Cnn
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After the markets plunged in the last three trading sessions, Wall Street investors were looking for an excuse to catch their breath.
They seem to have found one – at least for the moment.
Dow Futures increased by 1,000 points or 2.5% on Tuesday. Tower contracts on S&P 500 increased by 2% and term contracts on NASDAQ was higher by 1.8%.
In recent days, stock prices have been absolutely hammered while Wall Street feared that President Donald Trump’s pricing policy is plunging American and global economies into a recession. But after three days of market carnage, investors seemed to look for purchasing opportunities.
The price / benefit ratio of S&P 500 companies closed below 17 on Monday – historically cheap, giving investors a chance to collect actions which, according to them, could be occurred.
“This is a very normal action of very technical nature after a shock period,” said Keith Lerner de Truist. “The market is extremely occurred and the markets do not move linearly.”
Lerner noted that the rebounds of the historic market tend to be grouped with massive decreases, because investors with Fomo fear that they may miss a rally.
“In a period of uncertainty, each bit of new information is overexrapoli, which leads to leaps wider than normal,” added Lerner.
This explains why a few false news on Monday that Trump was considering a pricing break – immediately struck by the White House – sent temporarily soaring stocks. This gave the markets a taste of what could happen if some nations were starting to progress in the negotiation of the lower rates.
“Yesterday, market players saw how the suspicion of a good news ” – In this case, he performed on a break in the Liberation Day rates – could rally the markets by whole percentage points very quickly,” said Michael Block of Third Seven Capital in a note to investors. “Even if it turned out to be smoke, traders are now ready for fire-that is to say real news.”
However, there is no guarantee that the actions will remain dynamic. After having imposed 10% prices through 10% on almost all products that arrive in the United States on Saturday, the Trump administration should impose much more steep levies even on dozens of countries. These prices, which Trump called “reciprocal”, although they are not such, represent up to 50% for a handful of countries – and prices on China could reach around 70%.
Trump also threatened to slap an additional 50% rate on China if the country does not decrease its reprisals it announced on Friday. The Chinese Ministry of Commerce said on Tuesday that the country “would fight until the end” of the trade war and would continue to resist Trump.
Any escalation of the trade war would probably lead to an American and world recession this year, several banks of Wall Street said in last week, including Goldman Sachs and Jpmorgan Chase. This could continue to demand stock demand.
Although the current rebound could be short -lived, some in the Trump administration already declared victory.
“It’s finding the bottom now. He finds the bottom now,” said Trump’s best sales advisor Peter Navarro, about the market on Monday evening on Fox News. “It will move and it will be S&P 500 companies that are the first to produce here. These are those who will lead to recovery. And it will happen. Dow 50,000. I guarantee it and I do not guarantee any recession. ”
Navarro’s optimism was not equaled by the CEO of JPMorgan Chase, Jamie Dimon, who warned in his annual letter to shareholders on Monday that Trump prices would increase prices, slow the world economy and weaken America’s position in the world by tearing its alliances. Even some Trump’s allies, including Elon Musk and Bill Ackman, recently warned that prices are bad policy that was based on an extremely imperfect logic.
However, stock markets around the world increased on Tuesday.
Most Asian stock market indices have closed above. The Japanese reference Nikkei 225, which follows more than 200 of the largest listed companies in the country, ended at 6%. In South Korea, Kospi closed 0.3% more. The reference of Australia ASX 200 closed 2.3% stronger. The Hong Kong Hang Seng reference index, made up of the largest listed companies in Hong Kong and continental China, ended around 1.5% on Tuesday. One day earlier, he closed more than 13% more and more of the day, in the greatest daily drop in the index since the 1997 Asian financial crisis.
In Europe, the Stoxx 600 reference index increased 1.4%. The French CAC index increased by 1.6%and Dax Germany by 1.3%, while the London FTSE 100 index increased by 1.9%.