Global Markets Brace for Tariff Impact, Gold Surges 10%

As the April 2 tariff deadline approaches, global equity markets are experiencing a notable decline in risk appetite. Investors are preparing for potential market volatility stemming from the impending U.S. tariff policies. European stock indices have fallen, while Asian markets have seen their largest declines in a month, largely driven by concerns over the Japanese market.

The uncertainty surrounding U.S. President Trump's potential implementation of new tariffs on April 2 has heightened market anxiety. This, coupled with a significant drop in the U.S. consumer confidence index, has cast a shadow over economic prospects. As a result, safe-haven assets like gold are seeing increased demand as investors seek to mitigate risks. The price of gold has surged to a record high above $3,080, while the U.S. Treasury yields have also risen. The U.S. stock market is experiencing slight weakness and volatility.

Trump's proposed 25% tariff on automobiles is already in effect, although he has indicated that the "reciprocal tariffs" to be implemented next week will be relatively lenient. However, concerns over the escalation of the trade war are growing, with Federal Reserve officials warning that tariffs could lead to short-term inflation. The 30-year U.S. Treasury yield has risen to a one-month high, steepening the yield curve.

With the release of the U.S. PCE inflation data scheduled for later this week and rising trade uncertainty, investors are adopting a defensive stance, reducing their positions. The low trading volume could exacerbate market volatility. In Europe, the automotive sector remains fragile, and optimism surrounding the UK's fiscal outlook has waned. The bond market has already digested half of the measures proposed by the UK's Chancellor of the Exchequer, including a package of welfare benefits and government spending cuts.

Meanwhile, the British pound, which has been relatively stable around $1.29 in recent trading sessions, is set to face another test this week. February's retail sales data is expected to be lower than the previous month, adding to the economic uncertainties.