Fed Chair expects higher US inflation due to trade war
Speaking in Virginia, Fed Chair Jerome Powell said he expects US President Donald Trump’s tariffs to cause higher inflation and slower growth.
He said the announced tariffs were much bigger than expected, and the Fed won’t change its monetary policies until the picture becomes clearer.
Powell asserted the US economy appears strong now but the protectionist policies could threaten growth.
He said it’s still too early to decide on the appropriate path for monetary policies, but it’s important to stabilize inflation in the long term.
Wall Street extends losses after China's retaliation, Dow Jones tumbles 1400 points
US stock indices tumbled on Friday and extended their heavy losses as the US trade wars escalated with global retaliation.
China just slapped all US imports with 34% tariffs starting April 10, in response to Trump’s latest tariffs on Chinese imports.
Otherwise, earlier US data showed the economy added 228 thousand new jobs in March, after adding 117 thousand in February, while unemployment rose to 4.2%.
On trading, Dow Jones fell 3.5% as of 14:35 GMT, or 1401 points to 39131 points, while S&P 500 shed 4.1%, or 222 points to 5173 points, as NASDAQ gave up 4.5%, or 745 points to 15,805 points.
Oil tumbles to four-week trough as global trade wars erupt
Global oil prices lost over 8% on Thursday and headed for the fourth daily drop in a row, plumbing four-year lows and on track for the heftiest weekly loss since March 2023 as the global trade war erupted.
It comes after China announced retaliatory tariffs on all US products in response to similar tariffs imposed by US President Donald Trump this week.
Prices are also pressured by OPEC+ surprise production hike next month, in addition to a surge in US crude stocks last week.
Prices
US crude oil price fell 8.6% to $60.83 a barrel, the lowest since April 2021, with a session-high at $66.86.
Brent tumbled 8.25% today to $64.22 a barrel, the lowest since April 2021, with a session-high at $70.08.
On Thursday, US crude fell 5.8%, while Brent gave up 4.8%, the heftiest daily loss since July 2022.
Weekly Trades
Oil prices are down 11.5% so far this week, the first weekly loss in a month, and the heftiest since March 2023.
Global Trade War
China announced 34% retaliatory tariffs on all American imports starting April 10, in the first Chinese response to Trump’s tariffs.
The world economy is being shaken by the most aggressive US tariffs in over a century, leading to a steep drop in global stocks.
US President Donald Trump announced new historic reciprocal tariffs on many countries, that start with a base 10% and rise by many folds depending on the country.
He described the new tariffs as “a declaration of independence” and today as the “liberation day”.
Trump said the new tariffs are pivotal to bring back wealth to the United States, and he believes the 1929 Great Depression wouldn’t have happened if tariffs were kept.
He imposed 34% additional tariffs on China, 24% on Japan, 20% on the EU, 46% on Vietnam, 26% on India, 32% on Taiwan, 10% on the UK.
The EU has also vowed to respond, which could trigger further stock meltdowns and slower worldwide growth and lower fuel demand.
OPEC+
OPEC+ officially announced a production hike by more than expected in May, due to improving market indicators and higher crude demand.
The alliance said it’ll enact a production hike equivalent to three months of scheduled increases, surpassing previous expectations of a cut focused on May alone.
Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman convened virtually to discuss global market conditions, with the group agreeing on raising output by 411 thousand bpd, sharply above estimates of a 140 thousand bpd hike.
US Stocks
The Energy Information Administration reported a buildup of 6.2 million barrels in US crude stocks last week to 439.8 million barrels, while analysts expected a drop of 0.7 million barrels.
Gasoline stocks fell by 1.6 million barrels to 237.6 million barrels, as distillate stocks rose by 0.3 million barrels to 114.6 million barrels.
Bitcoin under pressure on risk aversion
Bitcoin fell on Friday and resumed losses after a short hiatus yesterday, about to hit two-week lows amid risk aversion and mounting global tensions in the global markets.
Wall Street marked its biggest loss since the Covid 2020 crisis after Trump announced far more aggressive tariffs than expected on most countries.
The Price
Bitcoin fell 1.8% at Bitstamp to $81,659, with a session-high at $84,708.
On Thursday, bitcoin rose 0.75% at Bitstamp away from two-week lows at $81,188.
Crypto Market Value
The market value of cryptocurrencies fell by $25 billion on Friday to a total of $2725 trillion as both bitcoin and other major currencies tumbled.
Trump’s Tariffs
US President Donald Trump announced new historic reciprocal tariffs on many countries, that start with a base 10% and rise by many folds depending on the country.
He described the new tariffs as “a declaration of independence” and today as the “liberation day”.
Trump said the new tariffs are pivotal to bring back wealth to the United States, and he believes the 1929 Great Depression wouldn’t have happened if tariffs were kept.
He imposed 34% additional tariffs on China, 24% on Japan, 20% on the EU, 46% on Vietnam, 26% on India, 32% on Taiwan, 10% on the UK.
Wall Street
US stock indices marked the biggest one-day loss on Thursday since March 2020 when the Covid 19 pandemic broke out, hitting seven-month lows as large investments exited the US.