Equities slide as Trump targets Powell again

General market commentary

US equity markets closed sharply lower on Monday amid escalating concerns over the Federal Reserve's independence and ongoing trade uncertainties. President Trump intensified his criticism of Fed Chair Jerome Powell, urging immediate interest rate cuts and even suggesting Powell's termination, which raised investor fears about political interference in monetary policy. This rhetoric contributed to a broad selloff, with the Dow Jones Industrial Average falling 2.5% to 38,170, the Nasdaq dropping 2.6% to 15,870, and the S&P 500 declining 2.4% to 5,158, marking a fourth consecutive session of losses. Technology and consumer discretionary sectors led the declines, with major tech shares such as Nvidia, Amazon, Tesla, Alphabet, Apple, Microsoft, and Meta all retreating. The S&P 500 now stands 16% below its February record high, nearing bear market territory. Meanwhile, the US dollar slid to a three-year low against major currencies, and gold surged to a new all-time high above $3,400 per ounce as investors sought safe havens amid tariff risks and policy uncertainty.

In the bond market, yields rose modestly with the 10-year Treasury yield reaching 4.41%, reflecting expectations of three to four Fed rate cuts starting in June, although the Fed's own "dot plot" suggests only two cuts this year. The Fed's recent end to quantitative tightening may help support bond prices and contain yields, but persistent budget deficits and inflation uncertainty could limit yield declines. The Conference Board's Leading Economic Index fell 0.7% in March, driven by weaker consumer expectations and equity market declines, but it does not currently signal an imminent recession. Growth appears to be slowing amid tariff tensions and political uncertainty, yet pro-growth policies like deregulation and tax cuts may bolster the economy later in 2025. Overall, the market environment is characterised by volatility stemming from political pressures on the Fed, trade disputes, and cautious economic indicators, with investors balancing risks between equities, bonds, and safe-haven assets.

Latest market and economic update

Most Asian equities traded in a narrow range on Tuesday as investor sentiment remained cautious amid ongoing US-China trade tensions and President Trump’s criticism of Federal Reserve Chair Jerome Powell. While China’s markets were largely flat and Hong Kong’s Hang Seng slipped 0.5%, Japan’s Nikkei edged down amid concerns over US tariffs and a strong yen, with broader Asian markets showing mixed performance ahead of key economic data and earnings reports this week.

US equity futures rebounded overnight, with the Dow futures gaining nearly 200 points, while S&P 500 and Nasdaq futures also rose, as investors looked ahead to key earnings reports including Tesla’s, despite ongoing trade tensions with China and market uncertainty.

The US dollar hovered near a three-and-a-half-year low against the euro, trading around $1.1502 after reaching $1.1573 on Monday, its highest level since November 2021, amid ongoing investor concerns fuelled by President Trump’s persistent criticism of Federal Reserve Chair Jerome Powell. Market uncertainty over US monetary policy and trade tensions has weakened confidence in the dollar, contributing to its decline against major currencies like the euro, which has strengthened by approximately 11% against the dollar this year.

Oil prices rose this morning, recovering from a sharp 2% drop as markets remained cautious amid global economic uncertainty driven by US trade tariffs and President Trump’s criticism of the Federal Reserve. Brent crude futures gained 0.8% to $66.80 per barrel and WTI crude rose 1% to $63.02, supported by short-covering after US-Iran nuclear talks raised supply concerns, while fears of a global slowdown due to tariffs and potential Fed rate cuts continue to temper demand outlooks.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Amazon Web Services (AWS) has paused some data centre leasing discussions, particularly in international markets, signalling a potential short-term slowdown in demand among major AI infrastructure spenders, according to Wells Fargo. This move follows a similar pullback by Microsoft, though other hyperscalers like Meta, Google, and Oracle remain actively investing, suggesting a moderation rather than a halt in AI-related data centre expansion.

