Saturday US Indexes Analysis - 2018-03-03
Saturday US Indexes Analysis - March 3rd, 2018
The strategies discussed below are suitable for swing traders.
Trump Tariff on Steel and Aluminium Import
Last Thursday March 1st, 2018, president Trump announced that there will be a new tariff regulation for steel and aluminium imports. The tariff would be 25% on steel and 10% on aluminium and applies to all countries, even US trading allies. Although nothing is signed yet, this official announcement has made quite a shock to the finance and business industries all around the world.
The president tweeted:
Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!
Other countries reaction
US trading partners and allies are quite in shock that they will also be affected by this new tariff. IMF, European Union, Canada, and China have officially given their “replies” that the tariff regulation is a bad move from president Trump. The major concern is this new regulation could create a tariff war which would affect many industries.
Effect on stock markets
Before analysing the stock market there is an interesting story regarding this new tariff. Apparently, Carl Icahn, the investing mogul and ex presidential advisor, sold his aluminium positions days before the announcement. You can google the news, it’s everywhere. So, what do you think of Carl Icahn’s impeccable timing? Coincidence or insider trading?
Now, let’s continue with our analysis. Due to the announcement, Thursday was a “down” day. At Friday, the market tried to fight a little bit with the nasdaq is moving a little bit better. We will see how this new tariff regulations unfold. Perhaps it would only bring bad news as there will be tariff war. Or perhaps this is just a small reaction and the market will stay strong.
This new tariff announcement has made US indexes come back to the equilibrium. With such a huge impact, I would predict that the best the market can do is just to consolidate. I wouldn’t be surprised if the market goes lower next week when the tariff regulations are signed.
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