Update From the Flightdeck

The Nasdaq dropped by 1000 points, the Nikkei lost almost 3000, and most other markets fell sharply on Friday. Particularly cryptocurrencies, which were down as much as 20% over the weekend after Trump reignited the tariff war with China. Alas, the long-awaited broad market selloff had seemingly finally arrived.

Amidst all the gloom, it’s worth remembering that global equities are still up more than 30% from the lows in April. In that sense, this pullback looks more like a healthy correction, with early trading on Monday already suggesting a market rebound. Bonds rallied. That’s good, reaffirming their role as a stabiliser in periods of uncertainty.

Commodities, however, were hit hard, not just energy, but also base metals, which fell as much as 5%. That could be a signal that the global economy is on more fragile ground than investors were expecting. Of course, gold rose, because it always does, though silver’s strength was somewhat surprising given its predominant industrial use.

From a technical perspective, the FTSE All World Index, as a proxy for global equities, could fall another 5% from Friday’s lows before breaking its longer-term upward channel that started in October 2022. Until that happens, the trend is our friend, and nothing has fundamentally changed in the narrative that drove markets to all-time highs. Investors may have to brace for a bit more turbulence ahead.