Market decline intensifies, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on April 7

Global Market Review

1. European and American market conditions

The three major stock index futures fell, with Dow futures mainly blue-chip stocks falling 2.40%; S&P 500 futures falling 2.31%; and Nasdaq 100 futures mainly technology stocks falling 2.48%. European stocks fell sharply, with the German DAX index falling 4.60%; the French CAC40 index falling 4.47%; and the UK FTSE 100 index falling 3.96%.

2. Market news interpretation

The market decline intensifies the U.S. credit risk panic indicators continue to rise

Indicators that measure credit risk in U.S. investment-grade securities have recorded the largest increase since the epidemic in the past three trading days, and concerns over the impact of tariffs on the economy have spread to debt investors. The MarkitCDX North American Investment Grade Bond Index, which rose as fears heated up, rose 4 basis points at one point to 76.2 basis points, and then gave up some of the gains.

Citigroup lowered its Brent crude oil 0-3-month forecast to $60/barrel

On Monday, Citigroup Research lowered its Brent crude oil 0-3-month price estimate to $60/barrel, and lowered its 0-3-month price estimate for copper and aluminum to $8,000/ton and $2,200/ton respectively. The bank said in its report that the actual impact of tariffs should be a double negative, with pre-buying and hoarding vendors following tightening of avatradescn.commodity markets over the past few months, the bank said.The product situation will be avatradescn.completely reversed. "In our opinion, any rebound this week due to the delay in the implementation of the April 9 tariffs will provide an opportunity to sell off at high prices," Citi analysts said in a report, adding that "U.S. gas and gold should outperform the market in the near future."

JPM CEO urged to resolve tariff uncertainty worry about the fall of the long-term US economic alliance

JPM CEO Dimon urged to resolve the uncertainty caused by US President Trump's tariffs as soon as possible, and cautioned that the long-term US economic alliance could be broken "disastrously". “The sooner this problem is resolved, the better, because some negative effects accumulate over time and are difficult to reverse,” Dimon wrote in his annual shareholder letter. Recently, "as investment costs rise and demand for domestic products increases, we may see the result of pushing up inflation, which is not only reflected in imported goods, but also in domestic prices."

Russian Ural oil prices fell to their lowest level since 2023

① As the international benchmark Brent crude oil price plummeted, Russian Ural oil prices fell to their lowest level since 2023. ②Brent crude oil futures price fell $2.43 to $63.15 per barrel, a drop of 3.7%, the lowest level since 2021. ③Russian Ural oil prices fell to around US$53 per barrel from the ports of Primorsk, Ustluga and Novorossiysk last Friday. Ural oil prices could fall below $50 on Monday if Brent prices continue to fall. ④ Lower Ural oil prices will help Russian oil sellers lock in tankers, as more Western shipowners can enter the market at prices below the Western price ceiling.

The UK Statistics Office is required to urgently improve data quality

① The UK Statistics Office (ONS) must take urgent measures in the next four weeks to reverse the decline in the quality of key economic data, including unemployment data. ②ONS has been criticized by the Bank of England and many economists for failing to reverse the decline in the number of participants in labor market investigations after the epidemic. ③ The UK Office of Statistics Regulatory Authority (OSR) launched a review of the ONS issue in July 2024, and the government announced another independent investigation last week. ④OSR said that ONS needs to urgently modernize its data collection methods and work practices to restore confidence. ⑤ Regulators require ONS to issue a avatradescn.comprehensive improvement plan within four weeks and clarify within three months how to prioritize funding for economic statistics and check its quality more regularly.

