Sell-off deepens on Powell's warning 17/04/2025

HOT stories for today

US market wrap:
 

• U.S. stocks suffered steep losses Wednesday, rattled by a bleak forecast from Nvidia and renewed anxiety over trade policy after Federal Reserve Chair Jerome Powell flagged the economic risks of escalating tariffs. The Dow Jones Industrial Average plunged 1.73%, while the S&P 500 shed 2.24%. The tech-heavy Nasdaq Composite endured the sharpest drop, retreating 3.07%. Shares of Nvidia plummeted 6.9% after the chipmaker issued a grim outlook that sent shockwaves through the broader semiconductor sector. The VanEck Semiconductor ETF (SMH) sank more than 4%, with AMD tumbling 7.4% and Micron Technology losing 2.4%.
• Investor sentiment was further shaken after the White House confirmed that, factoring in existing tariffs, certain Chinese imports could face levies as high as 245%. Powell’s comments underscoring the potential drag on economic growth only deepened the selloff. Sector performance on the S&P 500 heatmap reflected the rout: just one of eleven sectors ended in positive territory, with energy eking out a 0.65% gain. Technology stocks bore the brunt, collapsing 6.98% on the day.
   

Sell-off deepens on Powell's warning

• Federal Reserve Chair Jerome Powell warned Wednesday that rising tariffs may put the central bank in a tough spot as it balances inflation control with supporting economic growth. Speaking to the Economic Club of Chicago, Powell said the Fed could face a scenario where its dual mandate goals are in conflict. Tariffs are likely to push inflation higher while weighing on growth, he noted, complicating the policy path forward.
• While Powell gave no clear signal on interest rates, he said the Fed is "well positioned to wait for greater clarity" before making any changes. Markets are pricing in potential rate cuts starting in June, with several expected by year-end. A broad market selloff deepened as Powell began speaking, with major indexes hitting session lows and Treasury yields falling. Despite signs of slowing economic activity, Powell maintained that the economy remains in a “solid position”, though uncertainty around tariffs continues to cloud the outlook.
   

Stocks on the move:

• ASML (ASML) — Shares of the Dutch chip equipment maker slid 7% after the company reported weaker-than-expected orders and flagged rising demand uncertainty tied to U.S.-China tariff tensions.
• Interactive Brokers (IBKR) — The stock dropped 9% after the online trading firm reported Q1 earnings of $1.88 per share, missing analyst forecasts of $1.92, according to LSEG.
• Tesla (TSLA) — Shares declined 5% following a Reuters report suggesting that new U.S. tariffs on Chinese imports could hinder Tesla’s efforts to scale production of its Cybercab and Semi trucks.
• Hertz Global (HTZ) — The rental car giant surged 56% after Pershing Square revealed a new $46.5 million stake in a regulatory filing.
• Advanced Micro Devices (AMD) — The chipmaker fell 7% after announcing that fresh U.S. export curbs could lead to charges of approximately $800 million.
   

Today’s action
 

• Asia-Pacific equities mostly advanced on Thursday, diverging from Wall Street’s sharp downturn after Fed Chair Jerome Powell warned that persistent trade tensions could complicate the central bank’s efforts to manage inflation and stimulate growth. Hong Kong’s Hang Seng Index jumped 1.65%, while Mainland China’s CSI 300 was flat amid volatile trading. Japan’s Nikkei 225 gained 0.85%, and the Topix rose 0.83%. In South Korea, the Kospi edged up 0.68%.
• U.S. stock futures rose modestly following Wednesday’s steep sell-off. Dow Jones Industrial Average futures added 62 points (0.15%), while S&P 500 futures climbed 0.2% and Nasdaq 100 futures gained 0.3%. On the economic calendar, investors await key reports including the European Central Bank rate decision Initial Jobless Claims and Housing Starts/Building Permits, followed by remarks from Fed Governor Michael Barr. Pre-market earnings highlights feature results from major names including Taiwan Semiconductor (TSM), UnitedHealth Group (UNH), American Express (AXP), Blackstone (BX), Charles Schwab (SCHW), Ally Financial (ALLY), D.R. Horton (DHI), Truist (TFC), and State Street (STT).

