The trade: impact of tariffs on US Tech 100 and Bitcoin stability
IG's Tony Sycamore explores how the US-China tariff dispute fuels market turbulence, creating trading opportunities across asset classes amid potential economic impacts.
(AI video summary)
This video was created on 9 April for IG audiences by ausbiz.
Understanding market volatility and technical analysis
Recent trading sessions have been marked by significant volatility, particularly on Wall Street, where United States (US) stocks have reversed gains to close in the red. This turbulence is largely attributed to the ongoing tariff tensions between the US and China.
With tariffs as high as 104% on Chinese imports, the economic clash between these superpowers has the potential to surpass the impacts of both the Global Financial Crisis (GFC) and Covid-19. Traders are advised to closely monitor technical indicators, such as support levels in the US Tech 100, which suggest further declines could occur before any corrective bounce.
Impact on commodities and currency markets
The tariff dispute has also impacted commodities and currency markets. Crude oil prices have plummeted by 20%, breaking through key support levels, as recession fears dampen global demand.
Similarly, the Australian market, influenced by Chinese economic policies, faces its own challenges. The Australia 200 may experience further declines if tariffs persist, reflecting the economic strain of this geopolitical conflict. The Australian dollar is under pressure, with risks of testing pandemic lows, especially if a liquidity crunch develops, drawing investors towards the US dollar as a safe haven.
Crypto market resilience amidst turmoil
In contrast to traditional markets, cryptocurrencies like bitcoin have shown relative stability. Despite recent corrections, Bitcoin holders appear unfazed, viewing the digital asset as a long-term investment.
However, for bitcoin to rally, it must surpass the 200-day moving average and break through resistance levels around 89,000 to 90,000. Until then, traders should be prepared for continued pullbacks.
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