(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

LONDON, April 11 (Reuters) - What matters in U.S. and

global markets today

By Mike Dolan, Editor-At-Large, Financial Industry and Financial

Markets

It's Friday, so today I'll provide a quick overview of

what's happening in global markets and then offer you some

weekend reading suggestions away from the headlines.

Today's Market Minute

* The brief reprieve for battered stocks seen after President

Donald Trump decided to pause duties for dozens of countries

quickly dissipated, as attention returned to his escalating

trade war with China that has fuelled global recession fears.

* Safe-haven gold surpassed the key $3,200 mark for the first

time on Friday, spurred by a weaker dollar and economic concerns

due to an intensifying trade war.

* Just before President Donald Trump's social media post on

Wednesday pausing tariffs, some unidentified options traders

placed bets worth millions of dollars that the market would

rebound, data shows. Some Democratic lawmakers are calling for

investigations into whether Trump's policy reversal led to any

market manipulation or insider trading.

* China said on Thursday it would immediately restrict imports

of Hollywood films in retaliation for President Donald Trump's

escalation of U.S. tariffs on imported Chinese goods, targeting

one of the most high-profile American exports.

* In hope of avoiding punishing U.S. tariffs, Vietnam is

prepared to crack down on Chinese goods being shipped to the

United States via its territory and will tighten controls on

sensitive exports to China, according to a person familiar with

the matter and a government document seen by Reuters.

Capital flight fears sink dollar

As the U.S.-China trade war escalates and overseas investors

brace for another three months of seemingly daily shifts in U.S.

policymaking and whiplashes on Wall Street, the dollar is

sinking on fears of foreign capital flight from America.

Wall Street stocks suffered a relapse on Thursday, which

wiped out a third of the prior day's surge. This was matched by

an ongoing selloff in Treasury bonds. Now markets

are bracing for a string of U.S. company profit warnings as the

corporate earnings season kicks off in earnest later today.

But the dollar's slide and the dash for overseas havens may be

generating the most anxiety, with the dollar's DXY index

index hitting its lowest in three years, led by the euro's surge

to its highest since early 2022 and the Swiss franc's

climb to its strongest in 10 years.

Gold prices - now up 23% for the year so far - soared

anew to record highs.

This all partly reflects the alarming levels of uncertainty

and fears about the direction of the U.S. economy, but some

economists reckon the move is also a matter of simple math. If

Washington is intent on wiping out the U.S. trade deficit, it

also has to accept an evaporation of the counter-balancing

capital surplus, essentially the excess of overseas investments

in America over U.S. investments abroad.

The resulting weaker dollar may be the holy grail that some

in the administration are seeking to regain U.S. export

competitiveness, but it could come with a huge and destabilising

cost.

Bank of America's weekly tally of mutual fund flows suggests

this flight was already underway this week. Foreign investors

shed $6.5 billion of U.S. equity in the five trading sessions

ending on Wednesday, while funds holding U.S. 'junk' bonds saw

the biggest weekly outflow on record of almost $16 billion.

This relatively narrow set of fund metrics is small beer

against the bigger picture of foreign exposure to U.S. markets,

hence the growing concern playing out in the currency market.

Using Federal Reserve data, Apollo chief economist Torsten

Slok showed how foreigners own a fifth of the U.S. equity

market, with some $18.5 trillion of holdings, as well as almost

one third of both the Treasury and U.S. corporate bond markets,

some $7.2 trillion and $4.6 trillion, respectively.

TS Lombard chief economist Dario Perkins sliced the Fed

numbers in a different way. He points out that the world has

accumulated an exposure to U.S. equity of around $14 trillion

since 2012, with Europe responsible for roughly half that, more

than the entire market cap of the Euro Stoxx 50.

Meanwhile, the surging euro, on course for its biggest

weekly rise since 2020, is pricing in the likelihood of another

European Central Bank interest rate cut next week.

