- China tariff exemption conversations relieve tensions but fail to cause total recovery.
- Trump’s “total victory” comment on tariffs changes the feeling towards caution.
- The feeling of the UOM reaches 52.2; Inflation expectations are fired at 6.5% by 2025.
The Dow Jones industrial average (DJIA) registered losses of more than 0.32% on Friday in the midst of uncertainty about the commercial war between the US and China. However, when the news was known that China could exempt some American tariff products, Beijing seemed to have broken down tensions. This and a deterioration in the feeling of the US consumer kept the DJIA about 40,000 instead of trying the maximums of the current week.
The Djia falls while Mixed signs from China and Trump’s tariff posture weigh on risk mood
The appetite for the risk remains mixed despite the fact that China has adopted a flexible negotiation position with Washington. Meanwhile, the comments of the president of the United States, Donald Trump, that he will consider a “total victory” if the US maintains tariffs from 20% to 50% on foreign countries within a year caused a fall in the DJ due to a slight change in feeling.
Meanwhile, the feeling of the US consumer in April deteriorated even more, according to a survey from the University of Michigan (UOM). The index fell to 52.2 from 57 in March, the fourth lowest reading in data since the late 1970s. The survey showed that the expectations about the economy, income, stock market and housing purchase conditions worsened compared to the previous month.
The UOM survey showed that inflation expectations had increased more than 4.4% in the next 5 years, with Americans waiting for prices to increase 6.5% in the next 12 months.
US actions are also feeling pain, since the expectations of a recession in the US have increased from 30% to 45%, according to economists surveyed by Bloomberg.
Apart from this, gold prices remained pressured by the recovery of the US dollar. Lagote prices have dropped 1.89% to $ 3,285. At the same time, the American dollar index (DXY), which tracks the yield of a six -currency basket against the US dollar, rose 0.27% to 99.55.
Dow Jones price forecast
Dow’s bear bias has not changed even though the index is ready to finish the week with profits of more than 2% above the 40,000 mark. The relative force index (RSI) shows that the momentum remains neutral, an indication that buyers are struggling to boost the highest DJia, although the feeling has improved.
If the Djia exceeds 40,500, the next resistance would be the maximum of last week at 40,790. The key resistance is in front of 41,000. On the contrary, if the sellers carry the index below the minimum of April 23, 39,486, look for a test of the maximum of April 22, 39,271 to close the gap observed between April 22 and 23.
Dow Jones Faqs
The Dow Jones Industrial Avenge, one of the oldest stock market indexes in the world, consists of the 30 most negotiated values ​​in the United States. The index is weighted by the price instead of capitalization. It is calculated by adding the prices of the values ​​that compose it and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, also founder of the Wall Street Journal. In recent years it has been criticized for not being sufficiently representative, since it only follows 30 companies, unlike broader rates such as S&P 500.
There are many factors that promote the Dow Jones Industrial Average (DJIA) index. The main one is the added performance of the companies that compose it, revealed in the quarterly reports of business benefits. The American and world macroeconomic data also contribute, since they influence investor confidence. The level of interest rates, set by the Federal Reserve (FED), also influences the DJia, since it affects the cost of credit, on which many companies depend largely. Therefore, inflation can be a determining factor, as well as other parameters that influence the decisions of the Federal Reserve.
Dow’s theory is a method to identify the main trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Avenge (DJIA) and the Dow Jones Transportation Average (DJTA) and just follow the trends in which both move in the same direction. The volume is a confirmation criterion. The theory uses elements of maximum and minimum analysis. Dow’s theory raises three phases of the trend: accumulation, when intelligent money begins to buy or sell; Public participation, when the general public joins the trend; and distribution, when intelligent money abandons the trend.
There are several ways to operate with the DJ. One of them is to use ETF that allow investors to negotiate the DJ as a single value, instead of having to buy shares of the 30 companies that compose it. An outstanding example is the SPDR Dow Jones Industrial Avenge ETF (day). Future contracts on the DJ allow the specular operators about the future value of the index and the options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Investment funds allow investors to buy a part of a diversified portfolio of DJ values, which provides exposure to global index.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
