Forex Analysis & Reviews: 09.04.2025 - US and China engaged in...

09.04.2025 03:56 PM

US and China engaged in fierce battle: markets slump, high-tech stocks bruised, gold stands tall

Abra una cuenta de operaciones Abra una cuenta demo

Global markets are once again in turmoil: the escalation of the trade war between the US and China has slammed stock markets, gold is breaking records, Meta is mired in an AI scandal, and Apple risks losing up to $40 billion due to the tariff hit on the supply chain. This article analyzes the key events and ideas on how to turn turbulence into profit.

New tariff blow: stock markets fall, volatility rises, forecasts darken

Stock markets have once again entered a turbulence zone—and it seems this is just the beginning. US President Donald Trump, staying true to his stance on trade aggression, has approved a combined tariff rate of 104% on Chinese imports. The new tariff package came into effect last night and has become one of the most radical decisions in the history of US trade policy. As expected, the markets did not remain indifferent. Nervousness took over Wall Street, and global investors are urgently revising their positions.

Yesterday, the S&P 500 closed below the psychologically important 5,000-point mark—its first time in almost a year, losing 1.6% on the day and finishing at 4,982.77. Analysts say this no longer looks like a short-term correction but rather a gradual, increasingly evident drift toward a bear market. Especially considering that over the last four trading days, the S&P 500 plummeted more than 12%, and the combined capitalization of the companies in the index shrank by nearly $6 trillion, marking the largest 4-day decline in the benchmark's history since the 1950s.

The Nasdaq Composite, traditionally more sensitive to political upheavals and rhetoric surrounding technology, also dropped—down 2.15% for the day, with the tech sector at the heart of the panic sell-offs. The Dow Jones Industrial Average lost 0.84%, which seems modest in comparison to the rest of the market, but there is still a steady downward trend. Futures on US indexes by Wednesday morning showed further declines, reflecting the prevailing mood of fear and uncertainty.

Asian markets picked up the panic wave: Japan's Nikkei plunged by 3.8%, and European futures entered the red zone before the opening, with EUROSTOXX 50 signaling a 3.7% drop.

As we can see, volatility has not just returned—it has made a full-scale comeback worthy of a red carpet. The VIX fear index surged to its highest levels since the spring of 2020, and trading volumes on stock exchanges neared levels seen during the COVID-19 hysteria. Over 23 billion shares changed hands in one day, indicating panic not just in words but in numbers: markets fled, and in different directions at the same time.

What has changed?

Not the numbers, not the models, and not even the macroeconomics. The tone has changed. The White House made it clear: the new tariffs are not a negotiating lever but a political statement. No more "if you—then we." Now there is just "we." The US Trade Representative, Jameson Greer, confirmed: no exceptions, no concessions, no "let's discuss." China, for its part, has once again promised to "fight to the end," but this time with specifics: symmetrical measures that could hit key US sectors.

The scenario repeats itself: first, the market exhales, hoping for reason and common sense; then—a cold shower. US Treasury Secretary Scott Bessent's comments early on Tuesday supported the appearance of constructiveness, saying that the doors for dialogue were open. But by mid-session, it was clear—there were no doors, just a concrete wall. This is not diplomacy; this is a front.

What's especially painful for the market is that it is now literally drifting on headlines. Strategies based on fundamental analysis are increasingly losing out to a well-timed insider tip. As analyst Khu Nguyen aptly noted, "volatility today reflects total misunderstanding, not only of the rules but of the game itself." No algorithm knows what the next tweet will be: talks with Beijing or new industry tariffs. This is no longer a market; it's an interactive newsfeed with a price tag.

Unsurprisingly, strategists have rushed to rewrite their forecasts.

BlackRock sharply downgraded its rating for US stocks to "neutral," citing increased trade pressure and rising systemic risks. Goldman Sachs stated that the current wave of sell-offs shows all the signs of transitioning into a full-blown cyclical bear market. The rhetoric changed overnight: from "local volatility" to "possible shift in the economic paradigm."

For investors, this is, of course, no gift. But, paradoxically, it's in such moments that the best ideas emerge—not in the quiet calm, but against the backdrop of market thunder. The strategies now require not blind optimism, but surgical precision.

