Mid-week Market Analysis
Commentary
Welcome back to our usual mid-week analysis.
Markets kicked off the week with marked volatility, primarily triggered by statements from the new Trump administration regarding the introduction of trade tariffs. At the opening, the President’s remarks about imposing 25% tariffs on imports from Mexico and Canada (10% on oil) and an additional 10% on those from China caused a sharp decline. However, following phone calls with Sheinbaum and Trudeau, the implementation of tariffs on Mexico and Canada has been postponed by one month pending further negotiations, while measures against China remain unchanged. This delay allowed for a partial market recovery, although the climate of uncertainty persists, exacerbated by Chinese countermeasures, including new tariffs on U.S. products and an antitrust investigation against Google. Trump also stated he is “in no hurry” to address the issue with Xi Jinping, hinting at a possible prolongation of tensions.
On the macroeconomic front, the U.S. ISM Manufacturing PMI data surprised positively, climbing back above 50 for the first time since April, signaling a recovery in the manufacturing sector. Although it represents only 20% of GDP, the concurrent strength of the services sector further highlights the resilience of the U.S. economy. The Atlanta FED GDPNow has also revised its Q1 2025 growth estimate upwards to 3.9%, well above the previous forecast of 2.9%.
Labor market data released on Tuesday, such as the JOLTS Job Openings, showed a slight decline compared to expectations, standing at 7.6 million, indicating moderate cooling in the job market, which nevertheless remains robust.
The focus of the week remains on data releases today and Friday, which could prove to be the most volatile day with the publication of Non-Farm Payrolls (NFP), the unemployment rate, and average hourly earnings. These indicators will provide further insights into the strength of the U.S. economy.
A significant event will also be the Bank of England’s (BOE) interest rate decision, with a 25 basis point cut expected.
Volatility will likely remain high for the rest of the week, fueled by trade tensions and the resulting uncertainty, influencing global asset sentiment.
Equity Sector
Major indices like the S&P 500 and Nasdaq have declined, reflecting investor concerns about the economic impact of trade disputes. The technology sector, in particular, has shown greater sensitivity due to its strong ties to global supply chains.
Commodities
Crude oil prices have been under downward pressure due to concerns over global demand, while gold has continued to serve as a safe-haven asset, reaching new all-time highs in an environment of growing risk aversion.
Currency Markets
The U.S. dollar has shown mixed performance: initially rising on the back of trade tensions, it later lost ground following denials and delays. The euro and Japanese yen have benefited from relative strength, supported by both domestic economic data and geopolitical developments.
Technical Analysis
ESMAR25
The index continues its recovery within the value area between LVN 6004 and 6109. Key resistances are at 6065 and 6085 (HVN), the latter potentially acting as a price magnet. The main support remains between 6004-6000, with the risk of an intraday sell-off if 5988 is broken, down to the lows around 5950.
NQMAR25
Similar considerations apply to the U.S. tech index as for the equity segment. Notably, the quarterly earnings of Google and AMD were recently released, and despite beating analysts’ estimates, their stocks fell in after-hours trading yesterday. The index is trading in the range between LVN 21164 and 21848. Breaking recent highs could push the price towards the uncovered VWAP at 21772, while a bearish break below 21400 could accelerate selling down to 21100.
6EMAR25
The exchange rate fluctuates between 1.0358 and 1.0495. The 1.0441 level (HVN) represents the short-term fair value. Breaking through 1.0460 and 1.0495 would strengthen the upward trend, while a drop below 1.04 could push the rate towards 1.0368.
6BMAR25
The setup is very similar to the previous pair for the Cable, trading within the main value area between 1.2461 and 1.2606. Currently, we are around the HVN at 1.2520, which can be considered the short-term fair value. As long as the price remains above this HVN, the pair has the potential to appreciate up to the upper LVN. A bearish setup would return only below 1.2442, as failure to hold this support could plausibly lead to a retest of yesterday’s lows.
GCAPR25
Gold remains unstoppable, continuing to reach all-time highs amid global uncertainty that worries investors. From a technical perspective, there are no upper references as it is at historical highs. Given the strong momentum and investor sentiment, shorting would be very risky. The first supports are around 2860 and 2850, which, if broken downwards, could lead to a drop to 2824.
CLMAR25
WTI crude oil continues its negative phase, and after several days where the main support around 72.70 held prices, sellers broke this level yesterday, and buyers have not (yet) managed to recover it, indicating that general weakness persists. The lower part of the value area where the price is operating, between 74 and 71, could be the next target. A break below 71 would lead to a further decline in crude to 70. Slight positivity would return only with a confirmed recovery of 72 first and then 72.70.
