Global market turmoil hits all assets amid U.S.-China trade tensions. Discover the implications and upcoming RBI policy impact on April 9.
It’s a bloodbath on Dalal Street today in sync with the global rout across equity markets and asset classes. Not only are the stock markets down, practically every asset class from currency, Crude to gold have been under selling pressure on concerns about global recession as a result of the tariffs unveiled by Donald Trump.
But the mayhem is not limited to equities alone. Investors are dumping everything such as stocks, metals, IT shares, even safe havens like gold, in a rush to find liquidity. Let’s break down what’s driving this meltdown and what lies ahead.
What’s the big fear for the markets?
At the heart of the sell-off is the fresh round of tariff troubles. US President Donald Trump slapped a steep 54% tariff on Chinese imports, to which China retaliated with a 34% duty on American goods. This tit-for-tat has rattled global investors, raising fears that a prolonged trade war could drag the global economy into recession.
The ripple effect is being felt across the world. Wall Street has already taken a beating, with the Dow Jones, S&P 500, and Nasdaq all sliding sharply on Friday (April 4).
Why is gold selling off?
Gold is usually the go-to asset during times of crisis. But surprisingly, it too is under pressure. Because investors facing margin calls in falling stock markets are liquidating their gold holdings to raise cash.
“The news from the US is that hedge funds are facing the highest levels of margin calls , not seen since the Covid outbreak period of March/April 2020. In the scenario, we have seen even Gold and Silver being sold to generate liquidity all around. “
Nifty IT Index cracks
Tech stocks have taken one of the biggest hits today. The Nifty IT index has cracked nearly 7% in intraday trade. Since most Indian IT giants depend heavily on global clients, any disruption in trade or slowdown in global spending directly affects their revenues.
According to Anand James, Chief Market Strategist at Geojit Investments, “Nifty IT has broken below the widening wedge pattern forming a weekly Marubozu candle marking the second biggest weekly fall since March 2020… the index has broken below the 200-week moving average (WMA) for the first time since March 2020… it took an average of five weeks for the index to move back above the average.”
Nifty metals melt
The Nifty Metal Index has tumbled over 7% as fears of reduced global demand and the impact of new tariffs take their toll. All 15 stocks in the index are deep in the red, with Lloyds Metals down nearly 12%, Tata Steel losing 10%, and Hindustan Copper slipping 9%.
Other major losers include Vedanta, SAIL, and Hindustan Zinc – all down around 8%. For a sector that’s highly export-dependent, global trade barriers could be a major blow.
Big RBI decision on April 9
Amid all this turmoil, the Reserve Bank of India’s upcoming policy decision on April 9 has gained more importance. While inflation has cooled off a bit, global cues and the need to maintain stability will weigh heavily on the RBI’s move. However, the broad consensus is that the RBI may cut rates by 25 bps. Focus will be more on the RBI’s stance on the liquidity front given the rupee’s trajectory.
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This blog is purely for educational purposes. Mutual fund investments are subject to market risks, read all scheme-related documents carefully.