Those who are used to working with news-driven impulses—welcome to headline territory. Here, it's not about who knows more, but who reacts faster. Priority goes to ultra-liquid instruments, breakout strategies, and strict risk management.

Investors trading on weekly and monthly horizons should abandon the idea of "buying the dip"—it's better to enter gradually, during corrections, and in sectors less affected by tariff turbulence. Semiconductors? Not yet. Domestic retail or infrastructure? Why not.

For those thinking in terms of years, the approach to diversification needs to be reformatted. The global model of "produce everything in Asia, sell in the US" is cracking. The winners will be those whose value chain is local, margins are stable, and demand is independent of external politics.

What can be said for sure: the market has entered an era of geopolitical pricing. If in the past, the price of an asset was set by earnings reports, now it is dictated by directives, tariff schedules, and leaks from the White House. Trump, in essence, has turned economic policy into a reflexive experiment. And the markets are the test subjects.

Betting on tariffs is not just a move toward revising trade rules. It's a rejection of predictability as a concept. Which means that standard risk analysis models are becoming a thing of the past, giving way to hybrid scenarios where economics, politics, and psychology are mixed into one cocktail. And those who haven't adapted will be forced to revisit their portfolios... at new prices.

Gold rush: yellow metal soars again

After a brief pause, gold has once again reminded everyone who's in charge. On Wednesday morning, the price on the spot market confidently broke the $3,000 per ounce mark, as if to say, "Correction? Never heard of it." What triggered this new surge in the "yellow safe haven," how similar (or different) is the current rally to the 1980s gold rush, and what should we expect from gold moving forward? Let's break it down before it gets too late to enter the market.

A new round in the trade war between the US and China has once again reminded the markets that the word "stability" should only be written in quotes. Yesterday, the White House approved a combined tariff rate of 104% on Chinese products, and this isn't just a historic high – it's a loud signal: the global trading system is barely holding on. In Beijing, there was no time for diplomatic niceties; they accused Washington of economic blackmail and promised to "fight to the end." A familiar scenario: tariffs rise, rhetoric intensifies, and markets get tense.

And, as per the textbook, the dollar weakens, yields fluctuate, and gold rises. By morning, the spot price had once again surpassed $3,010.39 per ounce. Since the beginning of the year, the metal has gained 16%, continuing the impressive upward trend of 2024, when it rose by 27%. As analyst Tim Waterer notes, despite short-term fluctuations, gold is still heading toward new historic highs, and it doesn't seem like it's in any rush to stop.

The parallels to 1980 are almost inevitable. Back then, gold was storming records amid the Iranian Revolution and the oil crisis, reaching $850 per ounce, which is roughly equivalent to $3,486 today. But as James Steel of HSBC points out, today's rally is much deeper in meaning and potentially much more stable. While the situation back then stabilized through international coordination, today we're witnessing the opposite: the world is splitting into economic and political blocks, trade unions are crumbling, and geopolitical conflicts are multiplying faster than the Fed's rate forecasts.

The situation is further complicated by the dollar's status as a global anchor coming into question. After Western sanctions froze half of Russia's reserves, central banks across the "non-Western" world began rapidly increasing their gold holdings as a hedge against the possibility that their currency assets might one day "stop working." This reevaluation of risk translated into real money: gold ETFs saw the largest inflow in three years in the first quarter of 2025, despite rising government bond yields, which typically play against the metal.

An additional factor driving gold's growth is the Fed's policy. The regulator continues to maintain a cautious tone, navigating between inflation and recession risks. This means that gold remains in the game as protection against both. And it's not just staying in the game—it seems to be stepping up to the front lines.

Amid this backdrop, forecasts are becoming increasingly ambitious. Michael Widmer from Bank of America raised his target price for gold to $3,063 in 2025 and $3,350 in 2026, but emphasized that $3,500 is no longer a fantasy—it's a very real possibility. According to him, for gold prices to fall, we would need a return to global stability, the restoration of confidence in the dollar, and the disappearance of trade war threats. In other words, a change of era. And since none of that is expected anytime soon, gold remains not just a safe haven, but also a litmus test for the new world order.

Therefore, this current rally isn't a speculative bubble, but rather a market diagnosis: a systemic crisis of trust, de-dollarization, world fragmentation, and a search for protection against a future that doesn't inspire optimism. However, for traders, this isn't the end of the world, but rather a set of tools.

