The Dow Jones Index declined on Monday as concerns mounted over the global trade ecosystem amid trade tariff wars. The downtrend continued on Tuesday as President Donald Trump’s 25% tariffs against imports from Canada and Mexico kicked in. Dow Jones futures were down by 0.4% before opening of markets, signaling tumultuous days ahead.
Canada has retaliated against US tariffs with 25% counter-tariffs on nearly $100 billion worth of US imports. Elsewhere, China announced as much as 15% tariffs on US imports, in reaction to additional 10% tariffs announced by President Trump last week. The tariff-driven FUD sentiment is likely to grow stronger in the coming days if Trump makes good his threats against imports from the European Union.
The highlight of the week will be Friday’s release of Non Farm Payrolls (NFP) data, which will provide perspective on the trajectory of US economy. There are concerns that high tariffs could keep inflation elevated and subdue jobs creation.
Elsewhere, yields on benchmark 10-year US have fallen to 4.136% as of this writing, the lowest level in nearly three months, signaling declining investor confidence in the US economy.
Falling bond yields indicate that more investors are rushing to buy safe haven bonds, for fear that other segments of the economy could be staring at contraction. That increases their demand and drives down yields earned. A continuation of the trend will likely put downward pressure on the Dow Jones Index (INDEXDJX: .DJI).
Dow Jones Index Prediction
The Dow Jones Index pivots at 43,230 points and action below that level denotes control by the sellers. The first support is likely to be at 42,410 points, but a stronger momentum will break below that level and could find the second support at 41,950.
Conversely, going above 43,230 points will usher in the buyers to take control. In that case, the upward movement will likely meet resistance at 43,800 points mark. Breaking above that level will invalidate the downside narrative. Also, an extended control by the buyers could result in further gains to test 44,450 mark.
