Wall Street gaps lower, ASX under pressure following Trump’s tariffs

Wall Street indices fell out the wrong side of the bed at this week’s open, with Nasdaq 100 futures currently down -2.6% from Friday’s close. While not as volatile, it marks the second consecutive selloff at the beginning of the week, following last week’s knee-jerk reaction to DeepSeek’s AI models being released. S&P 500 futures are currently down -2% and the Dow is off by -1.4%.

Markets still responding to President Trump’s tariffs being slapped on Canada and Mexico’s imports to the US, with the threat of further tariffs set to follow. This means headline risks could cloud sentiment as we head towards Friday’s Nonfarm payrolls report, with several Fed members also set to speak (who are unlikely to be dovish).

It is interesting to note that the large gaps lower saw the S&P 500 and Nasdaq break back below their 50-day SMAs, while the Dow is trying to hold above it. As the Dow has a stronger correlation with the ASX 200, traders will want to see how the Dow reacts around the 50-day SMA to decipher the depth of the ASX selloff.

But already we’re seeing a bit of a pushback from bulls. S&P 500 futures are trying to recover from last Monday’s ‘DeepSeek’ low, and Nasdaq 100 futures are back above 21k. It may not be a compelling buy signal, but something for bears to consider before wading in around current levels as these markets appear vulnerable to whipsaws in both directions. And while it

ASX 200, SPI 200 technical analysis

Last week I noted concerns that a new all-time high for the ASX 200 cash index might be short lived. And it seems my suspicions were correct, as the SPI 200 (ASX 200 futures) are currently down -2% from Friday’s close.

Mean reversion is clearly underway with the ASX 200 cash index (left) trading between its 10 and 20-day SMAs while SPI 200 is trying to break beneath its 20-day SMA. But with the Dow holding above its 50-day SMA and the SPI above its 20 SMA (for now), the risk is we’ve seen the baulk of the initial selloff which could leave it vulnerable to a bounce. However, given the strength of the momentum shift just below its record high, I suspect bears will seek to fade into any such bounce.

The 1-hour chart of the SPI 200 (ASX 200 futures) shows that today’s selloff has been accompanied by heavy selling volume. The volume delta (bids minus offers) is extremely negative, which more often than not is later followed by a move in the opposite direction. Moreover, the current 1-hour candle does not confirm the extremely negative delta, with its relatively small high-to-low range. And with the RSI (2) also extremely oversold, the Dow and ASX holding above their 50-day SMAs, I suspect a bounce could be due.

Bears could seek to fade into moves below the monthly pivot (8393) in anticipation of a return to last Monday’s ‘DeepSeek’ low.

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