The S&P 500 has entered correction territory as global markets react to escalating tensions between the United States and Europe. In response to President Trump's imposition of a 25% tariff on steel and aluminum, the European Union has retaliated with a hefty 200% tariff on French champagne, wine, and other alcoholic beverages. This has left President Trump reportedly "totally annoyed" with the European reaction. As a result, the Stoxx 600 saw support near its 50-day moving average, while investors grapple with rising US Treasury bond yields and an upbeat market mood.
The UK government is grappling with economic challenges, desperately needing higher growth amidst ongoing spending cuts and potential tax increases looming later this year. The latest macroeconomic data from the UK failed to meet expectations, reflecting the nation's economic struggles. Despite these challenges, the GBP/USD managed to recover toward 1.2950 after slipping below 1.2920, offering a glimmer of hope for the currency.
Meanwhile, the EUR/USD gained traction and rose toward 1.0900 during the European session on Friday. This movement signals a moderate recovery for the euro amid the ongoing transatlantic tariff tensions. However, eyes remain on the upcoming US consumer sentiment data for March, as markets anticipate how it might influence future economic decisions.
In commodities markets, gold corrected lower, trading below $3,000 after previously setting a new record high earlier in the day. The XAU/USD pair's upside remains restricted due to rising US Treasury bond yields coupled with an optimistic market mood, which has limited gold's appeal as a safe-haven asset.