What next? As stocks around the world sink yet again on

Friday, with the notable exception of China and Hong Kong

bourses likely buoyed by official state buying, U.S. stock

futures remained in the red ahead of earnings reports

from the big U.S. banks today.

With China appearing ready to go toe-to-toe with the U.S.,

the two biggest economies in the world have now effectively

placed trade embargoes on each other, intensifying fears of a

global economic crunch.

Weekend reading and listening suggestions

Here are some reading and listening suggestions to help you

make sense of today's volatile financial markets and evolving

geopolitical landscape.

1. Undone alliances. The latest issue of the Council on Foreign

Relations' Foreign Affairs magazine leads with an article on

"Underestimating China" by Kurt Campbell and Rush Doshi. They

argue the United States can only compete strategically with

China by building coalitions, not by retreating from them. "If

the United States fails to pursue scale with others, or retreats

to the Western hemisphere while undoing its alliances, the

contest for the next century will be China's to lose."

2. Churchill and the dollar. In a column for Project Syndicate,

University of California, Berkeley professor and respected

currency scholar Barry Eichengreen argues the United States

should heed the lessons of how sterling lost its status as the

global reserve currency a century ago. "What was achieved over a

long period could be demolished in the blink of an eye - or with

the stroke of a president's pen."

3. Fentanyl fight. A Reuters Special Report by correspondents

Maurice Tamman, Laura Gottesdiener and Kristina Cooke shows how

Federal spending cuts instigated by the White House threatens to

reverse what was a steep decline in American overdose deaths and

potentially jeopardize other gains in the battle against

synthetic opioids.

4. Brexit hit. With the world wondering how to calculate the

impact of unravelling deeply integrated trade relationships, a

study published on the Centre for Economic Policy Research's

(CEPR) VOXeu website shows how Brexit led to 6.4% drop in

worldwide UK exports and a 3.1% drop in imports.

5. Independence in name. In a CEPR podcast, former Bank of

England policy maker and Citigroup chief economist Willem Buiter

discusses central bank independence and how the relationship

between central banks and governments, particularly their role

as financial agents of the state, creates potential risks that

could threaten economic stability.

6. French deportations. Hundreds of foreign nationals previously

protected because they grew up in France now face the risk of

expulsion under legislation introduced last year. Reuters

correspondents Sofia Christensen, Juliette Jabkhiro and Layli

Foroudi interview some of those affected and detail the impact

of the new laws.

7. China InetlLip-Bu Tan, the man chosen to lead Intel, the

U.S.'s largest chip maker, has invested in hundreds of Chinese

tech firms, including at least eight with links to the People's

Liberation Army, according to a Reuters review of corporate

filings. The report by Reuters correspondents Eduardo Baptista,

Stephen Nellis and Max A. Cherney shows how Tan, one of Silicon

Valley's longest-running investors in Chinese tech, raised

questions among some investors about the extent of his ongoing

involvement with businesses in China.

Chart of the day

Foreign investors in U.S. assets are clearly spooked by

Washington's trade war and concerned about radical shifts in

U.S. policymaking, alliances and government institutions. If

they decide to repatriate their capital longer-term, it could

undermine U.S. financial markets considerably. By way of

illustrating just how much, Apollo chief economist Torsten Slok

this week outlined the scale of these massive holdings.

Today's events to watch

* U.S. March producer price report, University of Michigan

April consumer sentiment survey

* New York Federal Reserve President John Williams, Boston

Fed President Susan Collins, St Louis Fed chief Alberto Musalem

speak

* US corporate earnings: JPMorgan, Morgan Stanley, Bank of

New York Mellon, Wells Fargo, BlackRock, Fastenal

* Eurogroup and other European Union finance ministers meet

in Warsaw, with European Central Bank President Christine

Lagarde

* Spanish Prime Minister Pedro Sanchez meets China's

President Xi Jinping and Premier Li Qiang in Beijing

Opinions expressed are those of the author. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.