Global Stocks Fall, Gold Hits Record as Trade War Fears Mount

Trade war concerns hit global markets. Gold hits record highs, while stocks, oil, and the dollar face mounting pressure from new U.S. tariffs.

Asian and European stock markets extended their losses on Friday, while gold prices surged to a new record high, as escalating trade war fears driven by fresh U.S. tariffs weighed heavily on global sentiment.

President Biden’s recent announcement of 25% tariffs on auto imports—set to begin next week—sparked concern among investors and companies worldwide. These measures, alongside broader global levies, have drawn widespread criticism from both international governments and major corporations.

Japan’s Nikkei 225 index tumbled nearly 2% in Asia, with sharp losses from auto industry giants such as Toyota and Honda. South Korea’s KOSPI fell 2% as well, driven by declines in Hyundai and Kia.

In Europe, the STOXX 600 index slipped further. The auto and auto parts sector is set for a 2% weekly decline, marking its sixth consecutive week in the red.

Michael Metcalfe, Head of Global Macro Strategy at State Street, commented that the U.S. tariffs on cars were “more aggressive than expected,” especially since no exceptions were granted to neighboring countries like Mexico or Canada.
“What remains uncertain is whether this hawkish stance on auto tariffs will extend to the broader trade measures we’re expecting next week,” Metcalfe noted. “This uncertainty is suppressing risk appetite.”

Automakers including Volvo, Volkswagen’s Audi, Mercedes-Benz, Hyundai, and others have already announced plans to shift parts of their production abroad. Ferrari, which manufactures all vehicles in Italy, confirmed it would raise prices by up to 10% on select models.

Hong Kong’s Hang Seng index dropped 0.6% as traders awaited further clarity on tariff plans directed at China. Biden signaled that tariffs on China might be reduced if a deal is reached involving ByteDance—the Chinese owner of TikTok—selling the popular app.

Markets now turn to the reciprocal tariffs expected from the U.S. on April 2. Dubbed “Liberation Day” by the White House, Biden suggested these new measures may not mirror previous tariff announcements as originally intended.

Thierry Wizman, Global FX & Rates Strategist at Macquarie, said: “As expected, the renewed tariff rhetoric is pushing markets into risk-off mode. These policies are both growth-restraining and inflation-inducing.”

Inflation in Focus as Dollar Steadies

In the currency markets, the U.S. dollar held firm ahead of a key inflation report. The Personal Consumption Expenditures (PCE) data for February, the Federal Reserve’s preferred inflation gauge, is expected to show a rebound in consumer spending and an annual core PCE inflation rate rising to 2.7%.

Despite earlier forecasts of dollar strength in 2025 due to ‘America First’ policies, the greenback is experiencing its weakest start to a year since the 2008 global financial crisis.

The euro, one of the biggest beneficiaries of the dollar’s weakness, slightly dipped to $1.077 on Friday after German consumer confidence data pointed to persistent uncertainty in Europe’s largest economy—but the currency remains significantly stronger on the year.

The yen gained ground, trading at 150.675 per dollar, poised for a quarterly gain of nearly 4%. The strength is supported by rising expectations that the Bank of Japan may hike interest rates again.

Tokyo’s core consumer inflation accelerated in March, further supporting the case for tighter monetary policy.

DBS analysts expect the yen to consolidate in the near term, balancing between ongoing trade risks and inflationary pressures.

Meanwhile, money markets increased bets on an upcoming European Central Bank rate cut. Softer-than-expected March inflation data from France and Spain added fuel to these expectations. Traders now price in an 80% probability of a 25 basis point cut in April—up from 50% just a week earlier.

German Bund yields dropped 6 basis points to 2.7%, their lowest level since March 5.
“It seems likely that the ECB will conclude that the downside risks from escalating trade tensions are materializing,” said Christoph Rieger, strategist at Commerzbank.

Gold Surges to Record; Oil Slips on Growth Worries

In commodities, gold surged to a record high on Friday, driven by safe-haven demand amid rising global trade tension. Spot gold climbed 0.77% to $3,079.50 per ounce.

Gold has gained more than 17% in the first quarter alone, putting it on track for its best quarterly performance since 1986.
“Continued demand for safe assets, along with central bank buying in emerging markets to diversify FX reserves, supports the bullish outlook,” said Michael Brown, Senior Research Strategist at Pepperstone.

Oil prices eased slightly as markets assessed the impact of shrinking global crude supplies and new U.S. tariffs on broader economic growth.

Brent crude futures traded around $74 a barrel, while West Texas Intermediate (WTI) crude hovered just under $70.