the United States following weak economic data last week. Asian stock markets were mostly lower in early trade on Tuesday.
Crude oil prices have already taken a hit in recent weeks. Oil prices in New York and London plunged to multi-year lows amid fears that a slowdown could take a deep bite out of global energy demand. The crypto market has come under heavy selling pressure, and the price of Bitcoin continues to decline, breaking the $80,000 mark and reaching a new low since February 28th. At the same time, the gold price has struggled for direction since last Thursday. Prices are trading back within a range as traders appear hesitant, preferring to wait for the release of the closely-watched US CPI report before making new directional moves.
Trade war fears are dominating market sentiment
The recent market downturn was largely fueled by fears of a trade war under President Donald Trump’s trade policies. Trump’s announcement of new tariffs against several countries, including Canada, Mexico, and China, and reciprocal tariffs against India, has caused concerns about the potential economic consequences. The trade war concerns could disrupt global supply chains, reduce output and increase production costs, leading to a slowdown in economic growth in many countries.
Fed rate cut uncertainty keeps markets on?edge
Markets also remain cautious as the Fed signals patience on rate cuts. The latest data shows mixed economic indicators, suggesting a complex path ahead for monetary policy decisions in 2025. Last Friday, Federal Reserve Chairman Jerome Powell said the U.S. central bank is in no hurry to change interest rates despite the uncertainty generated by President Donald Trump’s economic policies. The next FOMC meeting is on March 19, and according to the CME FedWatch Tool, no rate cut is expected.
Weak jobs data adds to economic slowdown?fears
The new batch of weak economic data from the United States hammered investor confidence. In February, U.S. nonfarm payrolls increased by 151,000, falling short of the market expectation of 170,000, signaling weakening momentum in the labor market. A disappointing jobs report spurred investor fears that the world’s largest economy is headed toward an economic slowdown. Meanwhile, the latest US ISM Manufacturing PMI data pointed to a slowdown in activity and price growth accelerated due to tariffs. Adding to investor jitters, Trump in a Fox News interview on Sunday declined to predict whether the U.S. could face a recession.
To conclude
Given the global market instability, economic uncertainties continue to weigh on market sentiment and investors should closely monitor Trump’s trade war developments. At the same time, we have two big events in the next 2 weeks that could drastically change the course of the market over the next few months. The pivotal US inflation data is the most market-moving event on the calendar this week ahead of next week’s Fed meeting. Therefore, the market will remain the same throughout March, with high volatility expected. Be definitive in your actions to protect the downside, prepare different scenarios necessary to minimize risks and diversify your portfolio to mitigate risk.
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