President Trump poured fuel on the fire by doubling down on trade threats, rejecting any notion of rolling back tariffs and suggesting that an additional 50% tariff on Chinese goods could be introduced. The hardline stance spooked markets early but failed to dislodge his position.

In response, European officials signalled a potential 25% tariff on US goods, with tensions rising on both sides of the Atlantic. With no sign of compromise, fears of an entrenched global trade war continue to loom large over the markets.

Bitcoin found its footing overnight, staging a rally back above $80,000, suggesting some return of risk appetite or at least a speculative bounce.

Gold, the traditional safe haven, held firm. After falling to $2,957, the metal rebounded back above $3000, staying elevated as geopolitical risks and volatility remain front of mind.

There was also plenty of volatility across the energy sector. US Light Crude fell to $58.80, a four-year low. It rebounded to $63.60 yesterday afternoon, but prices have pulled back this morning. Brent Crude, which traded above $72.40 in January, traded around $64 this morning. 

Bank of America has warned that in a worst-case scenario, Brent could fall to $50, reflecting concerns about demand destruction if the trade war worsens.

In the currency market, the US dollar rallied modestly against the Japanese yen, though it remains near recent lows. USD/JPY, which traded as high as 158.88 in January, was trading around 147.00 in the morning. Due to its relative stability, investors rush to buy the yen during periods of uncertainty.

The euro continues to find strength, trading at 1.0976, while sterling has eased, now at 1.2785, off from recent highs of 1.3207 seen just a week ago.

The Volatility Index (VIX) for April cooled somewhat, retreating to 31.90. While lower than recent spikes, the elevated level reflects continued unease across global financial markets as traders weigh the implications of an intensifying tariff battle and slowing growth momentum.

Despite all the macro noise, several key events are still on the calendar this week:

• Q1 US earnings season gets underway, providing corporate insight amid market volatility. Some of the world’s biggest banks report on Friday.
• US CPI data on Thursday, a key read on inflation and likely a major driver for Fed expectations

With escalating tariff tensions and no resolution in sight, markets will likely remain volatile in the days ahead. Further developments on trade—particularly any response from China or the EU—and whether the US follows through on additional tariff threats will set the tone.

Investors will also be closely watching upcoming US CPI data and corporate earnings, which could offer clues on inflation trends and how companies are weathering the macro storm. If sentiment sours further, expect continued rotation into safe havens like gold and the yen, while equity markets may remain on edge until some form of clarity or policy response emerges.