Morning Note: Trump Tariff Concerns, Japan's Spending, and Australian Business Confidence Wane

Stock Market Sinks as Trump’s Tariff Plans Fuel Concerns

Investors have become uneasy due to President Donald Trump's tariff plans, which have sparked a sell-off in the stock market and increased worries of an economic slump. The S&P 500 peaked last month, when Wall Street had broadly favoured Trump's program, and this collapse has wiped $4 trillion from that peak.

The benchmark S&P 500 index fell 2.7% on its biggest one-day decline of the year. A series of new policy initiatives from the Trump administration has further increased uncertainty for businesses, consumers, and investors, particularly amid ongoing trade disputes with key trading partners such as China, Canada, and Mexico.

(S&P 500 Daily Price Chart, Source: Trading View)

From a technical analysis perspective, the bullish trend reversed when bearish momentum drove the price to break below the ascending channel at the end of February 2025. Recently, the price made a decisive break below the swap zone of 5,660 – 5,700. Therefore, this strong bearish structure may drive the price further downward, potentially retesting the support zone at 5,400 – 5,440.

Japan’s Household Expenditures Drop Sharply in January

According to the data released by the Ministry of Internal Affairs on Monday 23:30 GMT, Japanese household spending increased by 0.8% in January from a year earlier. This growth fell significantly short of market expectations, which had projected a 3.6% rise. Meanwhile, on a seasonally adjusted basis, household expenditures saw a notable month-on-month decline of 4.5%, a steeper drop than the anticipated 1.9% decrease. The weaker-than-expected spending figures suggest that the consumer sentiment is fragile, potentially caused by inflation, wage stagnation or broader economic uncertainties.

(USD/JPY Daily Price Chart, Source: Trading View)

From a technical analysis perspective, the USD/JPY currency pair has been in a bearish trend since the beginning of January 2025, as indicated by lower highs and lower lows. Recently, it broke below the swap zone of 148.70 – 149.40, solidifying the reversal from a bullish to a bearish trend. Therefore, the bearish momentum will likely continue pushing the rate downward, potentially retesting the support zone at 142.80 – 143.50.

Australian Business Confidence Turns Negative in February

According to a survey released on Tuesday at 00:30 GMT by the National Australia Bank (NAB) survey, Australian business confidence slipped back into negative territory in February, despite some relief from central bank interest rates. The business confidence index saw a sharp decline of six points to -1, offsetting the gains recorded in the previous month. The data underscores ongoing challenges in the business sector, potentially driven by economic uncertainty, cost pressures, or subdued consumer demand.

(AUD/USD Daily Price Chart, Source: Trading View)

From a technical analysis perspective, the AUD/USD currency pair has been in a bearish trend since the end of September 2024, as indicated by lower highs and lower lows. However, it formed a double-bottom candlestick pattern with a significant liquidity sweep in January 2025. This suggests that bullish forces have regained control, pushing the rate upward, forming higher highs and higher lows.

Currently, it is testing the swap zone at 0.6250 – 0.6270. If this zone fails to hold as support, the rate will likely continue falling, potentially retesting the support zone at 0.6180 – 0.6200. Conversely, if it finds support at this swap zone, it may rebound upward, retesting the resistance zone at 0.6340 – 0.6360.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.