US markets sank on Friday after President Trump reignited trade war tensions, sending a jolt through equities. The Dow Jones fell over 250 points, the S&P 500 extended its losing streak to four sessions, and the Nasdaq slid 1% as traders digested a barrage of tariff threats. In a pair of Truth Social posts, Trump proposed a 25% tariff on Apple for offshore iPhone production and called for a sweeping 50% duty on the European Union. The renewed uncertainty hit major stocks and sectors, undermining a six-week rally and leaving investors reassessing expectations for the months ahead.

Key Takeaways:

  • Dow Falls as Trade Rhetoric Escalates: The Dow Jones Industrial Average shed 256.02 points, or 0.61%, to finish at 41,603.07. The renewed trade threats from Donald Trump sending the blue-chip index lower for a fourth time this week and pushing weekly losses beyond 2%.
  • S&P 500 Extends Losing Streak: The S&P 500 dropped 0.67% to close at 5,802.82, posting its fourth straight daily decline and ending the week back in negative territory for the year. 
  • Nasdaq Drops as Apple Weighs: The Nasdaq Composite tumbled 1% to 18,737.21, dragged lower by a 3% slide in Apple shares after Trump warned the company could face a 25% tariff on iPhones made outside the US The tech-heavy index was hit hardest as investors repriced risks tied to global manufacturing.
  • Europe Slides on Tariff Shock and Bond Rally: European markets came under pressure after Trump called for a sweeping 50% tariff on EU goods. France’s CAC 40 plummeted 1.65%, Germany’s DAX lost 1.54%, and Italy’s FTSE MIB dropped 1.94%, while the Stoxx Europe 600 index shed 1%. The UK’s FTSE 100 managed a weekly gain of 0.38%, supported by resilience in retail shares. Bond yields across the eurozone declined as investors moved into safe-haven assets. Germany’s 10-year bund yield dropped 8 basis points to 2.56%, while French and Italian yields fell 5 basis points. Swiss bond yields slid 12 basis points. In macro data, German GDP for Q1 was revised higher to 0.4% quarter-on-quarter, the strongest growth since 2022. UK retail sales rose 1.2% in April, marking a fourth consecutive monthly gain helped by sunny weather and stronger household sentiment.
  • Asia Mixed as Inflation and Diplomacy Drive Divergence: Asia-Pacific markets ended mixed on Friday as investors parsed a flood of data and signals of US-China diplomatic engagement. Japan’s Nikkei rose 0.47% and the Topix gained 0.68%, supported by stronger-than-expected core inflation of 3.5%. South Korea’s Kospi was flat while producer prices eased. Australia’s ASX 200 edged up 0.15%. Hong Kong’s Hang Seng and China’s CSI 300 traded flat. Singapore’s core inflation rose 0.7% year-on-year, topping expectations. A call between US and Chinese officials helped stabilise sentiment across the region, though inflation divergence and tariff concerns remain in focus.
  • Oil Logs Weekly Decline on Supply Fears: Brent crude rose 0.82% to $64.97 while WTI added 0.80% to $61.69 on Friday, but both benchmarks posted weekly losses of over 1%. Traders are bracing for another OPEC+ supply hike in July, with expectations of a 411,000 barrels per day increase. Reports suggest the alliance could fully unwind its 2.2 million barrels per day voluntary cut by October. 
  • Treasury Yields Ease from Highs: Yields retreated Friday after Trump’s tariff comments triggered safe-haven flows. The 10-year yield dropped 4 basis points to 4.509% while the 30-year yield slipped to 5.031%. Long-end yields had risen earlier in the week on deficit concerns linked to Trump’s budget proposal. 
  • Housing Strength Meets Labour Market Caution: April new home sales surged 10.9% to a seasonally adjusted annual rate of 743,000 units, marking the highest level since February 2022. Builders cut prices to attract buyers, bringing the median price down 2% year-on-year to $407,200. Despite the rebound, unsold inventory remains high and elevated mortgage rates continue to pose a headwind. Meanwhile, initial jobless claims fell by 2,000 to 227,000 for the week ended May 17, slightly below expectations of 230,000. Continuing claims rose by 36,000 to 1.903 million, suggesting it is becoming harder for the unemployed to find new roles. 

