21 April 2025 5:13pm
5:13PM Talks over trade deals and tariff-driven market turmoil will likely dominate the World Bank and International Monetary Fund’s (IMF’s) summit in Washington this week, writes Pui-Guan Man.Finance ministers and policymakers are preparing to meet for the first spring meetings since Donald Trump became US president for the second time. Delegates will include chancellor Rachel Reeves, who will be hoping to cut a trade deal with the US during her trip to Washington.The IMF warned last week that Mr Trump’s trade war could trigger a global financial meltdown, underlining its potential to disrupt the financial system. It cautioned that geopolitical risk was at its highest level in many decades.
Kristalina Georgieva, the managing director of the IMF, had previously flagged that Mr Trump’s tariffs “clearly represent significant risk” to the global economy.
4:37PM Paul Ashworth, chief North America economist at Capital Economics, said if Trump fired Jerome Powell it could spell the end of the Federal Reserve.
“If President Donald Trump does fire Fed Chair Jerome Powell, we suspect that the initial market reaction might not be disastrous, as long as Trump quickly lines up a relatively-qualified replacement, like Kevin Hassett or Kevin Warsh.”
He adds:
“In all likelihood, however, firing Powell would just be the first step in dismantling the Fed’s independence. If Trump is set on lowering interest rates then he will have to fire the other six Fed Board Members too, which would trigger a more severe market backlash, with the dollar falling and rates at the long end of the yield curve rising.”
4:32PM The Nasdaq 100, the tech-heavy index exposed to the Magnificent 7 stocks, is now down nearly 3pc led lower by Tesla.
The closely watched index is trading 2.86pc lower than Thursday’s close at 15,822 points over fears about Donald Trump’s economic policies.
Tesla’s near-7pc fall is driving down the Nasdaq, with all of the other Magnificent 7 stocks also in the red.
Apple fell 3.25pc, Google-owner Alphabet was down 2.85pc and Meta fell 3.63pc.
4:24PM Bitcoin has made its biggest gains since Donald Trump unveiled sweeping tariffs in early April as the dollar fell, Pui-Guan Man writes.
The world’s largest and best-known cryptocurrency rallied 4.5pc to more than $88,200 (£65,700) on Monday, as the US dollar dropped to a three-year low on the back of Donald Trump’s feud with Federal Reserve chair Jerome Powell.
The move is the largest move since Mr Trump unveiled his tariff package on April 2.
Ethereum, the second biggest cryptocurrency, also climbed to around $1,628.
3:55PM Tesla shares slumped more than 6pc after Barclays warned that Elon Musk’s group will make fewer vehicles than expected.
The electric vehicle giant saw shares fall by up to 6.7pc to $224.29 on Monday after the bank’s analysts warned of lower production volumes.
Barclays said it now expects Tesla to produce 1.69m vehicles this year, down 5pc from a year ago.
It also warned of slower demand because of Mr Musk’s association with Donald Trump.
“While it’s unclear to what extent Tesla has suffered global brand damage from Elon Musk’s political activities, we believe there was at least some impact in (the first quarter),” it said.
Barclays cut its price target from $275 to $325.
3:06PM Donald Trump has branded Fed chairman Jerome Powell “a major loser” as he ramped up his assault on the central bank chief.
The US President said on social media that Mr Powell, head of the Federal Reserve, had been too slow to cut interest rates, and urged him to undertake preemptive cuts.
“With Energy Costs way down, food prices (including Biden’s egg disaster!) substantially lower, and most other “things” trending down, there is virtually No Inflation,” he said on his platform Truth Social
“Europe has already “lowered” seven times. Powell has always been “To Late,” except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?”
2:50PM Beijing has threatened to punish countries that “appease” Donald Trump in trade deals while hurting China’s interests.
China’s commerce ministry said it will firmly oppose any nation striking a deal at its expense, and “will take countermeasures in a resolute and reciprocal manner”.
The warning follows reports that the US president will pressure nations, including the EU and UK, into restricting their trade with China in exchange for tariff exemptions.
China has retaliated to Mr Trump’s tariffs of 145pc by hitting US imports with levies of 125pc, effectively halting trade between the two countries.
The US president paused the wave of tariffs he imposed on all countries on “liberation day” April 2, with the exception of China, singling out the world’s second largest economy.
2:49PM The dollar slumped to its lowest level in three years after Donald Trump’s economic adviser suggested that the US president is seeking to oust the chairman of the Federal Reserve.
Mr Trump’s stinging rebukes of Jerome Powell caused the dollar to fall 1.1pc on Monday to a three-year low against a basket of six major currencies as investors worried over the independence of America’s central bank.
Every G10 currency gained against the dollar, with the pound rising 0.6pc to $1.33, while gold also rallied to a fresh record high, surging above $3,385 an ounce. Investors have been piling in to safe haven assets amid fears over the US president’s economic policy and ongoing uncertainty related to the trade war.
Meanwhile, the dollar tumbled to a 10-year low against the Swiss franc and the euro surged to $1.15 – its highest level since November 2021.
Mr Trump has repeatedly criticised Mr Powell, whom he appointed to chair the Fed in 2018, and suggested he should be removed for failing to lower interest rates more quickly.
2:39PM US stock markets slumped on Monday over fears Donald Trump could remove the chairman of the Federal Reserve.
The S&P 500 fell 1.2pc at the open to touch 5,217.83 while the Nasdaq declined 1.4pc led lower by the Magnificent 7 tech stocks to 16,015.31.
Tesla fell 5.1pc to while Nvidia fell 3pc.
US markets have been rocked by fears that the head of the Federal Reserve, Jerome Powell, could be remove from office by Mr Trump.
Markets in the US were closed on Friday for a public holiday, making Monday the first chance for investors to react to news the President was exploring the plans.
Tariff wars have already alarmed markets, with all major US indices losing $10 trillion in the weeks following Mr Trump’s “liberation day” tariffs.
