OPEC+ boosts output, defying market expectations

Global markets remained under pressure as escalating trade tensions weighed on sentiment. Investors are closely monitoring today’s economic releases from Europe and the U.S., with a focus on potential impacts to central bank policies. U.S. President Trump is set to address Congress tonight, potentially providing further insights into his administration’s stance on trade.

Trade Developments

Trump’s tariffs took effect at midnight, imposing 25% duties on imports from Mexico and Canada and raising tariffs on Chinese goods from 10% to 20%, impacting nearly $2.2 trillion in trade. In response, China announced tariffs of 10-15% on U.S. agricultural goods and listed several American firms as "unreliable entities." Canada retaliated with tariffs on $20.7 billion worth of U.S. imports, with additional measures in consideration if the situation persists.

Commodities

Oil: Oil markets were hit by a surprise move from OPEC+ as the coalition confirmed plans to boost production by 138,000 barrels per day starting in April, marking the first step in a series of monthly increases aimed at gradually restoring 2.2 million barrels per day by 2026. The decision comes despite current price levels being insufficient for many member countries to cover government spending.

The production hike is seen as an attempt to balance market share retention against the risks of a supply glut, especially as demand forecasts remain uncertain. OPEC+ noted that the increase "may be paused or reversed subject to market conditions," leaving room for flexibility if prices fall further.

Brent crude also experienced volatility, dipping below $70 per barrel, while WTI remains under selling pressure around $67.70 in early European trade.

Gold: Gold prices remain subdued below $2,900, struggling to find direction amid heightened trade tensions. The U.S. dollar gained some support on expectations that tariffs could drive inflation higher, potentially prompting the Federal Reserve to maintain elevated interest rates for longer.

Markets will continue to assess geopolitical risks and economic data for cues on market direction.