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Markets on Edge as Targeted Tariffs Ease Fears, but Uncertainty Lingers

2 days ago

Traders Brace for U.S. Trade Policy Shifts Amid Global Economic Jitters

Investor sentiment is showing tentative signs of improvement as the next round of U.S. tariffs, set for April 2, appears to be more targeted rather than a broad-based global crackdown, according to officials familiar with the matter. However, traders remain wary, as policymakers in China and Australia have warned of potential economic shocks stemming from U.S. trade actions.

While the early reaction in Asian markets has been cautiously positive, uncertainty looms ahead of next week’s official tariff announcement. Any unexpected policy shifts or a more aggressive stance from President Trump could quickly reshape market dynamics, making it difficult for investors to fully price in risk at this stage.

Trump is expected to announce widespread reciprocal tariffs against key nations and economic blocs but may exempt select countries from the measures. Sector-specific tariffs, once hinted at, are reportedly off the table for now. Despite this moderation, analysts warn that the Biden administration’s broader trade policies could have a “seismic” impact on the global economy.

Commodities and Inflation Data in Focus

  • Oil markets remain steady as traders assess the impact of new U.S. tariffs and an expected supply boost from OPEC+.
  • Gold is holding near record highs, trading around $3,022 an ounce, as market participants seek safe-haven assets amid policy uncertainty.

Looking ahead, key economic data releases across major economies will be closely monitored for signs of slowdown due to trade uncertainty:

  • Europe, UK, and U.S. activity data will offer insights into economic resilience.
  • Australia’s inflation report could shape expectations for the Reserve Bank of Australia’s next policy move.
  • U.S. Personal Consumption Expenditure (PCE) inflation data the Fed’s preferred measure of consumer prices will be a major event at the end of the week.

With markets on high alert, traders should brace for volatility as policymakers navigate the evolving landscape of trade and inflation risks.

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