Global Markets Retreat as Tariff Fears Resurface – May 6, 2025

Across Europe, major bourses managed modest gains, but in Asia, the headline indices generally moved lower, with MSCI’s Asia-Pacific ex-Japan index down roughly 0.2%.

At the center of the sell-off was an unexpected 100% tariff on foreign-produced films, unsettling investors already wary of an escalating trade war. With risk appetite dented, foreign-exchange markets saw a bout of volatility: the dollar index eased back below 100, the euro firmed to $1.13, and the yen strengthened to ¥143.8 per dollar. In Asia, the Taiwan dollar’s two-day rally, up nearly 8% against the greenback, forced Hong Kong authorities to deploy about US$7.8 billion in reserves to defend their currency peg.

Commodity prices reflected the risk-off mood as well. Crude oil fell sharply on renewed worries over OPEC+ supply increases, with West Texas Intermediate dropping nearly 2% to $57.13 per barrel and Brent crude sliding 1.7% to $60.23—its weakest close since February 2021. A technical rebound on Monday trimmed some losses, lifting Brent back above $61 and WTI to just over $58 as bargain hunters stepped in. Meanwhile, gold rallied on safe-haven flows and a softer dollar, climbing nearly 3% to a two-week high around $3,360 per ounce.

In the bond market, U.S. Treasury yields ticked marginally higher amid resilient services-sector data. The 10-year yield rose to roughly 4.35%, while two-year notes fetched about 3.84%, as traders scaled back expectations for near-term rate cuts by the Federal Reserve.

On the corporate front, Berkshire Hathaway shares tumbled about 5% following Warren Buffett’s announcement that he will hand over the CEO reins to longtime lieutenant Greg Abel. In emerging markets, a Reuters poll indicated that Mexico’s headline CPI likely held at 3.9% year-on-year in April—comfortably within Banxico’s 3 ± 1% target—supporting the case for further rate reductions at the central bank’s May meeting.

What to Watch Today (May 6, 2025)

• Australian Housing Market Data
• April’s new-home sales and building approvals will show how rising global rates are impacting activity Down Under.
• Services & Composite PMIs
• Flash readings for key developed (U.S., Eurozone, U.K., Japan) and major emerging (China, India, Brazil) economies will reveal whether service-sector strength is holding up.
• Eurozone Producer Price Index (PPI)
• April’s factory-gate inflation figures will signal upstream price pressures and feed into ECB rate-outlook debates.
• U.S. & Canada Trade Data
• April’s export/import balances will shed light on how tariffs and energy-market swings are reshaping North American trade flows.
• Atlanta Fed GDPNow (Q2 Estimate)
• The June update to the GDPNow “nowcast” will offer an early gauge of second-quarter U.S. growth momentum.
• Earnings Rollout
• Look for reports from AMD (AMD), Energy Transfer (ET), and Home Depot (HD) on first-quarter results, following yesterday’s releases from Ford and Palantir.