Oil drops to four year low as fears of global recession rise

Yahoo

09-04-2025

The pound moved higher against the dollar in early European trading on Wednesday, up 0.4% to $1.2795. The greenback fell to a six-month low as investors questioned whether the world's biggest economy would fall into recession.
The dollar extended its losses, with the dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, losing 0.6% to 102.31, its lowest point in half a year.
Lee Hardman, a senior currency analyst at MUFG, said: "The unfavourable price action has cast some doubt on the safe haven status of the US government bond market and the US dollar at a time when the global trade war is intensifying.
"We expect foreign exchange market volatility to remain elevated in the near-term and continue to expect the traditional safe-haven currencies of the yen and Swiss franc to outperform."
Read more: FTSE 100 LIVE: Stocks plunge into the red as Trump's 104% China tariffs take effect
Markets fear the US might be heading into a recession as Trump imposed the highest US tariffs since the early 20th century. US Customs and Border Protection confirmed that it is prepared to begin collecting country-specific tariffs from 86 trade partners. The 'liberation day' import duties came into full effect at 5am London time.
In other currency moves, sterling was down 0.12% against the euro, trading at €1.1624. The single currency has found some support as the European Commission considers slapping tariffs of up to 25% on a broad range of exports from the US worth around €22.1bn (£19bn) based on the EU's 2024 imports.
The list features agricultural and industrial commodities such as soybeans, meat, tobacco, iron, steel and aluminium, according to an internal document seen by POLITICO.
Most of the tariffs would apply from 15 May, unless blocked by a large majority of member states.
Gold prices climbed as US tariffs came into effect, including a huge 104% levy on Chinese goods, with the bullion buoyed by its safe-haven appeal and a weaker dollar.
Gold futures gained 2.3% to $3,059.40 per ounce at the time of writing, while the spot price rose 1.2% to $3,043.01 an ounce.
"The downward shift in the dollar on tariff worries effectively paved the way for gold to reclaim the $3000 level," KCM Trade chief market analyst Tim Waterer said.
"Due to global growth and inflation uncertainties, gold is still on track to pursue new all-time highs despite experiencing a few bumps in its progress over the last week."
Read more: Should you buy gold as Trump tariffs sparks surge in demand?
The dollar lost ground, making greenback-priced gold cheaper for overseas buyers.
"Despite falling for three consecutive sessions, gold remains bullish with trade tensions and the prospect of lower US interest rates boosting its allure. A solid breakout above $3,055 may open the doors back toward $3,100 and $3,130. Sustained weakness below $3,000 could see gold slip toward $2,950 and $2,930", said Lukman Otunuga, senior research analyst at FXTM.
Also, investors now have a rather dovish view of the Federal Reserve's future monetary policy, providing an additional fundamental boost to the precious metal.
"The significant rise in rate cut expectations in recent days suggest that the gold price will soon rise again", Commerzbank said in a note.
Oil prices fell for the fifth consecutive day on Wednesday, reaching their lowest level in four years as recession concerns mount amid an escalating global trade war.
Brent crude prices lost 2.8% to $61.03 a barrel at the time of writing. US West Texas Intermediate (WTI) crude retreated by more than 3% to $57.72 a barrel.
"China's aggressive retaliation diminishes the chances of a quick deal between the world's two biggest economies, triggering mounting fears of economic recession across the globe," Ye Lin, vice president of oil commodity markets at Rystad Energy, told Reuters.
"China's 50,000 bpd to 100,000 bpd of oil demand growth is at risk if the trade war continues for longer, however, a stronger stimulus to boost domestic consumption could mitigate the losses."
China has vowed to take 'firm and forceful' steps to protect its interests, after US tariffs of 104% came into effect.
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Beijing's foreign ministry spokesman Lin Jian insisted that 'the Chinese people's legitimate right to development is inalienable'.
The world's second-largest economy was the hardest hit by Trump's 'liberation day' tariffs, which followed sweeping 10% levies that came into force at the weekend.
In broader market movements, the FTSE 100 (^FTSE) lost 2.6% to 7,702 points on Wednesday morning. For more details, check our live coverage here.Sign in to access your portfolio