Non-US investors feel the squeeze as Wall Street plunges and USD faces worst month in 16 years

Wall Street tumbles as Trump criticises Fed Chair Powell

United States (US) stocks ended sharply lower overnight after President Trump intensified his criticism of Federal Reserve (Fed) Chair Jerome Powell, raising concerns about the central bank's independence and unsettling investor confidence. Adding to the market uncertainty, there has been minimal progress on trade negotiations, partly due to Beijing warning other countries against making deals that could disadvantage China.

The fallout from President Trump's criticism of Fed Chair Powell further weakened the US dollar (USD), leading to overnight declines against most major currencies. Notably, EUR/USD is up 6.24% month-to-date, on track for its largest monthly gain since May 2009.

Navigating FX exposure

For European and other international investors who began the year with heavy exposure to US stock markets without hedging their foreign exchange (FX) exposures, April has been particularly challenging. These investors had anticipated the usual correlation - if stocks fall, the USD rises - but this pattern has not held.

Using the US 500 as a benchmark and as a guide only, these investors are suffering an 8% loss on their US stock portfolio, compounded by approximate 6.2% loss if their US stock portfolio has not been currency hedged.

Former Boston Fed President Eric Rosengren succinctly captured the situation, stating on X that 'Unless the goal is to make the US trade like a third-world country, threatening the Federal Reserve's independence only makes the US less attractive to foreign investors.'

Economic data and earnings in focus

Market attention will focus on the following economic indicators to assess the impact of tariff uncertainty on the US economy and business sentiment.

• US 500 Flash Purchasing Managers' Index (PMI) (Wednesday, 23 April)
• Durable Goods Orders (Thursday, 24 April)

The earnings season intensifies with reports expected from Magnificent Seven members Tesla and Alphabet, along with major industrial companies including Boeing, Northrop Grumman, Lockheed Martin, and 3M.

The US interest rates market is currently pricing in a cumulative 92 basis points (bp) of Fed interest rate cuts by year-end, with the first 25 bp cut approximately 80% priced for June.

US Tech 100 technical analysis

The decline from the 9 April, 19,234 high is best viewed as the fifth leg of an unfolding five-wave decline from the 22,222 record high, which warns of a retest and break of the 16,542 low towards 16,000.

Aware that if the US Tech 100 were to first see a sustained break above the 19,234 high and then above the 200-day moving average (MA), currently at 20,223, it would negate the downside risks and be an initial warning the correction is complete, and the uptrend has resumed.

US Tech 100 daily chart

US 500 technical analysis

The decline from the 9 April, 5481 high is best viewed as the fifth leg of an unfolding five-wave decline from the 6147 record high, which warns of a retest and break of the 4835 low towards 4750.

Aware that if the US 500 were to first see a sustained break above the 5481 high and then above the 200-day MA, currently at 5750, it would negate the downside risks and be an initial warning that the correction is complete, and the uptrend has resumed.

US 500 daily chart

• _{Source: TradingView. The figures stated are as of 22 April 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}