The S&P 500 broad market index futures are
down 3.7% to 5,550 points, hitting a new low of 5,505—the weakest level since
early September 2024. The index is now approaching its downside target of
5,350–5,450 points, which appears increasingly likely to be reached. The market
is under pressure from intensifying recession fears, and the decline has been
so sharp that the S&P 500 did not even retest the 5,730-point support level
before continuing lower. A brief recovery followed the release of
better-than-expected U.S. inflation data for February, with the benchmark
closing Wednesday up 0.5% at 5,590 points. However, a fresh wave of trade
tensions quickly erased hopes for a sustained rebound. The European Union
imposed $28.0 billion in tariffs on U.S. goods in response to Washington’s 25%
levies on steel and aluminium. In retaliation, U.S. President Donald Trump
threatened to impose a 2005 tariff on European alcohol. While these measures
are not devastating to global trade, the lack of compromise and the ease with
which tariffs are being implemented are unsettling investors.
Trade conflicts are overshadowing positive
macroeconomic data. Large investors are reinforcing the negative trend, with
the SPDR S&P 500 ETF Trust (SPY) reporting net outflows of $3.87 billion
last week. However, the broader $15.28 billion bet on an upside scenario
remains a stabilising factor. This week, investors added another $7.99 billion
to SPY, suggesting that institutional players are buying into the correction.
While this does not rule out further declines to the extreme downside targets
of 5,350–5,450 points, it indicates that the market correction is not turning
into a full-blown meltdown. A reversal may be near, even if it starts as a dead
cat bounce. The Federal Reserve’s meeting next week will be a key event. While
interest rates are expected to remain unchanged, the central bank’s rhetoric may
turn more dovish given cooling inflation, economic slowdown, and stock market
weakness. This could serve as a catalyst for a market recovery.
Technically, the worst may be over, but the
S&P 500 remains in a downtrend. The extreme target range is 5,350–5,450
points. The nearest resistance is at 5,630–5,650 points, while key support lies
at 5,530–5,550 points.
Brent crude remains under pressure at $70.54
per barrel, with support at $68.00–70.00 and resistance at $78.00–80.00. While
prices are attempting a recovery, recession fears are capping gains. A failure
to hold support could push prices lower to $58.00–60.00.
Gold is trading around $2,995 per troy ounce,
close to its all-time high of $3,004. The next resistance level is at
$2,950–2,980, with extreme upside targets at $3,200–3,300. However, a drop
below $2,850 would invalidate the bullish outlook.
The EURUSD has reached its upside target of
1.09500–1.10500 and is now facing strong overbought pressure. A correction to
1.06000 is likely, and the pair may struggle to find new upside drivers once
the correction takes place.