Market navigator: week of 21 April 2025
Global markets react to trade tensions with tech stocks declining while gold hits a record $3357 amid safe-haven demand and recession fears.
Written by
Fabien Yip
Market Analyst
Summary
- What Happened Last Week: Semiconductor industry faces export curbs. China's Q1 GDP grew 5.4%. Dollar weakened as gold hit historic high. ECB cut rates again. Mixed Q1 earnings results.
- Markets in Focus: Tariff concerns drove tech selloff with Nasdaq down 2.3%. Trading volumes plunged amid policy uncertainty. Hang Seng rebounded on stimulus hopes. Gold surged to $3357 on safe-haven demand and recession fears.
- The Week Ahead: Markets focus on trade talks. Key releases include global PMI data with earnings from Tesla, Alphabet, and Boeing.
What happened last week
- Headwinds for the semiconductor industry: In addition to the sectoral tariffs expected to take effect in one to two months, the industry faces new curbs on exporting advanced chips like Nvidia's H20 to China. More company leaders, including ASML, have expressed concerns over trade policy uncertainties. Nasdaq 100 fell 2.3% this week.
- China's economic growth: Q1 GDP grew 5.4% year-on-year (YoY), beating expectations. Strong retail sales growth may reflect early signs of government policy effectiveness. Exports surged 12.4% YoY as overseas buyers stockpiled before extreme US tariffs took effect.
- Weakening dollar: The dollar index continued to trade below 100 last week as investors lost confidence in US assets. Most major currencies appreciated against the dollar, with AUD/USD making the largest gain, recovering from a five-year low to 0.638. Gold saw strong safe-haven demand, breaking a fresh historic high at $3357.
- ECB cuts: The European Central Bank (ECB) made its third 25 basis point (bp) rate cut this year, reducing the deposit rate to 2.25%. The ECB shared concerns about the impact of trade tensions on the already slowing economy.
- Q1 earnings: Goldman Sachs and Bank of America posted strong earnings driven by the boost in equity trading business. TSMC beat estimates with a 60% YoY growth in net income and saw resilient demand for advanced chips despite tariff policies. Netflix share price rose 1% after strong earnings and positive guidance, while UnitedHealth tanked 22% after the health insurer missed estimates and reduced its profit guidance.
Markets in Focus
Trading with caution
Market sentiment remained subdued last week as investors awaited clarity on trade policy developments and sought directional cues from corporate earnings guidance. The S&P 500's daily average trading volume contracted by 40% week-on-week. The tech-heavy Nasdaq 100 declined 2.3%, impacted by semiconductor tariffs, while the Dow Jones Industrial Average fell 2.7%, dragged by UnitedHealth's disappointing results.
Tariff effects are becoming increasingly evident in economic indicators. US retail sales registered a 1.4% month-on-month increase from February, primarily driven by automotive demand as consumers accelerated purchases ahead of anticipated tariff implementation. In his Wednesday address, Federal Reserve (Fed) Chair Powell indicated that monetary policy would remain unchanged for now as the central bank navigates the complex balance between price stability and full employment.
Technical analysis shows the US Tech 100 Index trading along its 20-day simple moving average (SMA) after rebounding from 16,324, now established as a critical support level. The recent recovery has normalised the relative strength index (RSI) to neutral territory, indicating temporary equilibrium between buying and selling forces. A sustainable reversal of the current downtrend would require the index to breach and maintain position above the technically significant 200-day SMA at 20,447. Significant resistance at approximately 20,400 is likely to constrain upward momentum without substantial improvement in global trade relations.
Figure 1: IG US Tech 100 index (daily) price chart
Hang Seng rebounds despite persistent US-China trade tensions
The Hang Seng Index (HSI) halted its losing streak after five consecutive weeks of decline, advancing 2.3% last week. AIA Group led gains with an 8.2% increase, followed by PetroChina (+7.4%), while smartphone lens manufacturer Sunny Optical recorded the largest decline (-6.9%).
