Markets React Sharply

Asian markets experienced losses for the entire week. On Friday, Japan’s Nikkei 225 fell nearly 2%, with leading automobile manufacturers Toyota and Honda experiencing sharp declines. South Korea’s KOSPI dropped 2%, while Hyundai and Kia saw similar losses. Hong Kong’s Hang Seng Index declined by 0.6%, with investors wary of the potential escalation in tariffs against China. These market reactions reflect mounting concerns about prolonged economic strain in the region.*

Europe’s STOXX 600 index also edged lower, with the car and auto parts sector standing at a 2% weekly drop, extending a six-week losing streak on announced tariffs for this sector. The looming trade conflict has already pushed some major car manufacturers, including Volvo, Audi, and Mercedes-Benz, that are now consider relocating production, while Ferrari announced price hikes on select models by up to 10%.

The U.S. dollar, initially expected to strengthen under Trump’s ‘America First’ policies, has instead weakened by 4% against a basket of top currencies this year. This decline has been particularly beneficial for the euro, which strengthened, especially after the German elections. Meanwhile, Japan’s yen has appreciated nearly 4% this quarter, with expectations of further rate hikes by the Bank of Japan adding to its strength.

Source: TradingView

Gold Surges to All-time High

As a reaction to the uneconomic policies of Trump’s administration, gold prices soared to a record peak on Friday as investors turned to safe-haven assets amid escalating trade tensions. Spot gold reached an all-time high of $3,086.21 per ounce, with analysts projecting further gains into the $3,200-$3,250 range. The metal has gained over 17% in the first quarter, marking its best quarterly performance since 1986.*

Fears of persistent inflation and trade-induced economic slowdowns have driven investors toward gold as a wealth-preserving asset. Additionally, according to market strategists, the surge in gold prices has been fueled by continued central bank purchases, particularly in Asia, as well as rising demand for bullion-backed ETFs

Broader Economic Implications

With the Federal Reserve maintaining a cautious stance on interest rates, the inflationary effects of new tariffs could further complicate monetary policy decisions. Meanwhile, oil prices have eased slightly as traders weigh the impact of trade tensions on global energy demand.

As the world braces for further retaliatory measures, market volatility is expected to persist. Whether Trump’s hardline approach will yield favorable trade negotiations remains uncertain, but for now, global investors are positioning themselves for a turbulent financial landscape, with gold emerging as the ultimate hedge against instability.

* Past performance is no guarantee of future results.