- Chinese conversations of layoffs with a tariff reduce tension, but do not cause a full recovery.
- Trump’s attention “complete victory” about tariffs changes the sentiment back to caution.
- UOM sentiment goes 52.2; Inflation expectations will augment to 6.5% in 2025.
The industrial average Dow Jones (DJIA) registered losses on Friday by over 0.32% among the uncertainty of the trade war between the USA and China. However, as they reported that China may release some American goods from tariffs, Beijing seemed to have deescalated tensions. This and the deterioration of consumer sentiment in the US meant that DJIA rises nearly 40,000, instead of testing the ups this week.
DJIA will slip as mixed Chinese signals and Trump’s tariff attitude burden the risk mood
Risk appetite remains mixed, although China adopted a elastic negotiating attitude with Washington. Meanwhile, the comments of US President Donald Trump, that he will consider “total victory” if the US retain from 20% to 50% of the tariff on foreign countries a year, caused that the leg in DJIA due to a compact change in moods.
In the meantime, consumer sentiments in the US in April deteriorated further, as revealed in the survey by the University of Michigan (UOM). The indicator dropped to 52.2 of 57 in March, the fourth lowest data reading from the tardy seventies. The study showed that the expectations regarding the economy, income, stock exchanges and the conditions of home buying deteriorated from a month earlier.
The UOM survey showed that inflation expectations increased after 4.4% in the next 5 years, and Americans expect prices to rise by 6.5% in the coming 12 months.
According to economists surveyed by Bloomberg, American actions feel pain because the growing expectations of US recession increased from 30% to 45%.
In addition, gold prices remained through the recovery of the American dollar. The prices of ores have dropped by 1.89% to USD 3,285. At the same time, the American dollar index (DXY), which follows the performance of the six currencies basket compared to the American dollar, increased by 0.27% to 99.55.
Dow Jones price forecast
The bear’s prejudice did not change, despite the fact that the index will end a week with an augment of over 2% above 40,000. Relative force indicator (RSI) shows that the shoot remains neutral, which indicates that buyers are trying to bring DJIA above, although the sentiment improved.
If DJIA cleans 40,500, the next resistance would be the highest last week at 40 790. The key resistance lies forward to 41,000. And vice versa, if the sellers drive the index below the lowest level 39 486, look for the highest level test 39 271 to eliminate the gap observed between 22 and 23 April.
Dow Jones FAQ
The industrial average Dow Jones, one of the oldest stock market indicators in the world, is developed from the 30 most rotating operations in the USA. The index is rather weighted with the price, not weighted by capitalization. This is calculated by adding up the operating prices and dividing them by the factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years he was criticized for not representative enough, because he follows only 30 conglomerates, unlike wider indicators such as S&P 500.
Many different factors drive the industrial average Dow Jones (DJIA). The main results of component companies revealed in the company’s quarterly reports are the main results. The condition and global macroeconomic data also contribute because they affect the mood of investors. The level of interest rates, determined by federal reserves (Fed), also affects DJIA, because it affects the cost of a loan on which many corporations are strongly dependent. Therefore, inflation can be the main driver, as well as other indicators that affect the FED decisions.
DOW theory is a method of identifying the basic stock exchange trend developed by Charles Dow. The key step is to compare the industrial direction of Dow Jones (DJIA) and medium transport of Dow Jones (DJTA) and follow only trends in which both move in the same direction. Volume is confirming criteria. The theory uses elements of peak analysis and the trough. Dow theory assumes three phases of the trend: accumulation when clever money begins to buy or sell; Society’s participation when a wider society is joined; And distribution when clever money comes out.
There are many ways to trade in DJIA. One of them is the exploit of ETFs that allow investors to trade DJIA as one security instead of buying shares in all 30 components. The leading example is SPDR DOD Jones Industrial ETF (Dia). Djia Futures contracts enable traders by speculating the future value of the index and the options ensure the appropriate, but not the obligation, buying or selling the index at a predetermined price in the future. Investment funds enable investors to buy a diverse DJIA shares portfolio, thus ensuring a general exposure to the general indicator.