Short-term speculators can catch pullbacks and take advantage of high volatility—just don't forget the stop-losses, as gold can rise rapidly but fall just as fast. Medium-term investors can build positions during pullbacks. As long as the trend remains stable and risks persist, gold looks like an attractive defensive asset. Long-term investors may consider gold as insurance against deeper processes, from erosion of trust in the dollar to the collapse of the old globalization model.

Apple on the brink: the company may lose up to $40 billion due to tariffs

Earlier this month, Apple found itself at the center of a new trade drama: Donald Trump's tariff attack hit China, Vietnam, and India—countries that are central to Apple's production network. In this article, we will discuss how the market reacted to this, what risks now loom over Apple, and what opportunities this opens for traders.

Recall that last week, the White House unveiled a new trade tariff package that affected several Asian countries, including China, Vietnam, and India—three key links in Apple's production chain. These measures were a continuation of Donald Trump's protectionist agenda and immediately triggered a nervous reaction from the markets. Apple, as one of the main beneficiaries of globalization, found itself under crossfire.

The market reacted to this new tariff volley in the classic Wall Street way: first, sell, then think. Apple's shares plummeted by 19% in just three days, marking its worst decline since 2001, with the company's capitalization shrinking by $637 billion, and the VIX on Apple shares spiking to a four-year high.

The additional blow to Apple came with yesterday's decision from the White House: the Trump administration approved a combined tariff rate of 104% on Chinese products. For Apple, whose supply chain is deeply tied to China, this means increased costs, margin compression, and a direct threat to profits. It's no surprise that on Tuesday, Apple's shares fell by more than 5%, bringing the total drop over the past four sessions to 21%—the worst 4-day drop since the 2008 global financial crisis.

Apple is trapped: if the company tries to pass on the cost increases to consumers, demand will drop; if it decides to cut costs, profitability will suffer. There's almost no room to maneuver, grimly summarizes analyst Anthony Saglimbene.

However, despite the obvious hit, many analysts are not yet ready to bury the company. There are several reasons:

Fundamentals remain strong: Free cash flow and a large share buyback program give Apple more breathing room than most competitors.

The oversold condition has reached a critical minimum: The 14-day RSI dropped below 23, something that hasn't been seen in nearly a decade.

Apple shares are now cheaper compared to expected profits, the lowest valuation in two years.

It's no surprise that amidst the panic, optimists and opportunity hunters have emerged. "Now that the excess froth has been removed from the shares, everything looks much more interesting," says analyst Andrew Zamfotis.

Nevertheless, the main stumbling block remains the fate of the tariffs. If the Trump administration decides to ease them, as it did during his first term, we could see a rally that wipes out the recent plunge. But if the trade war continues, it will be, as market strategist Daniel Ives put it, "an economic Armageddon for tech giants."

In theory, Apple was preparing for such a scenario: the company has been trying for years to reduce its dependence on China, moving some production to Vietnam and India. But in practice, diversification unexpectedly became not a savior, but a new vulnerability, as these countries also came under the tariff attack. So, the "Plan B" was hit just like "Plan A."

According to Rosenblatt, Apple's potential costs from the new tariffs could reach $40 billion. If the company doesn't pass these costs onto consumers, it will lose almost a third of its profit. Economist Howard Chen suggests that shares could fall another 10%, and in the worst-case scenario, "everything that can be lost, will be."

Against this backdrop, investors are holding their breath in anticipation of Apple's next big event: the quarterly report due on May 1. According to analyst Pat Burton, this release could become a turning point for the market, either signaling a reversal or confirming the continued decline.

As of now, analyst revisions are relatively cautious: consensus on profits for 2025 has dropped by just 0.7%, and revenue estimates have decreased even less. But all of this could change in an instant if the report signals troubling signs.

So, what do we know today:

Apple shares have fallen but remain technically oversold.
The fundamental outlook is intact, but the risks are significant.
The tariff factor is the main trigger determining short- and medium-term dynamics.
The market is awaiting the May 1 report, which could either signal a reversal or accelerate the decline.

