Today, investors focus on the Non-Farm Payrolls labor market report

The Dow Jones Index (US30) fell by 3.98% on Thursday. The S&P 500 Index (US500) lost 4.84%. The Nasdaq Technology Index (US100) closed negative 5.97%. The US indices suffered their biggest one-day drop since 2020 after US President Donald Trump announced comprehensive trade tariffs, sparking fears of an all-out trade war that could lead to a global recession. On Wednesday, President Trump announced sweeping new tariffs, imposing a 10% levy on all imports and significantly raising rates for countries deemed “bad players.” China will face an additional 34% tariffs on top of the 20% duties already in place. For the European Union, Japan, and other countries, tariffs will range from 20% to 49%. The broad tariffs will go into effect on April 5, and the country-specific tariff increases will begin on April 9. Trump has justified the tariffs by citing unfair trade practices and currency manipulation, arguing that the measures will rejuvenate American industry and reduce the national debt.

Today, the US will release important data on the US labor market, namely the Non-Farm Payrolls report. Analysts expect that the number of new jobs (NFP) will amount to 139k (slowing down from 151k last month). The unemployment rate will remain at 4.1%, and average wage growth will be 4.1% y/y, the same as in February. If the data comes out in line with analysts’ expectations, then a slight weakening of the US dollar, moderate support for gold, and a neutral/positive stock market would be the most likely scenario. A dovish scenario will occur if NFP data shows a sharp decline, with unemployment rising. Such data will indicate a sharp cooling of the labor market, and the market will expect a more aggressive Fed rate cut. In such a scenario, the US dollar would weaken sharply, which would have a positive impact on risk assets such as the euro and British pound sterling, as well as on carry trade currencies — the Japanese yen and the Swiss franc.

The Mexican peso strengthened to 19.97 per US dollar, thanks to Mexico’s exemption from the broader reciprocal tariffs announced by US President Trump. The exemption gives Mexico a comparative advantage over major trading partners such as China, the EU, and Japan, which face high duties, reducing trade uncertainty and boosting investor confidence.

Equity markets in Europe mostly fell yesterday. Germany’s DAX (DE40) fell by 3.01%, France’s CAC 40 (FR40) closed down 3.31%, Spain’s IBEX 35 (ES35) Index lost 1.19%, and the UK’s FTSE 100 (UK100) closed down 1.55%. Frankfurt’s DAX Index lost 3% on Thursday, the biggest daily decline since July 2024, as sharp losses in European and global markets. The global sell-off was triggered by US President Donald Trump’s sweeping tariff policy. The new “reciprocal tariffs” include a 10% prime rate on all imports from the United States, a 20% tariff on goods from the European Union, and a 25 percent levy on imported cars. Most sectors saw significant falls, with sportswear giants Adidas and Puma leading the way, falling more than 11%. Banks, technology companies, and auto stocks also came under significant pressure.

The Swiss franc strengthened to 0.87 per US dollar, the highest level since early November 2024, as investors rushed into safe-haven assets in response to US President Donald Trump’s more aggressive-than-expected tariffs on major trading partners. As part of his “retaliatory tariffs” strategy, President Trump imposed a 31% tax on Swiss imports, with the US accounting for a significant 19% of Swiss exports. The new tariffs are likely to hurt economic growth and inflation in Switzerland, increasing the likelihood that the Swiss National Bank (SNB) will cut its discount rate to zero in June, compared to previous expectations of keeping it at 0.25%.

WTI crude oil prices fell to $66 a barrel on Friday, extending a more than 6% drop from the previous session, amid continued pressure from OPEC+ and concerns over global trade. Eight key OPEC+ producers agreed to raise output by 411,000 barrels a day next month, well above the expected 140,000 and faster than planned. The group called the increase “equivalent to three monthly increases.” It comes amid broader market turmoil caused by higher-than-expected US tariffs announced on Wednesday, which prompted retaliatory measures from major economies. While energy imports remain unaffected, fears of a global trade war could slow economic growth and reduce fuel demand.

Asian markets were also trading lower yesterday. Japan’s Nikkei 225 (JP225) fell by 2.77%, China’s FTSE China A50 (CHA50) decreased by 0.13%, Hong Kong’s Hang Seng (HK50) lost 1.52%, and Australia’s ASX 200 (AU200) was negative 0.94%.