US-China trade tensions show no signs of abating. In the latest reciprocal measures, China directed airlines to suspend Boeing jet deliveries while the US initiated an investigation into critical minerals supply chains. The diplomatic standoff persists as President Xi and President Trump each appear to be waiting for the other to initiate formal trade negotiations. Market expectations now centre on enhanced stimulus measures from Beijing following Premier Li Qiang's statements regarding domestic demand stimulation and reinforced support for the property sector.
Technical indicators confirm a trend improvement, validating the optimistic signals we identified in last week's Market Navigator. The index has maintained its position above the 200-day simple moving average (19,920), coinciding with continued momentum enhancement. Our analysis suggests potential for an HSI retracement toward the 22,700 level. However, should the index breach its 200-day moving average support, subsequent price action would likely target the 18,671 level.
Figure 2: Hang Seng Index (daily) price chart
Gold shines as safe-haven rally intensifies
Gold extended its impressive performance trajectory, appreciating over 3% last week and establishing a new record high of $3357 on Wednesday before consolidating around $3330. With year-to-date gains of 27%, gold has outperformed most major asset classes. This rally is primarily attributable to heightened uncertainty surrounding global trade tensions and elevated recessionary risks.
The medium-term outlook remains supported by gold's traditional safe-haven characteristics. Global physically-backed gold exchange-traded funds (ETFs) recorded $21 billion in capital inflows during the first quarter – the second-highest quarterly figure in history according to the World Gold Council. Central banks maintained their acquisition trend with reserves expanding by 24 tonnes in February, marking the 20th consecutive month of net purchases.
Despite robust fundamentals, technical indicators suggest potential overbought conditions following the steep appreciation. With the RSI at 72, a more prudent approach may involve awaiting a price retracement toward $3100 before establishing new positions. For market participants with strongly bullish gold price projections, the 1.618 Fibonacci extension of the 2001-2011 uptrend corresponds to an upper boundary of $3739.
Figure 3: IG Spot Gold (Daily) Chart
The Week Ahead
This week, market participants will focus closely on evolving trade negotiations as global government officials and corporate executives engage with the Trump administration regarding trade policy adjustments. Additional significant economic releases include purchasing managers' index (PMI) data for Australia, UK and US. The quarterly earnings season continues with critical financial disclosures from industry leaders including Tesla, Alphabet and Boeing.
Key macro events this week
Monday 21 April 2025
- 9.00am (HK time) -- China Loan Prime Rate (April): previous 1Y rate at 3.1% and 5% rate at 3.6%
Wednesday 23 April 2025
- 4.30am (HK time) -- US API Crude Oil Stock Change (18 April): previous 2.4M
- 7.00am (HK time) -- Australia S&P Global Manufacturing PMI Flash (April): previous 52.1
- 7.00am (HK time) -- Australia S&P Global Services PMI Flash (April): previous 51.6
- 4.30pm (HK time) -- UK S&P Global Manufacturing PMI Flash (April): previous 44.9
- 4.30pm (HK time) -- UK S&P Global Services PMI Flash (April): previous 52.5
- 9.45pm (HK time) -- US S&P Global Manufacturing PMI Flash (April): previous 50.2
- 9.45pm (HK time) -- US S&P Global Services PMI Flash (April): previous 54.4
Thursday 24 April 2025
- 8.30pm (HK time) -- US Durable Goods Orders MoM (March): previous 0.9%, consensus 1.8%
- 10.00pm (HK time) -- US Existing Home Sales (March): previous 4.26M, consensus 4.12M
Friday 25 April 2025
- 2.00pm (HK time) -- UK Retail Sales MoM (March): previous 1%, consensus -0.3%
Key corporate earnings
Tuesday 22 April 2025
Wednesday 23 April 2025
Thursday 24 April 2025
Friday 25 April 2025
Source: Trading Economics, AASTOCKS, Reuters (as of 18 April 2025)
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