Reduced Tariff Risks?
US stock prices are recovering higher this week, bolstered by optimism that Trump will go for a more limited tariff approach on April 2nd. ,Trump's so-called 'tariff liberation day'. Stories run by Bloomberg and WSJ suggest that Trump will take a more concentrated set of actions with some countries to be exempt from tariffs and others to receive smaller tariffs than previously signalled. The news has helped drive a wave of better risk sentiment this week with equities prices rallying across the board. The S&P futures are now back up to their highest level since early March following a gap higher at the open yesterday and subsequent rally.
Fed Easing Expectations
The market is also being supported by dovish signalling from the Fed. At the recent March FOMC, the bank adjusted its rates forecast lower with two cuts now projected this year, down from one prior. Additionally, the prospect of weaker tariff action from Trump reduces upside inflation risks and keeps near-term rate-cut chances intact. The market is still currently pegging June for the next Fed rate cut and while this remains the case, stock prices should find room to continue higher near-term, provided we don’t see a spike higher in USD.
Technical Views
S&P Futures
The rally of the 5,592.50 level has seen the market breaking back above 5,721.25. With momentum studies bullish now, focus is on a continuation higher and a test of the 5,931 level next and retest of the broken bull trend line. This will be a key hurdle for bulls, putting focus back on YTD highs if overcome.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.