trade wars, global volatility, recession fears & gold's record run

what matters now

The markets experienced unprecedented volatility as Trump's tariff policies roiled global trade, with a 145% tariff on Chinese imports and a 90-day pause for other countries triggering a massive 9.5% S&P rally before a sharp reversal. The escalation has sent the dollar to multi-year lows against safe havens, pushed gold to all-time highs above $3,200, and raised recession probabilities to 45%. Meanwhile in India, TCS disappointed with weak Q4 results as companies delay spending decisions, while RBI's new gold lending norms created turbulence for NBFCs like Muthoot Finance. The market's attention now shifts to whether we're witnessing a temporary disruption or the beginning of a fundamental realignment of global trade.

main themes

trump's tariff chaos triggers historic market whiplash

What began as a sharp rally turned into a global selloff as markets grappled with the implications of Trump's tariff announcements. After initially imposing widespread tariffs, Trump declared a 90-day pause for most countries—excluding China, which now faces a staggering 145% tariff. This announcement briefly triggered the S&P 500's largest single-day gain since 2008, surging 9.5% before plummeting 3.5% the following day as reality set in.

The volatility wasn't limited to equities. The U.S. dollar collapsed to multi-year lows against traditional safe havens, falling to its lowest level against the Swiss franc since January 2015. The fallout spread to bond markets, with Treasury yields fluctuating wildly and reflecting a severe loss of confidence in U.S. assets. This marks what analysts are describing as a potential shift in global financial order, questioning the dollar's privileged position as the world's reserve currency.

Hedge funds largely missed the brief rally, having positioned for further declines. Global long/short funds captured just 0.98% of the 9.5% market surge, according to Morgan Stanley, after undertaking the largest net selling in nearly 15 years. The rapid reversal suggests many institutional investors remain deeply skeptical about market stability amid the escalating trade tensions.

Former Treasury Secretary Janet Yellen characterized Trump's tariff policy as a "self-inflicted wound," while Goldman Sachs raised its U.S. recession probability to 45%. The economic implications are profound—analysts estimate that for every percentage point increase in tariffs, U.S. GDP could contract by 0.1 percentage points while simultaneously driving inflation higher, creating the perfect conditions for stagflation.

gold breaks records as investors seek refuge from currency turmoil

Gold has surged to unprecedented heights, reaching a record $3,219.48 per ounce as investors flee to safe havens amid escalating trade tensions and currency instability. This remarkable 22% gain year-to-date reflects both the metal's traditional role as a crisis hedge and growing concerns about the dollar's stability as a reserve currency.

The precious metal's ascent has been particularly pronounced in recent weeks, with prices climbing over 3% in a single session following the announcement of heightened U.S. tariffs. Market analysts attribute this rally to a perfect storm of factors: the weakening U.S. dollar (which has fallen below 100 on the DXY index for the first time since July 2023), expectations for interest rate cuts, and central banks' continued accumulation of gold reserves.

In the Indian market, gold futures hit a fresh peak of ₹93,736 per 10 grams, reflecting both global trends and local demand dynamics. Regional pricing shows significant variations, with Chennai commanding the highest prices at ₹92,270 per 10 grams, while Mumbai and Delhi trade at ₹92,000 and ₹91,840 respectively.

The current gold rush isn't merely a tactical response to market volatility—it represents a deeper reassessment of fundamental currency values in a world where traditional financial relationships are being tested. As one analyst dryly noted, "Gold is the best place to be in the market now," encapsulating the defensive posture investors are adopting amid unprecedented economic uncertainty.

tcs disappoints with q4 results, delays wage hikes amid uncertainty

Tata Consultancy Services (TCS) reported a lackluster fourth quarter, with net profit declining 1.68% year-on-year to ₹12,224 crore, falling short of analyst expectations of ₹12,650 crore. While revenue showed a modest growth of 5.3% to ₹64,479 crore, operating margins contracted to 24.2%, down from 24.47% in the previous quarter.

CEO K. Krithivasan attributed the underperformance to clients adopting a wait-and-watch approach due to global uncertainties, particularly the escalating tariff situation. "We are observing delays in decision-making and project starts with respect to discretionary investments," he noted, with particular weakness observed in retail, travel, and automotive sectors. The company has opted to defer wage hikes—typically announced in April—citing the need for greater clarity on economic conditions.

