S&P 500 broad market index futures plunged
5.9% to 5,247 points this week, reaching their lowest level since August 2024,
as escalating trade tensions between the U.S. and China sent markets into
turmoil. In response to U.S. President Donald Trump's reciprocal tariffs, China
retaliated with a 34% levy on all U.S. imports, effective April 10, the day
after the U.S. tariffs on Chinese goods take effect. This escalation has thrown
the stock market into chaos, with the S&P 500 now targeting extreme
downside levels at 4,900–5,000 points. A further decline could cement a bearish
market sentiment, opening the door for a broader sell-off of up to 20% or more.
The last comparable market drop in 2022 saw a 27% slump, which was ultimately
halted by debt crisis intervention. However, the current market was highly
overbought, making the extent of this pullback even more uncertain.
Large investors have already initiated heavy
sell-offs. The SPDR S&P 500 ETF Trust (SPY) recorded $22.22 billion in net
outflows during the third week of March, followed by weak inflows of just
$307.4 million in the last week of the month. Selling pressure has intensified,
with investors offloading an additional $4.85 billion worth of SPY shares in
the first two days of this week alone.
Friday’s U.S. labour market report for March
could add further volatility. Nonfarm Payrolls are expected to land between
152,000 and 155,000, surpassing Wall Street’s forecast of 139,000. The
unemployment rate is anticipated to remain at 4.1%, but surprises cannot be
ruled out. If Federal Reserve Chair Jerome Powell offers supportive remarks in
his Friday statement, market turbulence may ease. Otherwise, the sell-off is
likely to persist.
Technically, the S&P 500 has deepened its
bearish formation. Immediate support lies at 4,900–5,000 points. A failure at
this level could push the index further down to its primary downside targets of
4,500–4,600, which would be a severe blow to market confidence. Resistance
stands at 5,300–5,400 points.
In commodities, Brent crude has broken below
its key support at $68–70 per barrel, now trading at $65.35 per barrel, weighed
down by recession fears and the escalating trade war. The next major support
zone lies at $58.00–60.00, with resistance at $68.00–70.00.
Gold has lost momentum after reaching a record
high of $3,167 per troy ounce, hitting its extreme upside target of
$3,150–3,250. Profit-taking is likely at these levels, with support at
$3,050–3,080 and signs of a potential reversal forming.
The currency market also reacted sharply. The
U.S. Dollar weakened, sending the EURUSD surging 1.5% to 1.11467 before
retreating below resistance at 1.10500. This signals weakness, and a
retracement toward 1.06000 seems likely as the pair struggles to sustain its
upside momentum.