Stocks of large U.S. banks fell, tariffs hit the market

①Stocks of large U.S. banks fell before the market on April 7, expanding their decline for the third consecutive day as Trump announced last week that a 10% benchmark tariff on all imported goods and higher tariffs on dozens of countries. ②Morgan Stanley fell 5.3%, Citigroup fell 5.1%, and Goldman Sachs fell 4.7%. Bank of America fell 3.8%, MorganChase fell 3.7%, while Wells Fargo fell 3.6%. ③ Uncertainty caused by tariffs has suppressed transactions and capital market activities, and a decline in consumer confidence may suppress consumption and loan demand, and investment banks are expected to be impacted. ④ Since Trump announced the increase in tariffs, the KBW Bank Index has fallen 15.8%.

The UK plans to close hundreds of public institutions to streamline the government

① The UK government said it could close hundreds of semi-autonomous non-governmental public institutions (quangos) to cut costs, increase productivity and respond to the "new era of global instability." ② These institutions are funded by taxpayers but are not directly controlled by the Minister, including the Health and Safety Executive Board, the Railway Network avatradescn.company and the Immigration Advisory avatradescn.committee. ③ The government statement said that all public institutions will be reviewed and if their existence cannot be rationalized, they will be closed, merged or functions will be returned to government departments. ④The UK is currently in a state of fiscal austerity, and Finance Minister Rachel Reeves needs to meet fiscal rules while responding to the negative impact of Trump's tariffs on economic growth.

Top investment banks have raised their U.S. recession forecasts and interest rate expectations again

① Goldman Sachs raised the probability of a U.S. recession from 35% to 45%, a second increase in a week, aroused concerns due to the escalation of the trade war. ②JP Morgan expects the probability of a recession in the United States and globally to be 60%, and is worried that tariffs will trigger inflation and retaliatory measures. ③ Goldman Sachs lowered its U.S. economic growth forecast for 2025 from 1.5% to 1.3%, still higher than Wells Fargo's 1% estimate. ④ Goldman Sachs expects the Federal Reserve to cut interest rates three consecutive times in June, at 25 basis points each time. ⑤JP Morgan expects the Federal Reserve to cut interest rates every time in the remaining five meetings in 2025, and the interest rate will drop to 3% after another rate cut in January.

Libya launches a new round of oil tender

① Libya's oil minister announced that the country will launch a new round of oil tenders to provide investors with more attractive terms. ② This tender will involve multiple key areas in Libya, including the Silt, Murzuk and Gadames Basins, as well as maritime blocks along the Mediterranean coast.

Japan considers formulating a supplementary budget to deal with tariffs and inflation

① The Japanese government and the ruling coalition are considering formulating a supplementary budget to deal with US tariffs and long-term inflation. ② Japanese Prime Minister Shigeru Ishiba may instruct officials to formulate budgets this month and strive to pass them during this parliamentary session. ③The Japanese government plans to take measures to stimulate domestic demand, especially after the United States introduces automobile tariffs. ④The government may strengthen financial support for avatradescn.companies that do not lay off employees and restore electricity and gas subsidies. ⑤ Japan may also supplement its reserve funds.

Indonesia seeks to establish fair and reciprocal relationship with the United States

① Indonesian President Joko Widodo said that Indonesia hopes to establish fair and reciprocal relationship with the United States and will resolve the 32% tariff imposed by the United States through diplomatic means. ② Indonesia plans to increase imports from the United States, such as cotton and smallwheat, oil and gas in exchange for tariff reductions. ③The United States is Indonesia's third largest export destination. In 2024, Indonesia's exports to the United States reached US$26.3 billion, and its trade surplus was US$16.8 billion. ④ Indonesia's economy has faced challenges in recent times, with the stock market plummeting and the currency depreciating to its lowest level since the 1998 financial crisis. ⑤ Indonesia's central bank said it will actively interfere in the foreign exchange market after the April 8 holiday ends to stabilize the exchange rate.

3. Trends of major currency pairs in the New York Stock Exchange before the market

Euro/USD: As of 20:18 Beijing time, the euro/USD fell and is now at 1.0955, a drop of 0.03%. Before the New York Stock Exchange, the euro-dollar price continued to work hard to find the bottom of the uptrend, based on this to gain a positive recovery momentum. Despite recent declines, it is still above the key support level of 1.0945, which forms a positive turning point that can lead to upward movement, especially a positive divergence after the relative intensity index (RSI) reaches an oversold level avatradescn.compared to price movement. Positive signals have begun to appear.

