S&P 500 broad market index futures plunged
by 4.3% to 4,843 points on Monday, intensifying the current market turmoil. The
benchmark index fell by 8.9% last week, marking its steepest weekly decline
since mid-March 2020. Back then, the Federal Reserve (Fed) stepped in with a
full-point interest rate cut to 0.25% and launched a massive asset purchase
programme. Although the S&P 500 dropped 35% during that period, the current
decline of 21.7% suggests the situation may once again demand extraordinary
measures to avert a deeper crisis.
JPMorgan has revised its recession forecast to
the second half of 2025. Meanwhile, billionaire investor Bill Ackman warned
that the U.S. is heading for a self-inflicted "economic nuclear
winter" due to President Donald Trump’s aggressive tariff strategy. Ackman
urged the administration to announce a 90-day tariff timeout to enable
negotiations on what he termed “unfair” deals. He emphasised that such a move
must come within days to avert catastrophic damage.
Despite these warnings, the U.S.
administration remains largely unresponsive. There is growing speculation that
the tariff policy is a deliberate tactic to provoke a market sell-off and
pressure the Fed into cutting rates. The exaggerated scale of the reciprocal
tariffs may be part of a broader plan to secure better trade terms for U.S.
goods, with a subsequent rollback to more sustainable levels. However, the
strategy appears to be misfiring.
China has retaliated forcefully, imposing 34%
tariffs on U.S. goods without prior negotiations—a move that undermines Trump’s
apparent plan. Adding to the confusion, Fed Chair Jerome Powell offered no
support in his Friday remarks, expressing concern that tariffs could stoke
inflation. Nonetheless, the market is already pricing in interest rate cuts in
May, June, and July.
Trump's demand for China to compensate $200
billion in trade deficit appears unrealistic and risks provoking further
retaliation. Without a Fed policy shift or de-escalation in trade tensions, the
stock market remains exposed to further losses.
The S&P 500 is now trading below the
critical support zone of 4,900–5,000 points. A short-term rebound towards the
gap at 5,061 is possible, but in the absence of positive news, another wave of
selling could push the benchmark down to 4,500–4,600. If this level fails,
extreme downside targets at 4,050–4,150 points come into play—an outcome that
would seriously undermine investor confidence.
Large investors continue to pull out. The SPDR
S&P 500 ETF Trust (SPY) recorded $22.22 billion in net outflows during the
third week of March, followed by only $307.4 million in net inflows the next
week. Excluding Friday, net outflows last week reached an additional $7.83
billion. Friday’s data is of particular interest, as it coincided with both
China’s tariff retaliation and Powell’s refusal to back the markets.
From a technical standpoint, the index has
extended its bearish formation. With the 4,900–5,000 support zone breached, the
chart now supports a continuation of the downtrend. The next major support
levels lie at 4,500–4,600 points, with a risk of a freefall to 4,050–4,150 if
selling accelerates.
In commodities, Brent crude fell below its key
support at $68–70 per barrel, now trading at $64.23. Recession fears and the
deepening trade conflict weigh heavily on prices. The next major support lies
at $58.00–60.00, with resistance at $68.00–70.00.
Gold has lost momentum after hitting a record
high of $3,167 per troy ounce, touching its extreme upside target range of
$3,150–3,250. Profit-taking is expected at these levels, with the next support
at $2,950–2,980 and resistance at $3,050–3,080.
In the currency market, the U.S. Dollar is
regaining strength, with EURUSD falling to 1.09550. Failure to hold above the
resistance zone at 1.09500–1.10500 signals weakness, increasing the likelihood
of a retracement towards 1.06000 as bullish momentum fades.