Global equities slide while haven assets soar amid rising trade war fears and shifting central bank signals
Gold surged to a historic high above $3,300 an ounce on Wednesday as global equity markets buckled under intensifying U.S.-China trade tensions and new curbs on high-tech exports. Meanwhile, UK inflation cooled unexpectedly to 2.6%, injecting fresh pressure on the Bank of England to consider interest rate cuts — even as clouds gather on the horizon.
The selloff in risk assets accelerated after the U.S. announced sweeping new restrictions on chipmaker Nvidia’s sales to China late Tuesday, reigniting fears of a tech cold war. The Nasdaq opened sharply lower, with similar losses rippling through European and Asian markets.
Gold’s Meteoric Rise
Spot gold jumped as much as 2.7% in early trading to breach the $3,300 mark — a level never seen before — before settling slightly lower by mid-morning. The rally is being fueled by investors seeking refuge from mounting geopolitical volatility and an increasingly uncertain monetary policy outlook.
Analysts cite a confluence of forces behind bullion’s momentum: hawkish saber-rattling between Washington and Beijing, central banks stockpiling gold at record rates, and growing bets that global interest rates will fall faster than previously expected.
UK Inflation Cools, But For How Long?
Closer to home, Britain’s Office for National Statistics said inflation slowed to 2.6% in March, down from 3.1% in February, driven by moderating food and fuel prices. The number beat expectations and may embolden the Bank of England to begin easing rates — but economists warn the relief may be fleeting.
“The BoE is stuck between a softening domestic economy and a very loud global storm,” said Arvind Shah, economist at Europa Macro. “They may cut — but they’ll be cutting into a headwind.”
Clothing prices rose as spring fashion hit stores, and housing costs continued to rise — albeit at a slower pace. UK house price inflation picked up slightly, but rental growth showed signs of cooling.
Chip War Escalates
At the heart of the market panic is the Biden-Trump consensus on restricting China’s access to cutting-edge technology. On Tuesday night, the U.S. Department of Commerce barred Nvidia from selling advanced AI chips to Chinese firms, citing national security concerns.
The move prompted an immediate response from Beijing, which imposed a 125% retaliatory tariff on a wide array of U.S. imports. Compounding the uncertainty, China unexpectedly appointed a new trade negotiator, Li Chenggang — a veteran of Trump’s first-term trade battles — signaling a likely hardline stance in the next chapter of U.S.-China economic warfare.
“Li’s appointment is a signal — not of peace, but of preparation,” said Li Ming, a trade policy scholar in Hong Kong. “This is Beijing digging in.”
Markets in Retreat, Policy in Flux
The fallout has been swift and widespread.
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FTSE 100 fell 1.8%
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DAX dropped 2.2%
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Hang Seng plunged 3.6% overnight
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Nasdaq futures slumped 1.5% in premarket trading
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Bitcoin, often seen as digital gold, jumped 4.9% to $78,230
With central banks already jittery, today’s market reaction further complicates the messaging. The European Central Bank is walking a tightrope between inflation control and growth support. In the U.S., Fed officials are staying cagey — weighing their inflation mandate against a possible global downturn.
What’s Next?
Investors are bracing for more volatility as both the economic and political narratives shift.
Xi Jinping, currently touring Southeast Asia to strengthen regional trade ties, has refrained from commenting on the chip export bans but is expected to address the issue during his upcoming stop in Cambodia.
Meanwhile, President Trump — in a campaign rally this morning — doubled down on his China strategy. “We’re not backing down. They took our technology, and we’re taking it back,” he said in Cleveland.