Despite the immediate challenges, TCS maintained a positive outlook, citing a strong order book of $12.2 billion for the quarter and $39.4 billion for the full year. The company crossed the $30 billion annual revenue milestone in FY25 and announced two significant leadership appointments: Aarthi Subramanian as President and COO, and Mangesh Sathe as Chief Strategy Officer.

The headcount remained essentially flat at 607,979, with just 625 employees added during the quarter, highlighting the cautious approach to hiring. Attrition increased slightly to 13.3% from 13% in the previous quarter. The board recommended a final dividend of ₹30 per share.

Broker reactions were mixed but skewed negative, with several major firms cutting target prices. Kotak maintained a "Buy" but lowered the target from ₹3,900 to ₹3,800, Nomura cut from ₹3,890 to ₹3,490 while maintaining "Neutral," and Citigroup reduced its target from ₹3,210 to ₹3,000, reiterating a "Sell" rating.

rbi's draft gold loan norms shake up nbfcs

The Reserve Bank of India's draft guidelines on gold loans sent tremors through the non-banking financial companies (NBFCs) sector, particularly impacting gold loan specialists like Muthoot Finance, whose shares plummeted 14% over two days. The new regulations aim to standardize rules across all entities offering gold-backed loans, imposing stricter requirements on NBFCs that were previously subject to more relaxed standards than banks.

A key change involves the Loan-to-Value (LTV) calculation for bullet repayment loans, which must now be computed based on the total payment due at maturity and maintained below the 75% cap throughout the loan's tenure. If the LTV exceeds this threshold for more than 30 days, lenders must make an additional 1% provision. This adjustment effectively reduces the maximum loan amount NBFCs can offer against gold collateral, potentially slowing their growth trajectory.

Analysts from Morgan Stanley noted that while the guidelines appear less severe than feared—monthly interest servicing isn't mandated, and bullet loans can be renewed once interest is paid at maturity—the revised LTV definition could significantly impact loan growth. Macquarie emphasized that the regulations are "more punitive for NBFCs" than banks, as the latter already follow most of these requirements.

Despite the immediate market reaction, several brokerages maintained optimistic long-term outlooks. Bernstein reiterated an "Outperform" rating on Muthoot Finance with a target price of ₹2,500, suggesting that higher gold prices could offset some negative impacts. CLSA expressed relief that bullet loans weren't discontinued altogether, while Kotak institutional Equities downgraded Muthoot from "Buy" to "Add" while cutting its target price from ₹2,400 to ₹2,250.

The timing of these regulations is particularly notable as they coincide with gold prices reaching all-time highs, creating a complex dynamic for lenders who benefit from rising collateral values but face more stringent operational constraints.

adani group secures global backing despite ongoing scrutiny

In a notable development for the embattled conglomerate, BlackRock, the world's largest asset manager, has emerged as the primary investor in Adani Group's $750 million bond issuance, committing over $250 million or approximately one-third of the total amount. This significant vote of confidence comes despite ongoing legal challenges facing the group, including a U.S. Department of Justice investigation related to bribery allegations from November 2024.

The bond issuance through Renew Exim DMCC, an offshore unit of the Adani promoter family, will finance the acquisition of ITD Cementation and support other strategic growth initiatives. The 3-5 year bonds attracted participation from five additional institutional investors, predominantly from the U.S. and Europe. This marks BlackRock's first private placement in India's infrastructure sector, underscoring its growing interest in the market despite the controversy surrounding the Adani Group.

Meanwhile, Adani Energy Solutions reported impressive operational metrics for the fourth quarter, with its under-construction order book for transmission projects surging to ₹59,936 crore—a remarkable 3.5x increase from the beginning of fiscal 2025. The company added 140 circuit kilometers to its transmission network and secured two major projects estimated at ₹5,000 crore.

In its consumer-facing business, Adani Electricity Mumbai reduced distribution losses to 4.31% while maintaining an impressive 99.9% system availability. The unit reported an 8% year-on-year increase in sales, totaling 2,413 million units, driven by strong demand in Mumbai's residential and commercial segments.

