In a speech at the Economic Club of Chicago, Federal Reserve Chair Jerome Powell declared that the Supreme Court case regarding President Trump's firing of federal officials likely doesn't apply to the Fed, affirming the central bank's stability and political independence. Powell warned that Trump's tariffs will trigger higher inflation while simultaneously slowing economic growth, creating potential tension between the Fed's dual mandate goals. The Fed is firm in maintaininging its current policy stance while awaiting clarity on tariff impacts, as first-quarter growth shows signs of deceleration with only modest consumer spending increases. Tariffs will generate at least temporary inflation withe riskisk of persistent effects if inflation expectations become unanchored, Powell cautioned. His remarks led to immediate market reactions, with stocks falling and Treasury yields declining as investors absorbed the implications. Despite these challenges, Powell maintained that the economy remains in a "solid position" even with the projected slowdown.

EQUITY

Stocks are under stress once again with significant losses in the tech sector in direct fire from the U.S.-China trade war. Nvidia bit the bullet after announcing it would take a charge of up to $5.5 billion due to new US export restrictions on AI chips to China, while other chip manufacturers like AMD had also felt the heat. The only sector posting gains was energy, while the tech and consumer discretionary sectors saw the steepest declines as investors either stayed on the sidelines or actively dumped their holdings in regard to escalating US-China trade tensions.

GOLD

Lack of a fundamental hurdle had helped gold prices to climb to a record high of $3,357 per ounce after posting their biggest daily gain since April 2020 with a 3.51% rally. The precious metal has risen to a high of 27% this year alone thanks to continued tension in trade and geopolitics. Central banks, especially those in countries with strained relationships with the U.S., continue to diversify their reserves by purchasing gold at higher and higher levels.

OIL

Crude prices have broken out of stagnation upward, facilitated by the Trump administration's new sanctions, this time on Chinese refineries, after its tanker that had purchased Iranian oil was banned a few weeks back. Both benchmarks settled 2% higher on Wednesday while OPEC announced updated plans for Iraq, Kazakhstan, and other countries to make further output cuts to compensate for pumping above quotas.

CURRENCY

The dollar index continued sliding below 99.3 as investors reacted to Federal Reserve Chair Powell's warnings. The selloff had driven the dollar to a seven-month low against the yen and pushed the Swiss franc to near decade-highs, with the currency recording its fourth straight weekly loss. U.S.-Japan trade talks avoided discussion of foreign exchange rates, though data pointed against the claim of Japan dumping U.S. treasuries. Analysts at Citi predict continued pressure on the dollar this year due to "sell America" flows, favouring euros and francs.