5 August 2025,03:16
Daily Market Analysis
5 August 2025, 03:16
*U.S. stocks rallied over 1% as Trump’s softer-than-expected tariff adjustments eased trade war fears and restored investor confidence.
*The 90-day extension of the tariff pause between Washington and Beijing calmed markets and revived hopes for further negotiations.
*Growing expectations of synchronized rate cuts by the Fed, BoE, and RBA added to the risk-on tone, lifting equities and risk assets globally.
A wave of optimism swept through financial markets as investors welcomed signs of de-escalation in global trade tensions and growing anticipation of coordinated central bank easing. Major U.S. stock indices surged more than 1%, leading a broad-based recovery across risk assets after the Trump administration unveiled revised tariff measures that were less severe than initially feared. The moderated approach, which spared key trading partners from the steepest potential duties, helped calm markets and reduce the threat of immediate retaliatory actions.
The improved risk sentiment gained further support from a 90-day extension of the U.S.-China tariff truce, reinforcing expectations that both economic powers remain committed to resolving their differences through negotiation rather than confrontation. This development, combined with emerging clarity on the scope of upcoming U.S. tariffs, helped alleviate the cloud of uncertainty that had weighed on markets in recent weeks.
Beneath the surface, a notable shift in monetary policy expectations is providing additional fuel for the rally. Market participants are increasingly confident that the Federal Reserve will deliver another rate cut in September, with similar easing moves anticipated from other major central banks including the Bank of England and Reserve Bank of Australia. This growing consensus around global monetary accommodation is creating a supportive backdrop for risk assets, as evidenced by strong overnight gains in Asian markets and early strength in U.S. equity futures.
For now, the combination of reduced trade anxiety and expectations for continued central bank support has created conditions conducive to renewed risk appetite, though the durability of this rebound will likely depend on tangible progress in ongoing trade negotiations and confirmation of the anticipated policy easing.
The Dow Jones Industrial Average rebounded sharply from its monthly low of 43,301, posting a 2% gain from the recent trough. The index has now decisively broken above the 68.2% Fibonacci retracement level at 44,209.40, signaling a potential bullish trend reversal.
Further reinforcing the bullish outlook, a bullish crossover has formed on the simple moving averages (SMA), underscoring strengthening upward momentum. On the technical front, the Relative Strength Index (RSI) is nearing the overbought zone, while the MACD continues to climb higher after crossing above the zero line — both indicating strong bullish momentum underpinning the index’s recent gains.
Resistance level: 44,425.00, 44,685.00
Support level: 44,060.00, 43,910.0
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