Today, we have important news regarding the potential reductions in prices on China. President Trump suggested that “the 80% price on China seems fair” before the next commercial negotiations with Chinese officials. This would represent a substantial decrease compared to current prices, which would reach up to 145%.
What is particularly interesting – and revealing – is the lukewarm reaction of the stock market to this news.
Despite what would generally be considered positive for the economy (lower prices), the stock market did not respond with enthusiasm. During the drafting, the shares are slightly down, which suggests one of the two things (or both):
The market does not think that these pricing reductions will considerably improve economic perspectives, or the market is ready to decrease according to technical factors and feeling, overwhelming what would normally be positive news.
This reaction aligns with what I have discussed in recent alerts – the markets do not always respond to news directly, in particular when the technical conditions and the positioning of the market already point in a particular direction.
Skeptical bond market as to commercial stimulation
The reaction of the bond market to this news provides an additional context. I have not seen significant movements, suggesting that fixed income investors remain skeptical about the long -term economic impact of these potential rate adjustments.
From the point of view of technical analysis, today’s price action also confirms what the graphs have told us: the market is probably positioned for a significant decline regardless of the flow of new. When the markets fail to come together on positive news, it is often a sign that the sales pressure remains dominant. In other words, even if the actions move smaller, the message is strong: the actions want to refuse here.
This is deep, because the performance of stocks as well as that of sets provide key history for many markets, including raw materials (like) and precious metals.
And the latter has also done something really remarkable (and in line with what I have been writing for several days now). Namely, he climbed in a burst …
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