Wall Street rallies 7% as tech tariff exemptions ease market pressure

US markets surge amid tariff optimism

United States (US) equity markets finished higher on Friday, fuelled by optimism surrounding potential trade agreements and reassurance from Federal Reserve (Fed) speakers who noted they stood ready to stabilise the market if needed. At the end of a roller-coaster week, the US Tech 100 surged 7.4%, the US 500 soared 5.7%, and the Wall Street rose 1897 points, or nearly 5%.

US equity futures have extended gains this morning following tariff exemptions for smartphones, computers, semiconductors, and related equipment, announced after markets closed on Friday. These exemptions, effective retroactively from 5 April 2025, lifted the 125% tariffs on Chinese goods and 10% tariffs on other countries for these products.

However, President Trump posted on Truth Social Sunday, claiming, "There was no Tariff 'exemption' announced on Friday," and indicated semiconductors would shift to a different tariff category, likely under Section 232 for national security. His aides, on Sunday talk shows, clarified that exemptions for electronics were a reclassification, not a cancellation.

China retaliates with rare earth export ban

Complicating the outlook, China announced this morning it has halted exports of several rare earth minerals to the US. This move is seen as targeting a key US vulnerability and, along with the bilateral US-China tariffs announced last week are a significant escalation in the US-China trade war which risks permanent trade dislocation.

What comes next for Wall Street?

While last week's exemptions eased some immediate downside risks, trade policy uncertainty persists. High tariff rates and frequent tariff changes complicate investment decisions, undermining business and consumer confidence and risking slower capital expenditures and trade - a combination that keeps the odds of recession elevated.

Furthermore, it will be important to keep an eye on other key asset classes. Last week, the US dollar index (DXY) fell 3%, while the 10-year Treasury yield rose 50 basis points (bp) to 4.50%. With policy clarity lacking and the end of US exceptionalism, foreign investors are expected to reduce US asset holdings further, ensuring the trend for US dollar weakness likely continues and yields continue to march higher.

The US interest rates market starts the week almost fully priced for a 25 bp Fed rate cut in June with a cumulative 80 bp of rate cuts priced by year end.

US Tech 100 technical analysis

In last Monday's update here, we said:

"The acceleration to this morning's 16,550 low is viewed as a Wave III or C. This suggests that we should now be looking for signs of basing, indicating that Wave III might be close to completion and a Wave IV bounce might be imminent, back towards 18,000 – 18,500."

The bounce in the US Tech 100 has reached and breached that target. However, the critical question remains whether the bounce is a bear market rally before the sell-off resumes or an indication that the correction from the 22,222 high is complete at last week's 16,542 low and that the uptrend has resumed.

The price action in the coming session will be crucial in answering this question. Specifically, if the US Tech 100 can reclaim resistance at 19,500 and the 200-day moving average (MA) at 20,258, we favour the second option. However, while it remains below the 200-day MA, the risks are for a retest of the 16,542 low.

US Tech 100 daily chart

US 500 technical analysis

In last Monday's update, we said:

"The acceleration lower to this morning's 4832 is viewed as a Wave III or C. This suggests that we should now be looking for signs of basing, indicating that Wave III might be close to completion and a Wave IV bounce might be imminent, back towards 5300."

The bounce in the US 500 has reached and breached that 5300 target. However, the million-dollar question remains whether the bounce is a bear market rally before the sell-off resumes or an indication that the correction from the 6147 high is complete at last week's 4835 low and that the uptrend has resumed.

The price action in the coming session will be crucial in answering this question. Specifically, if the US 500 can reclaim resistance at 5600 and the 200-day MA at 5754, we prefer the second option.

However, while it remains below the 200-day MA, the risks are for a retest of the 4835 low.

US 500 daily chart

• _{Source: TradingView. The figures stated are as of 14 April 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}