Tuesday’s moves mark a third day of market swings, with fears of an escalation in US–China tensions returning to the forefront. The S&P 500 has gained more than 30% since its April low, as initial trade concerns gave way to unrelenting optimism over artificial intelligence and the resumption of US interest-rate cuts.
The yen was the top performer among major currencies as Japan’s opposition parties weighed a bid to unseat the long-ruling Liberal Democratic Party. The Nikkei 225 dropped as much as 3.2%, while short-term yields fell on reduced chances of a near-term rate hike. Gold fluctuated, while silver dipped after hitting a record high.
Investors’ attention is also turning to the unofficial start of earnings season, with JPMorgan Chase & Co., Goldman Sachs Group Inc., and Citigroup Inc. set to report before the US open. This season, investors will be looking for reassurance on everything from the durability of AI spending to the fallout of elevated tariffs.
“The China trade escalation has clearly rattled markets,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers. “With elevated valuations already making markets vulnerable, expect continued volatility ahead.”
Elsewhere, cryptocurrencies extended their declines after a wave of historic liquidations sparked a sharp weekend selloff.
Bitcoin, the largest token by market value, fell as much as 3.75% to around $111,500, while Ether dropped 7.5% to below $4,000. Smaller, more volatile tokens fell even further, wiping out more than $150 billion from the total cryptocurrency market value in 24 hours, according to CoinGecko data.
Brent crude fell toward $62 a barrel, extending its year-to-date decline to more than 16%, after the International Energy Agency said the record oil glut will be larger than previously estimated.