Watchlist: TSM, NVDA, UNH, ALLY, AXP, BX, SCHW, STT, TSLA, AMD
 

Bitcoin
 

• Bitcoin (BTC) has hovered near the $85,000 mark since Tuesday but continues to regain market share from rival altcoins. On Wednesday afternoon, the leading digital asset dipped to $83,393, following remarks from Federal Reserve Chair Jerome Powell that dampened risk sentiment across both crypto and equity markets. Powell signaled that a near-term interest rate cut is unlikely, suggesting that monetary policy may remain restrictive longer than anticipated. The comments curtailed investor optimism and weighed on broader markets, including crypto.
• Despite the pullback, BTC maintains a dominant position, with a market cap of $1.68 trillion, making up the lion’s share of the $2.66 trillion crypto market. Its dominance over ether (ETH)—the industry’s second-largest asset—remains a key metric to watch. A rising BTC dominance ratio often precedes greater price momentum and can be a leading indicator of a potential move toward new all-time highs, especially as market sentiment turns bullish.
  Watchlist: Bitcoin: 74,000-100,000, Ethereum: 1380- 1800, Solana: 95-150
   

Forex

• The Japanese Yen (JPY) came under pressure in early Asian trade on Thursday, with USD/JPY rebounding over 100 pips, driven by a modest U.S. Dollar recovery and waning safe-haven demand amid improving risk sentiment. A broadly positive tone in equity markets weighed on the Yen, traditionally seen as a haven during times of uncertainty. However, further JPY losses may be limited, as investors remain cautious over escalating U.S.-China trade tensions, potential tariff moves by President Donald Trump, and ongoing recession concerns. Diverging policy stances between the Federal Reserve and the Bank of Japan also continue to influence the pair’s trajectory.
• Meanwhile, the EUR/USD pair held steady near the 1.1400 level during early Asian hours, with traders staying on the sidelines ahead of the European Central Bank’s (ECB) rate decision. The ECB is expected to cut rates for the third time this year, keeping policy accommodative amid persistently low inflation.
  Watchlist: EUR/USD: 1.1240-1.1148, USD/JPY: 141-145
   

Basic Materials
 

• Gold (XAU/USD) is in a bullish consolidation phase after hitting a fresh all-time high during Thursday’s Asian session. The precious metal is trading sideways as mixed market signals temper momentum. A modest rebound in the U.S. Dollar, bolstered by upbeat retail sales data and hawkish commentary from Fed Chair Jerome Powell, has applied some pressure on gold, especially amid overbought technical conditions. Despite this, the broader outlook for gold remains supported by ongoing US-China trade tensions, recession concerns, and expectations of Fed rate cuts later in the year.
• Meanwhile, West Texas Intermediate (WTI) crude continues its upward trajectory, rising for a second straight session to around $62.40 per barrel during Asian hours. The advance is driven by tightening supply concerns, following the Trump administration’s new sanctions on Iran, specifically targeting oil exports and a China-based "teapot" refinery. Additionally, OPEC received revised output plans from Iraq, Kazakhstan, and other producers outlining further production cuts to counter previous overproduction.
  Watchlist: GOLD 3000-3380, US Oil: 57.00-70.00

Key Economic Events Today:

EST time
08:30 am: USD Unemployment Claim
08:30 am: USD Philly Fed Manufacturing Index
08:30 am: USD Building Permits, Housing Starts
08:45 am: EUR ECB Press Confernece
11:45 am: USD FOMC Member Barr Speaks

Earnings

BMO (Before the US Market opens)
TSM                  Taiwan Semic.
UNH                  UnitedHealth Group
AXP                   American Express Comp.
SCHW               The Charles Schwab Corp.
BX                      Blackstone Inc.
DHI                    D.R. Horton Inc.
AMC (After the US Market closes): NFLX

The TEFS Analyst team wishes you a successful day!