Weekly Fundamental Analysis: U.S. Indices Close Lower as Trade War Drags on
Key Takeaways
- U.S. Markets Close Lower with Growing Trade and Fed Tensions
- ECB Cuts Interest by 25 basis points, citing growth fear.
- Gold breaks a New High as Demand on Safe-haven Assets Continues
Major U.S. Indices experienced strong fluctuations this week, with the S&P 500 and Nasdaq ending the week down 2.93% and 4.87% respectively. Healthcare stocks experienced big drops driven by UnitedHealth, which saw significant declines due to disappointing earnings. This week, investor sentiment was further impacted by President Trump’s criticism of the Federal Reserve’s Chair Powell, and his policy regarding interest rates.
The European Central Bank lowered interest rates for the seventh time this year, citing growing uncertainty in global markets and the negative impact of U.S. tariffs. ECB President Christine Lagarde stressed out the need for resilience and data-driven policy amid ongoing challenges.
Gold prices reached new highs this week, breaking above $3,358 per ounce, driven by escalating trade tensions and a weakening U.S. dollar. Investors resorted to safe-haven assets with growing concerns over global economic stability and inflationary pressures.
Federal Reserve and Political Tensions:
President Trump increased his criticism of Federal Reserve Chair Jerome Powell, and even hinted at removing him before the end of his term. This escalation raised concerns about the independence of the U.S. Federal Reserve and added to market uncertainties.
Global Economic Outlook:
The International Monetary Fund (IMF) warned of a slowdown in global economic growth resulting from increasing trade tensions, particularly from U.S. tariffs. The IMF’s forecast reflects concerns over potential inflationary pressures and the risk of stagflation this year.
Asian Markets
Asian markets exhibited mixed performances. Japan’s Nikkei 225 rose by 723 points (2.13%) South Korea’s Kospi increased more than 29 points (1.19%). Taiwan’s Taiex is down 291 points (1.48%) this week. The Shanghai Composite slightly increased by 0.76% after a fluctuating week. These gains were supported by positive earnings from Taiwan Semiconductor Manufacturing Co. (TSMC), although the company expressed caution over potential risks from U.S. tariffs.