Novo Nordisk has submitted an application for US approval of an oral version of its weight loss drug Wegovy, after Phase 3 trials showed patients lost up to 15% of their body weight over 64 weeks. This oral semaglutide pill would offer a more accessible alternative to injectable treatments amid rising demand and increasing competition from Eli Lilly’s oral GLP-1 candidate in the expanding obesity drug market.

The U.S. Federal Trade Commission (FTC) has sued Uber Technologies, accusing the company of signing up some users for its Uber One subscription without consent and making deceptive claims about savings and cancellation ease. Uber denies the allegations, asserting that its sign-up and cancellation processes are clear and lawful, and it is confident the courts will side with them.

A U.S. appeals court has revived a proposed data privacy class action against Shopify, allowing the Canadian e-commerce company to be sued in California for collecting personal data from state residents. The decision, which could impact internet-based platforms, ruled that Shopify's actions were deliberately aimed at California, despite the company's argument that it should be sued elsewhere.

Chipotle Mexican Grill is set to expand internationally with a new location in Mexico, partnering with Latin American operator Alsea Group, marking its first entry into the region. This expansion follows its recent Middle East venture and comes amid concerns over U.S. tariffs on raw materials from Mexico, with the company forecasting modest sales growth due to inflationary pressures.

Nomura is acquiring Macquarie Group’s U.S. and European public asset management businesses for $1.8 billion in an all-cash deal expected to close by the end of 2025, boosting its assets under management from $590 billion to around $770 billion. Macquarie will keep its Australian public investments business and collaborate with Nomura on product development, while Nomura aims to strengthen and expand its asset management platform.

Raymond James downgraded Amazon from Strong Buy to Outperform, reducing its price target to $195, citing rising investment pressures and underestimated margin risks in 2025-26. While positive on Amazon’s long-term AI prospects, the firm highlighted concerns over margin pressures, tariffs, logistics costs, and capital-intensive efforts, favouring companies like Meta, Uber, and MercadoLibre instead.

DA Davidson downgraded Salesforce from Neutral to Underperform, citing concerns that the company’s focus on artificial intelligence is detracting from its core business, which is experiencing broad deceleration. The firm lowered its price target to $200, forecasting slower growth, particularly in non-AI products, and expressing scepticism about the scalability and ROI of Salesforce's AI initiatives.

Wedbush analyst Dan Ives warned that Tesla is at a crucial crossroads, urging CEO Elon Musk to distance himself from politics and refocus on the company's core business, as his political affiliations and involvement with DOGE have caused significant brand damage. Despite remaining bullish on Tesla's long-term potential, Ives cautioned that the company faces weakening demand and lower earnings projections, with recovery dependent on Musk's full-time commitment to Tesla and a shift away from political distractions.

Loop Capital upgraded Norwegian Cruise Line to Buy from Hold, citing a nearly 40% drop in the equity and a positive outlook following the launch of its new ship, Aqua. The firm maintained its $25 price target, highlighting strong onboard spending, resilient pricing trends, and significant earnings visibility, with the upcoming earnings report seen as a potential catalyst.

Baird upgraded Adidas to Outperform, citing an improved risk/reward following a 25% share decline, with growing confidence in the brand's strength across lifestyle and performance segments. The firm highlighted improving wholesale relationships, limited U.S. tariff exposure, and conservative earnings guidance, forecasting potential earnings of more than €11 per share by 2026, which could support a share price in the high €200s.

Barclays initiated coverage of Abercrombie & Fitch with an Equal Weight rating and a $71 price target, citing strong growth potential but also risks like margin pressure and sector uncertainties. Despite the company’s solid performance, Barclays adopted a neutral outlook due to challenges such as elevated inventory and rising costs.

Upcoming data and events

Market will today be closely watching key economic events, including speeches from Federal Reserve members Patrick Harker and Neel Kashkari, along with Treasury auctions and oil inventory data, all of which could influence market dynamics. Earnings reports from major companies like Intuitive Surgical, Tesla, Capital One, Chubb, and SAP will also be in focus, offering crucial insights into corporate performance.

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