FX Today:

  • EUR/USD Rebounds Toward 1.1400 as Momentum Builds: EUR/USD advanced 0.74% to settle at 1.1362 on Friday, continuing its rebound from the mid-May lows and logging a third straight daily gain. The pair bounced earlier this week from strong support around 1.1150, a zone reinforced by the rising at 1.1149. Price action has since remained firm, with daily closes near their highs and buyers grinding steadily toward the 1.1400 resistance. That level has capped several rallies in recent weeks but is now under pressure. The 100-day and 200-day SMAs, positioned at 1.0874 and 1.0801 respectively, remain well below, confirming a long-standing uptrend. If EUR/USD closes above 1.1400, the March swing high at 1.1550 becomes the next upside focus. Immediate support lies at 1.1250, followed by the 50-day average. 
  • GBP/USD Breaks Above 1.3500 to Hit 2025 High: GBP/USD surged 0.86% on Friday to close at 1.3533, reaching its highest level of the year and clearing the significant 1.3500 resistance barrier. The move marks a bullish breakout from a multi-week consolidation phase, powered by consistent higher lows since April. Technical structure is supportive, with the 50-day SMA at 1.3165 now turning higher, while the 100-day and 200-day SMAs at 1.2850 and 1.2888 remain well below. If momentum continues, bulls may target the 1.3700 zone next. Any pullback toward 1.3350 or the 1.3200-1.3165 support band is likely to be seen as a buying opportunity unless there’s a material shift in dollar sentiment or macro outlook.
  • USD/CAD Slides Sharply Below Key Support: USD/CAD dropped 0.95% to end the week at 1.3724, breaking decisively below a critical horizontal support level near 1.3800. The pair has now posted its sharpest weekly loss since early April and confirmed a structural shift away from the uptrend that had been in place since October. This week’s move snapped a rising trendline and brought price action into a more bearish configuration. The 50-day SMA at 1.4016 and the 100-day at 1.4181 are both trending lower, while the 200-day at 1.3629 is the next major level to watch. A sustained break beneath the 200-day average would likely accelerate selling pressure, with next support near 1.3600 and 1.3450. Resistance remains stacked at 1.3800 and 1.3900. 
  • AUD/USD Edges Up to 0.6495 as Bulls Press Higher: AUD/USD rose 1.35% on Friday to close at 0.6495, its highest level since early March. The pair extended its rally to four straight sessions and broke above the 200-day SMA, which stands at 0.6452. This average has repeatedly capped rallies in recent weeks, but Friday’s close above it may signal a shift toward more sustained upside. Momentum has been gradually building as higher lows form above key support levels. The 50-day SMA at 0.6335 and the 100-day at 0.6308 are now offering dynamic support. Price also closed near the session high, indicating continued demand. If buyers can maintain control above 0.6500, the next targets come into view at 0.6600 and potentially 0.6650. Immediate support lies at 0.6400 and then 0.6340. 
  • Gold Surges to $3,361 as Buyers Reclaim Control: Gold close at $3,361, advancing 2.01% and breaking through the key resistance level of $3,350. The rally came after several days of consolidation near the 50-day SMA, at $3,199. That average acted as a springboard for renewed bullish momentum, pushing gold back into the upper half of May’s range. Price is well supported above the 100-day and 200-day SMAs, positioned at $3,008 and $2,811 respectively. The structure remains bullish, with higher lows and broad-based strength returning to the metal. Immediate resistance lies at $3,400, while further gains could bring April’s peak near $3,500 back into focus. Key support is layered at $3,300 and $3,250, with the 50-day average offering additional protection.

Market Movers:

  • Booz Allen Cuts Jobs Amid Spending Slowdown: Shares fell 15% after the firm announced 2,500 layoffs, or 7% of its workforce, citing a decline in federal spending. Management warned of continued pressure in the first half of the fiscal year.
  • Intuit Jumps on Strong Earnings: The stock rose 7.5% after reporting a 15% revenue increase to $7.8 billion. TurboTax and QuickBooks led the beat in its fiscal third quarter.
  • Apple Falls After Tariff Threat: Shares slid 2.6% after Trump said iPhones made abroad would face a 25% tariff. Apple’s heavy reliance on China manufacturing raised investor concerns.
  • Nuclear Stocks Pop on Trump Policy: Oklo surged 24%, NuScale gained 14.5%, and Cameco rose 9% after reports Trump will sign orders to boost nuclear energy.
  • Deckers Drops on Lack of Guidance: Shares tumbled 19% as the Ugg-maker declined to issue full-year forecasts, blaming macroeconomic and trade policy uncertainty.
  • Wolfspeed Plunges on Bankruptcy Reports: Wolfspeed sank 13% following reports it may file for bankruptcy within weeks. Investors reacted to rising financial distress signals.
  • Workday Slumps on Cautious Forecast: Shares of Workday dropped 11.8% after the company’s second-quarter subscription revenue forecast of $2.16 billion came in line with expectations. 

After a steady rally fuelled by hopes of easing trade tensions, Friday’s sharp reversal reminded investors how quickly sentiment can shift. Trump’s renewed tariff threats injected fresh volatility into global markets and raised questions about the durability of recent gains. While some dismissed the comments as political posturing, the reaction across equities, bonds, and currencies suggests markets are taking no chances. With trade once again dominating headlines, attention will now turn to next week’s OPEC+ meetings and fresh economic data for clues on how global policy and demand dynamics may evolve.