For traders, all this creates an interesting window of opportunity. Those working in the short term should pay attention to technical signals: the relative strength index has fallen below 30, which historically often precedes an upward reversal. However, without clear stop-losses, entering is risky—volatility is too high. Medium-term investors should consider gradually building a position, step by step, taking into account the ongoing risks. As for bearish players, those who don't believe in a quick reversal can still find entry points, especially if the trade war drags on.

Today, Apple is not just a tech company, but a barometer of global expectations. If it finds a way to adapt to the new reality, it will set a positive tone for the entire sector. If not, we're in for continued technical corrections, and perhaps, not a soft one.

Meta at the center of a scandal: why new AI models are being accused of manipulation and what to expect next

Amid the raging tariff war between the US and China, which has already cost global markets trillions of dollars in capitalization, investors in Big Tech have a new headache. If anyone hoped that Meta would stay out of the crossfire for at least a while, unfortunately, that's not the case—now the company is embroiled in an information firestorm. This time, it's not Trump, but artificial intelligence. Specifically, Llama 4, Meta's newest line of AI models, which was supposed to strengthen the company's position in the generative AI race, instead added new problems—both reputational and market-related.

The internet buzzed this week after an anonymous post appeared on a Chinese social media platform from an alleged former Meta employee. The post claimed that the company artificially inflated the performance metrics of its Llama 4 Maverick and Scout AI models by training them on pre-known test sets while simultaneously masking their weaknesses.

Meta's Vice President for Generative AI, Ahmad Al-Dahle, quickly issued a denial. In a statement on X (formerly Twitter), he called the accusations "false" and categorically rejected the notion that the models were trained on test sets. It seemed like the reputation crisis had been localized. But it wasn't over yet.

Users and researchers started reporting significant discrepancies in the models' performance depending on the cloud provider. Some received smooth, logical responses, while others got fragmented and inconsistent ones. Meta explained this by attributing it to the rapid rollout of the new models, which were still being optimized, and promised to fix the bugs in the coming days and improve integration with partners. But that wasn't all.

The situation was further complicated by the fact that the model demonstrated on the LM Arena platform, designed for manual AI response evaluation, was not the same model available to the general public. This raised inevitable questions: how valid is the comparison of performance metrics if users are getting a different version of the model?

Researcher observations only fueled suspicions: the benchmark version of the model had more emojis, longer and neater answers, and a noticeably softer tone. In reality, users were receiving a much "rougher" version. Essentially, Meta showcased a polished prototype and then delivered a draft version. The company explained this by saying they wanted to "demonstrate the potential of dialog optimization," but for the market, this explanation sounded like a veiled admission that the model had indeed been tailored for testing.

As a result, the company found itself facing a serious challenge. Questions about the transparency of benchmarks are not just an internal issue—they're a fundamental trust factor for developers, corporate clients, and investors. As the situation shows, in an era where every model is vying for shares in the rapidly growing AI market, even a hint of dishonesty can be costly—literally.

What does all this mean for Meta? In the short term, it's another blow to the brand's already fragile perception. In a time when investors and clients seek predictability, such stories erode the trust that the AI market relies on. In the medium term, this poses a challenge to the entire benchmarking approach in the industry. If each major player starts showing "showcase" versions of their models, comparing them becomes pointless, and trust in the numbers will quickly devalue.

And all of this is happening against the backdrop of tightening tariff policies, stock market turbulence, and Meta's clear bet on AI as a new growth driver after stagnating user products. It turns out that the margin for error is minimal, and the cost of silence is too high.

However, paradoxically, there are opportunities for traders in this confusion. Firstly, the informational wave provides a chance for speculators: the rise in volatility around Meta's stock can be used for trading on the movements. Secondly, those who focus on news dynamics may catch the market's reaction to management statements: if there are admissions of mistakes, apologies, or a roadmap for improvements, this could trigger a short-term rebound. On the other hand, if Meta chooses a defensive strategy, the market could punish it for that.

Finally, for long-term investors who believe in Meta's potential in AI, the current situation could present an opportunity for partial entry. But with one caveat: it's best to do so only if the company promptly and transparently clarifies its testing and communication policies.

Use the current market situation to your advantage—start earning from Meta's stock by opening a trading account with InstaForex! And to always stay connected with the market, download our mobile app!