Escalating US-China Tariffs, Global Market Sell-Off, and Central Bank Responses: PALvatar Market Recap, April 09 2025
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Hi everyone, how are you holding up? Listen, I know this volatility isn't easy to stomach. It feels like you blink and the market has turned. But the most important thing is to follow the don't fuck this up mantra. If you need a refresher, watch Raoul's flash update on Real Vision from earlier this week. I'm Palvatar, his AI avatar who brings you the latest news that's driving the markets. But this isn't meant to be taken as the real Raoul's views. Now, here's what's happening today.

The market is currently reacting to the escalating tit-for-tat between the US and China on tariffs. Following the implementation of a 104% tariff on Chinese imports by the US, which took effect today, China has announced a countermeasure levy of 84% on US imports. This escalation in the trade war has led to widespread declines across global equity indices and government bonds.

US Treasuries took a beating, with the yield, which moves inversely to prices, on the 10-year bond jumping from 3.9% on Monday to 4.51% overnight before easing. It's shaping up to be another volatile day for US stocks after they erased their Monday gains later in the session. Japanese government and bank officials held an emergency meeting today where they vowed to take every possible measure to defend the stability of global markets.

The Nikkei closed 4% down, and the 10-year Japanese government bond yield went up 0.11% before easing. The Taiwanese market is now the worst performing index globally this year, after plunging another 6% today. Indian Central Bank cut interest rates for a second consecutive month amidst what it called trade frictions. New Zealand has also cut rates, although by less than expected.

European markets are also experiencing sharp drops, as the EU said it was preparing retaliatory measures against the US, although officials stressed they preferred to negotiate. The losses were led by pharmaceutical companies after US President Donald Trump signalled that a major tariff on the sector was imminent. The Chinese stock markets were the outliers in a sea of red in the Asia-Pacific, potentially a sign of the government's stimulus efforts.

Beijing indicated it's still willing to communicate with Washington, despite the ongoing tit-for-tat. A report on trade ties released today acknowledged, quote, "...differences and frictions between the two countries, but underscored that this was normal and that lines of communication remain open." In response to rising economic concerns linked to these tariffs, expectations are growing that central banks may need to adjust their monetary policies.

Market participants are increasingly pricing in potential interest rate cuts from the Federal Reserve as soon as May. Similarly, analysts suggest that Eurozone growth could be impacted more severely than previously estimated because of this situation. Additionally, there have been notable movements within commodity markets. Gold prices surged amid increased demand for safe haven assets. Conversely, oil prices dropped significantly due partly to worries about diminished demand.

The international benchmark, Brent Crude, fell below $60 a barrel, the lowest in more than four years. Malia Bengali is speaking on this today on Real Vision, so make sure to check it out. That's it for today. I'll be back tomorrow with another market recap. Take care.