US futures
Dow future -2.50% at 37385
S&P futures -3.1% at 4935
Nasdaq futures -2.9% at 16889
In Europe
FTSE -4.5% at 7685
Dax -4.85% at 19713
- Recession fears rise after Trump’s tariff announcements
- Fed rate cut expectations are rising to 5 rate cuts this year
- Tech stocks falls further, Apple -25% from record high
- Oil falls a further 3% after 10% losses last week
Recession fears continue pulling stocks lower
U.S. stocks are set to open lower, indicating further weakness after last week's steep sell-off, sparked by President Trump's reciprocal tariffs.
The S&P 500 is set to open about 1.8% lower, and the Nasdaq is expected to open 1.9% lower after the latter fell into a bear market last week, marking a decline of at least 20% from its peak. Over the weekend, President Trump showed no signs of concern with his announcement, even as recession fears rise.
JP Morgan considers a 60% probability of the US heading into recession, while Goldman Sachs has raised its expectations to 45%.
The market is pricing in a more dovish Fed with five rate cuts now expected this year, with the first one potentially coming as soon as May. This is up considerably from the two rate cuts that the Fed guided to in its March meeting. Optimism that the Fed will step in sooner is helping the sell-off to decelerate. But the Fed is not there to support the market; it is there to support jobs and prices.
Last week, the nonfarm payroll report showed that more jobs were added than expected in March, although the unemployment rate ticked higher to 4.2%. The data didn’t point to any notable weakness in the jobs market. This week's attention will also be on US CPI inflation data, which is due on Thursday, followed by PPI data on Friday, as well as the minutes to the Fed's March meeting.
Trade tariffs will likely drive inflation higher and slow economic growth.
Corporate news
Big tech continues to be pummeled. Apple and Nvidia are falling sharply with Wedbush Securities lowering its price target on the two companies. Apple has fallen 25% this year last Nvidoa is down 20% from its peak and Microsoft has fallen 14%.
Thanks will also be in focus with JP Morgan chief executive Jamie Dimon saying on Monday that the trump administration tariffs will likely raise prices of domestic and imported goods and slow down and already fragile U.S. economy. JP Morgan and Wells Fargo kick off Q1 earnings season on Friday.
Dow Jones forecast – technical analysis.
The Dow Jones faced rejection at its 200 SMA, falling sharply below 40,000 to a low of 36,550 today. The price has recovered from this low to 37,500 as the RSI remains very oversold. Sellers should be cautious of chasing losses lower while the RSI is so oversold. Instead, a period of consolidation could be on the cards. Resistance is seen at 38,500.
FX markets – USD rises, GBP/USD falls
The USD is rising after falling 1% last week. Demand for the USD remains weak, while fears of a US recession rise and treasury yields are below 4%. The market is pricing in 5 rate cuts this year, with the first potentially in May.
The EUR/USD is falling, giving up earlier gains as the focus remains firmly on trade tariffs and their impact on the economy. The EUR has benefitted from the recent USD selloff as invesors look for where to put their funds after selling out of the USD.
The GBP/USD is falling as Trump's trade tariffs hurt the market mood and dent the UK's economic outlook. GBP/USD is testing the 200-day Simple Moving Average (SMA) support.
Oil falls a further 3%
Oil prices fell 3% on Monday, extending losses of 10% from the previous week amid escalating trade tensions between the US and China, which raised fears of a recession.
Last week, Trump announced trade tariffs taking 54% on Chinese goods. China retaliated with 34% tariffs, raising the prospect of a significant trade war between the world's two largest oil consumers.
Ongoing uncertainty around trade policy continues to drive market moves, with Goldman Sachs now forecasting a 45% chance of recession in the next 12 months, while JP Morgan says it is 60%.
Saudi Arabia also announced a sharp cut to crude oil prices for Asian buyers in May to the lowest in four months, reflecting the fact that tariffs will likely hit oil demand.