These developments suggest that despite the clouds of controversy, Adani Group continues to secure financial backing for its ambitious growth plans, particularly in infrastructure development where international investors see long-term potential.

howard marks warns of recession risks as trade tensions escalate

Legendary investor Howard Marks has issued a stark warning about the economic fallout from Trump's tariff policies, comparing them to the unintended consequences of Brexit. Marks characterized the blanket tariffs as potentially leading to economic dislocation and recession, suggesting they could inflict more harm than good on the U.S. economy.

The parallels with Brexit are particularly telling. Marks described both situations as similar to an "own goal" in soccer—a self-inflicted wound that damages one's position. Just as Brexit resulted in significant harm to the UK's GDP, morale, and international relationships, Marks suggests that aggressive tariff policies could trigger a comparable downward spiral for the American economy.

His concerns are echoed by Goldman Sachs, which has placed the probability of a U.S. recession at 45%, primarily attributed to rising trade tensions and the substantial selloff in equities and Treasuries. This assessment takes on added weight considering the 3.5% drop in the S&P 500 and its current position approximately 15% below its recent high.

Marks outlined several potential consequences of aggressive protectionism: reduced consumer spending due to diminished confidence, delayed corporate investments amid uncertainty, difficulties in significantly altering the U.S. trade balance, and challenges in building sufficient industrial capacity to meet heightened domestic production demands.

While avoiding definitive predictions in these uncertain times, Marks emphasized the complexity inherent in economic forecasting, particularly when policy decisions introduce significant new variables. His commentary serves as a sobering reminder that even well-intentioned policies can trigger cascading negative effects throughout an interconnected global economy.

china faces unprecedented pressure as yuan hits post-crisis low

The Chinese yuan has fallen to its lowest level against the dollar since the global financial crisis, reflecting the intensifying pressure from the escalating trade war. The People's Bank of China (PBOC) cut its daily reference rate for the sixth consecutive session, contributing to the currency's decline as it attempts to navigate the economic fallout from Trump's imposition of punitive tariffs now reaching 145% on Chinese imports.

Chinese exporters on platforms like Amazon face a severe existential threat from these tariffs. Wang Xin, head of China's largest e-commerce association, warned that many sellers will have no choice but to either drastically increase prices in the U.S. market or exit altogether. Shenzhen alone houses over 100,000 Amazon sellers, with five already confirming plans to raise prices by 20-50% or seek alternative markets outside the U.S.

The pressure extends to manufacturing, with reports that Chinese electronics component manufacturers are offering unprecedented price concessions—up to 5% discounts to Indian companies—as they scramble to preserve supply relationships amidst the trade turmoil. This represents a significant concession in a sector that typically operates on thin margins of 4-7%.

President Xi Jinping has responded by calling for a united front with the European Union against U.S. "unilateral bullying," while strategically seeking to deepen trade relationships with Southeast Asian nations. His upcoming diplomatic tour to Vietnam, Malaysia, and Cambodia from April 14-18 underscores China's pivot toward regional alliances as U.S. relations deteriorate.

Amid these pressures, Goldman Sachs has lowered Chinese GDP growth estimates to 4.0% for the current year, down from earlier predictions. The combination of trade tensions, a struggling real estate sector, and weakening domestic demand creates a perfect storm for the Chinese economy, with potentially far-reaching implications for global growth.

india navigates trade opportunities amid global disruption

As global trade patterns undergo a seismic shift due to U.S.-China tensions, India finds itself in a unique position to capitalize on the disruption. External Affairs Minister S. Jaishankar emphasized the "urgency" in finalizing trade agreements with the U.S., UK, and EU, noting that recent tariff developments have prompted a reassessment of India's approach to global trade. He advocated for increased partnerships with Western economies, highlighting their potential to translate into real economic growth due to their market economies and competitive edge.

Commerce Minister Piyush Goyal similarly addressed ongoing negotiations for a bilateral trade agreement with the U.S., targeting an initial phase by September-October 2025 with an ambitious goal to increase bilateral trade from $191 billion to $500 billion by 2030. The U.S. decision to pause the 26% reciprocal tariff on India for 90 days provides crucial breathing room for these negotiations while maintaining a baseline 10% tariff.

