What’s ahead for Nasdaq, US Dollar and Hang Seng?

Tariff exemptions to offer calm into the new week

Wall Street staged a strong recovery last week, with the S&P 500 gaining 8.3%, the Nasdaq jumping 11.7%, and the Dow Jones rising 6.2%. Much of the rally was sparked by a surprise 90-day delay in some import tariffs, which may signal a shift from escalation toward negotiation and form the basis for some short-covering. Over the weekend, further tariff rollbacks were announced, potentially extending the market’s optimism into the coming week. Notably, smartphones, computers, semiconductors, and related equipment were exempted from new reciprocal tariffs, though they remain subject to the existing 20% fentanyl-related levies.

While any tariff rollback may offer near-term relief, the economic drag from existing tariffs will be a key risk to monitor in the months ahead. Recession risks have eased somewhat compared to a month ago, but remain elevated. Growth forecasts still point to a sharp slowdown in the US economy in 2025 as well, with estimates ranging from 0.1% to 0.6%, while unemployment is expected to rise and inflation may stay persistent. Once the initial optimism around tariff rollbacks fades, these underlying macro headwinds could bring markets back to a more sobering reality.

US data underscores growth risks

Economic data released last Friday showed a surprise downside in March’s US produce price index (PPI), with core PPI declining 0.1% month-on-month (MoM), below the 0.3% expansion expected. Meanwhile, the preliminary University of Michigan Consumer Sentiment index plunged to 50.8 from the 57 prior—marking the fourth straight month of decline. Notably, one-year inflation expectations surged to 6.7% from 5.0%, the highest reading since 1981. The data paints a stagflation-like backdrop that suggests consumer confidence remain fragile, though the calculations were done before the partial reversal of US President Donald Trump’s reciprocal tariffs.

What’s ahead for the Nasdaq?

The question for the Nasdaq remains on whether the recent bounce is a bear market rally, which often unfolds quickly and sharply, as this bounce appears to. For now, the lower highs and lower lows structure remain intact, with a downward trendline still keeping the broader downward trend in place. Greater conviction of a trend shift may come from a move above 10 April high at the 19,244 level, which may mark a break of the trendline resistance. Its daily relative strength index (RSI) has also returned to its midline, with a move above the midline needed to offer further bullish bias.

What’s ahead for the US Dollar Index?

The recent break below the key psychological 100.00 level on the US Dollar Index (DXY) could prove significant, as it marks a retest of the lower bound of a year-long consolidation range. Historically, this support zone has prompted a rebound, making it a key level to watch. However, a failure to hold could open the door to further downside toward the 96.70 level, where a broader uptrend line support may come into play. Headwinds for the US dollar include ongoing growth concerns and the unwinding of US assets.

What’s ahead for the Hang Seng Index (HSI)?

Despite China being singled out as the primary target of recent US tariff measures, the HSI found support last week at the 18,930 level, which aligned with a broader upward trendline. Market expectations that any aggressive retaliation from China may be followed up with strong domestic policy stimulus—potentially a "bazooka" response—may have helped cushion the recent pullback. Technically, the weekly RSI is attempting to hold at its midline, a level that has consistently provided support since April 2024, reinforcing the underlying uptrend. Immediate resistance lies at the 21,600 level, near its 100-day moving average (MA), with focus on whether any near-term retracement will form a higher low to set the stage for the next leg up.