GBP/USD: As of 20:18 Beijing time, GBP/USD fell and is now at 1.2813, a drop of 0.51%. Before New York, GBPUSD prices moved upwards on the last trading day, supported by key support level 1,2865, which helped the price gain a bullish momentum, especially after (RSI) sending a positive overlap signal.

Spot gold: As of 20:18 Beijing time, spot gold fell and is now at 3028.59, a drop of 0.28%. Before the New York Stock Exchange, gold prices fell on the last trading day because resistance stabilized at $3.050. Affected by several negative pressures and short-term bear correction waves, the price fell after some obvious oversold trends in the successful overselling (RSI), strengthening the negative scenario.

Spot silver: As of 20:18 Beijing time, spot silver rose, now at 30.015, an increase of 1.62%. Before the New York Stock Exchange, silver prices stabilized at the intraday level, below the key resistance of $30.85, strengthening the bearish scenario, especially (RSI) has reached oversold levels.

Crude oil market: As of 20:18 Beijing time, U.S. oil fell, now at 60.240, a drop of 2.81%. Before the New York Stock Exchange, crude oil prices confirmed their losses within the day, breaking the current situationSupport at $60.70 and stay below it as a signal for its resumption of the decline, especially as the price successfully gets out of oversold state (RSI) negative signals return.

4. Institutional view

RJC: The tariff shock wave continues to drag down European bank stocks

European bank stocks were hit harder on Monday, as the market opened with concerns about the chain reaction of US tariffs on the global economy, and the sharp drop last week expanded. The European Stoke 600 Bank Index fell 5.4% on the opening, continuing the decline last Thursday and Friday. The index has fallen by 17% since the beginning of this month, almost erasing all the gains this year. "The chain effect of tariffs could put significant pressure on banking profits," RBC Capital Markets said in a research note. "Analysts wrote that as the economic outlook changes drastically, the fate of European banking has changed in a short period of time. The cross-industry European Stoke 600 index fell 6.1%, and has fallen 8.1% this year.

UBS: U.S. economic growth is expected to be below 1% this year, and the Federal Reserve may cut interest rates by 75 to 100 basis points. UBS released a report saying that if Trump does not take positive measures to reduce tariffs in the next three to six months, it is likely to enter a downward situation, including a significant recession in the US economy and a decline in stock markets. If the extreme pressure strategy extends to diplomatic (such as the Iranian nuclear issue and the Russian-Ukrainian conflict) and fiscal policy (i.e., the extension of tax cuts), uncertainty may be further intensified. The bank estimates that reciprocal tariffs have raised the actual US tariff rate from 9% to about 25%, and the actual tariff rate is expected to be higher in the short term. The "reciprocal" method of US tariffs means that the retaliation of trading partners may encounter higher US tariffs. Not included in the tariff goods that may face future Section 232 investigations, or result in the cancellation of tariff exemptions. The bank expects U.S. economic growth this year to be below 1%, including the recession this year, with a low of 1%. In terms of inflation, tariffs are expected to push U.S. inflation by about 2 percentage points by the end of the year, which has been assumed that only part of the cost is transmitted to the final consumer. While higher inflation, a sharp slowdown in economic growth and possible weak labor markets will prompt the Fed to cut interest rates by 75 to 100 basis points this year.

The above content is all about "[Aihua Foreign Exchange Market Analysis]: The market decline intensifies, and the short-term trend analysis of spot gold, silver, crude oil, and foreign exchange on April 7" was carefully avatradescn.compiled and edited by Aihua Avatrade Foreign Exchange Editor. I hope it will be helpful to your trading! Thanks for the support!

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