{"id":59715,"date":"2025-04-14T07:59:10","date_gmt":"2025-04-14T05:59:10","guid":{"rendered":"https:\/\/www.captrader.com\/?post_type=analyse&p=59715"},"modified":"2025-04-14T07:59:11","modified_gmt":"2025-04-14T05:59:11","slug":"dow-jones-benefits-from-de-escalation-in-trade-dispute","status":"publish","type":"analyse","link":"https:\/\/www.captrader.com\/en\/analyse\/dow-jones-profitiert-von-deeskalation-im-handelsstreit\/","title":{"rendered":"Dow Jones benefits from de-escalation in trade dispute"},"content":{"rendered":"
Following the announcement of new tariffs by US President Donald Trump, stock markets around the world came under heavy pressure. The Dow Jones Index fell to 36,612 points at one point, representing a slump of almost 20 %. After signs continued to point to escalation at the beginning of last week - particularly between the US and China - Asian and European markets in particular also slumped significantly. Later in the week, however, Trump suddenly rowed back and caused great relief among investors. <\/p>\n\n\n\n
At the time of writing this article (over the weekend), further suspensions and\/or exemptions to the previously announced tariffs have been reported, which is very likely to ensure a very friendly start to the new trading week on Monday.<\/p>\n\n\n\n
Market forces Trump to give in<\/strong><\/h2>\n\n\n\n
Donald Trump's announcement of so-called reciprocal tariffs on April 2 triggered a massive sell-off on the global stock markets. But it wasn't just shares that suffered price losses. Last week, there was also a massive sell-off in US government bonds, which in turn led to a sharp rise in bond yields. <\/p>\n\n\n\n
The fact that yields on 10-year and 30-year US government bonds initially fell (and prices rose) after April 2 was interpreted by many traders and analysts as a likely intended side effect of the tariff announcements. The USA has a refinancing requirement of around USD 9 trillion in the coming months. Lower yields\/interest rates are a declared goal of the new US government and would significantly reduce costs and the burden on the national budget. In fact, it was reasonable to assume that one of the main reasons for the announcement of the new tariffs was an attempt to push down yields at the long end.<\/p>\n\n\n\n
However, this (supposed) strategy only worked in the short term. Between Monday and Wednesday, there was a veritable explosion in yields and a collapse in bond prices. The movement was accelerated because some large hedge funds got into difficulties in connection with the \"base trade\". The base trade is a type of arbitrage strategy on the spread between bond futures and the underlying bonds, in which market participants buy US government bonds and simultaneously hedge these purchases via futures contracts. The positions are generally highly leveraged and react sensitively to abrupt market movements. Due to the sudden fall in prices, some large hedge funds such as Millennium, Citadel and Point72 got into difficulties and were forced to liquidate positions, leading to large losses on the one hand and reinforcing the downward movement in a kind of negative spiral on the other. The US Federal Reserve (Fed) was reportedly preparing for possible rescue measures to prevent a major financial crash. These distortions caused additional nervousness not only on the bond market, but also on the stock market.<\/p>\n\n\n\n
Is the spook (trade dispute) already over?<\/strong><\/h2>\n\n\n\n
The sharp sell-off on the stock markets and the slump on the bond market may have been among the reasons for the US President's abrupt about-turn. Last Wednesday, Trump initially announced that reciprocal tariffs for all countries with the exception of China would be paused for 90 days and that only the flat tariffs of 10 % would remain in place for all goods imports.<\/p>\n\n\n\n
Renewed signs of easing were reported over the weekend. Tariffs on cell phones, computers, semiconductors and other electronics are to be withdrawn or paused. On the one hand, these developments are likely to lead to renewed strong buying on Monday. On the other hand, uncertainty is likely to persist in the coming weeks due to the contradictory signals and the repeated back-and-forth and could continue to weigh on the market.<\/p>\n\n\n\nDow Jones weekly chart<\/figcaption><\/figure>\n\n\n\n
Downward trend still intact<\/strong><\/h2>\n\n\n\n
The important price markers in the Dow Jones are clearly visible on the following chart. The next short-term resistance level is around 41,000 points. For the chart picture to brighten significantly, however, the Dow would also have to overcome the 42,000 points, including the daily EMA and SMA 200. As long as these two important resistances are not exceeded, there is potential for a renewed downward movement. A potential downward movement can often be easily recognized when selling takes place at one of the resistances under strong volume.<\/p>\n\n\n\nDow Jones daily chart<\/figcaption><\/figure>\n\n\n\n
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