S&P 500 REVERSES AFTER KUDLOW COMMENTS ON TARIFFS

It’s been a busy 24 hours across financial markets, with a key driver showing up in yesterday’s morning’s US session. As global stocks were starting to take on a worrying overtone, with the S&P 500 appearing very near a re-test of the February double-bottom, White House Chief Economic Advisor Larry Kudlow offered some comments to Bloomberg News that seemed to be crafted specifically for traders’ ears. Mr. Kudlow framed tariff talk as more of a negotiations rather than a done deal, reminding that ‘none of the tariffs have been put in place yet,’ and that it would likely take up to two months to actually begin implementation.

This was music to markets’ ears and US equities quickly started a rally that lasted into this morning’s European open. A bit of resistance has started to show in S&P 500 futures, and this is coming-in at the 38.2% Fibonacci retracement of the February sell-off. Bulls have appeared to be rather undeterred after this resistance test, as we’ve seen a build of higher-low support since that level came into play earlier this morning.

S&P 500 TWO-HOUR CHART: BULLISH REVERSAL RUNS INTO FIBONACCI RESISTANCE

S&P 500 two hour chart

Chart prepared by James Stanley

NFP, CANADIAN JOBS NUMBERS ON DECK; POWELL SPEECH AHEAD OF US MARKET CLOSE

Tomorrow’s economic calendar brings Non-Farm Payrolls out of the United States, and we’re also getting Canadian Jobs numbers at the same time; making for an especially pensive backdrop in USD/CAD.

But that’s not all that this Friday holds, as we’re also going to get a speech from Fed Chair, Jerome Powell, at 1:30 PM ET. While it may be hard to imagine how a speech from a Fed Chair a few hours ahead of markets closing for the week may not work out well for stocks, it’s important to note that after each of Mr. Powell’s appearances in March, a degree of risk aversion began to show. Earlier in the month at Humphrey Hawkins, stocks took on a fairly nasty tone after his first day of speaking and largely remained until he finished a couple of days later. And then we had the rate hike later in the month, and that was followed by another rather nasty spill in US equities. So – traders may want to be a bit more balanced as we go into that speech than if this were Janet Yellen.

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