Over the weekend, the Trump administration announced new tariffs on its three largest trading partners: Canada, Mexico, and China. The equity indices mirrored the previous Monday’s DeepSeek-related decline, with SPY gapping down sharply in pre-market trading, opening near the previous low around $590. A confirmed break below this level could mark the beginning of a medium-term correction.
Intraday upside tests are likely to face resistance near the mid-term moving average around $595. If the price fails to hold above and quickly pulls back, the market is expected to remain in a broad range-bound pattern, with $600 acting as a critical resistance level ahead.
Sector Impact:
• The semiconductor sector and leading AI stocks are the most directly impacted by DeepSeek-related volatility.
• The auto sector is particularly sensitive to the U.S.-Canada-Mexico trade conflict, followed by the energy sector.
Policy Implications:
• Since the new tariffs are set to take effect starting Tuesday, it implies that Trump is leaving room for negotiation.
• However, from the Canadian government’s side, there appears to be little clarity on the U.S.’s actual goals or intentions, raising uncertainty.
Market Outlook:
• Short-term volatility is inevitable.
• Medium- to long-term direction depends on how long the trade conflict lasts and whether it escalates.
• In the current environment, AI leaders, traditional automakers, consumer goods, and energy stocks may all require revaluation.
Trading Strategy:
• Risk management should be prioritized.
• Patience is key until greater policy clarity emerges.
• There is a high probability of a short-term technical rebound after a sharp selloff, but institutions are likely to reassess mid-term impacts until a concrete deal is reached.
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