The pause has been particularly welcomed by export sectors such as textiles, garments, and engineering components. Shrimp exporters, previously disadvantaged by tariffs, see the pause as leveling the playing field with competitors like Ecuador. However, industry associations remain cautious, urging the government to engage proactively with the U.S. to secure a sustainable trade partnership.

Investment strategists including Aman Chowhan of Buoyant Capital recommend focusing on domestic-oriented sectors like cement, engineering, and financials with minimal export exposure during this period of uncertainty. Meanwhile, Anand Rathi suggested that despite volatility, investors should capitalize on current market conditions, citing historical patterns where markets typically recover within a year after significant declines.

UBS has cut its FY26 GDP forecast for India to 6% from 6.3%, projecting a 20 basis point economic hit from Trump's tariffs. Nevertheless, Jefferies has raised India's allocation to "Overweight" in its Asia Pacific ex-Japan portfolio, citing India's lower dependency on U.S. and China demand, relatively lower tariff incidence, and benefits from declining oil prices.

results, updates & other news in brief

• Biocon Biologics received FDA approval for its cancer biosimilar Jobevne (bevacizumab-nwgd), marking its seventh biosimilar approved in the U.S. The reference product, Avastin, generated approximately $2 billion in U.S. sales in 2023.

• Cipla secured final FDA approval for its generic version of Paclitaxel Protein-bound Particles for Injectable Suspension, a therapeutic equivalent to Abraxane used in treating metastatic breast cancer, non-small cell lung cancer, and pancreatic cancer.

• Sun Pharma received relief as the U.S. Court of Appeals vacated a preliminary injunction, allowing the launch of its alopecia drug Leqselvi (deuruxolitinib). Nomura estimates the drug could achieve global peak sales exceeding $500 million.

• Tata Steel announced a transformation program for its Netherlands subsidiary targeting €500 million in annual savings by FY26, including a reduction of approximately 1,600 jobs. JP Morgan maintained an "Overweight" rating with a target price of ₹180, calling it a positive development against a tough macro backdrop.

• Honda Motorcycle & Scooter India issued a voluntary recall for CB300R motorcycles manufactured between 2018-2020 to address potential headlight failures due to PCB structural issues.

• Anand Rathi Wealth reported Q4 net profit up 30% year-on-year to ₹74 crore, with revenue increasing 22% to ₹241.4 crore. Assets under management rose 30% to ₹77,103 crore, significantly outpacing the Nifty's 5% gain during the same period.

• Jash Engineering received orders worth ₹35 crore in March, bringing its total order book to ₹808 crore. The company plans to inaugurate its Chennai manufacturing facility on May 18, spanning 65,000 sq ft and producing stainless steel fabricated products for South India projects.

• CLSA initiated coverage on tire companies with positive ratings: "Outperform" for MRF (target ₹128,599), Apollo Tyres (₹566), and CEAT (₹3,493), citing structural improvements in profitability and capital efficiency as the sector reaches the bottom of its margin cycle.

• Morgan Stanley upgraded consumer companies Godrej Consumer Products to "Overweight" (target ₹1,431) and Hindustan Unilever to "Equal-weight" (target ₹2,338), while downgrading Dabur to "Underweight" (target ₹396), citing the potential resilience of consumer staples amid global uncertainties.

• HSBC cut target prices on Zomato (to ₹280 from ₹315) and Swiggy (to ₹385 from ₹460) citing sustained intense competition in the quick commerce industry, with consensus food growth expectations now down to 12-15%.

• SRF commissioned and capitalized a new agrochemical facility in Dahej, Gujarat, at an investment of ₹239 crore, completing the project that was approved in October 2023.

• Aurionpro Solutions management expressed optimism about demand, stating they haven't faced any slowdown from clients. The company provided FY25 revenue guidance of ₹1,150-1,200 crore, with the U.S. comprising less than 10% of their revenue.

• Nippon Asset Management reported a cyber-attack on its IT systems, prompting immediate shutdown of affected systems. The company is working with cybersecurity experts to assess and address the issue.