Markets on Alert: Services Rise, Oil Slumps, and Fed Holds Steady Amid Tariff Turmoil

Introduction

Markets enter the week on cautious footing as a mix of economic signals shape investor sentiment. In the US, services activity regained some strength in April, but labor market concerns persist amid rising jobless claims. Meanwhile, China’s services sector slipped to a seven-month low, raising fresh concerns over global demand. The Federal Reserve is expected to hold rates steady as it navigates the economic fallout from sweeping tariffs. Crude oil prices have dropped below break-even levels, pressuring producers, while the World Bank warns of a broader commodity downturn driven by faltering trade. Against this backdrop, analysts are closely watching technical signals across energy and equity markets for clues on what’s next.

US Services Sector Rebounds in April as New Orders Rise, But Jobs Lag

US services sector activity expanded for the 10th straight month in April, with the ISM Services PMI rising to 51.6 from 50.8 in March, signaling steady growth. New orders and supplier deliveries improved, while employment remained in contraction despite a rebound. Prices rose sharply, reflecting ongoing cost pressures. Eleven industries reported growth, though fewer than in previous months, as federal budget cuts and tariff-related price concerns continued to weigh on sentiment.

China’s Services Sector Hits 7-Month Low

China’s services activity dropped to a seven-month low of 50.7 in April, as US tariffs dampened demand and business confidence, according to Caixin/S&P Global. New business orders grew at the slowest pace since 2022, while employment declined for a second month. Analysts now expect 2025 GDP growth to slow to 4.2%, well below Beijing’s 5% target, raising pressure on policymakers to stimulate domestic consumption.

Fed Stays Put on Rates, Eyeing Tariff Fallout

The Federal Reserve is widely expected to leave interest rates unchanged at 4.25%–4.50% this Wednesday as policymakers assess the economic fallout from President Trump’s sweeping new tariffs. While recent data shows continued labor market strength and moderate consumer spending, the outlook is clouded by rising inflation risks and shaken business confidence. Analysts say the Fed is in no rush to cut rates, despite political pressure, and will likely wait for more clarity on trade impacts and economic momentum before making any moves.

Oil Drops Below Profit Line, Raising Flags for Industry Stability

Crude oil prices have fallen to their lowest level in four years, dipping below $58 per barrel—under the break-even point for many producers. While lower prices may benefit consumers at the pump, they threaten oil companies’ profitability and could slow new drilling. Some firms have already pulled back rigs, opting instead to return capital to shareholders. Analysts note that while the industry is more consolidated and resilient than in the past, a prolonged downturn—especially if coupled with rising input costs from tariffs or a broader recession—could pressure producers further.

World Bank Warns of Commodity Slump as Global Trade Falters

The World Bank expects global commodity prices to decline sharply in 2025 and 2026, with energy seeing the steepest drop. Weaker global growth, higher tariffs, and ongoing trade disruptions are driving the downturn. While lower prices may help ease inflation, they could hit commodity-dependent developing nations hard. The Bank warns of the worst price volatility in 50 years and urges economic reforms to weather the impact. Meanwhile, gold is forecast to shine as investors seek safety amid uncertainty.

Technical Analysis: Oil Under Pressure

Crude oil continues to exhibit a clear bearish trend since peaking at $79.30 on January 15, with price action and technical indicators aligning to confirm sustained downside momentum. The initial shift in sentiment was marked by a Bearish Harami formation, followed by a breakdown below both the 20- and 50-period Exponential Moving Averages (EMAs), which triggered an acceleration in selling pressure.

A failure swing pattern emerged as the subsequent high at $74.42 failed to surpass the previous peak, reinforcing the prevailing downtrend. The confirmation of a “Death Cross”—with the 20-period EMA crossing below the 50-period EMA—added further credibility to the bearish structure. Momentum dynamics remain negative, with the Momentum Oscillator entrenched below the 100 baseline and the Relative Strength Index (RSI) firmly below the 50 mark, both pointing to continued selling interest.

Should this momentum persist, downside levels to monitor include $54.67, $48.51, and $38.55. Conversely, a shift in sentiment and renewed buying pressure would bring resistance levels at $61.44, $64.63, and $71.86 into focus.

Conclusion

As markets digest a steady stream of mixed signals—from resilient services data and persistent jobless claims in the US to weakening demand in China and heightened global trade risks—investors remain cautious. The Federal Reserve’s wait-and-see stance, combined with slumping oil prices and a World Bank warning of broad commodity weakness, underscores the fragility of the current macro environment. With key employment and inflation data on the horizon, markets may remain volatile as participants look for clearer direction in an increasingly uncertain global economy.