While any tariff rollback may offer near-term relief, the economic drag from existing tariffs will be a key risk to monitor in the months ahead.

Wall Street staged a strong recovery last week, with the S&P 500 gaining 8.3%, the Nasdaq jumping 11.7% and the Dow Jones rising 6.2%. Much of the rally was sparked by a surprise 90-day delay in some import tariffs, which may signal a shift from escalation toward negotiation and form the basis for some short-covering, says Yeap Jun Rong, market strategist at trading solutions provider IG.

Over the weekend, further tariff rollbacks were announced, potentially extending the market’s optimism into the coming week. Notably, smartphones, computers, semiconductors and related equipment were exempted from new reciprocal tariffs, though they remain subject to the existing 20% fentanyl-related levies, notes Yeap.

While any tariff rollback may offer near-term relief, the economic drag from existing tariffs will be a key risk to monitor in the months ahead, adds Yeap in an April 14 note. 

“Recession risks have eased somewhat compared to a month ago, but remain elevated,” writes Yeap. “Growth forecasts still point to a sharp slowdown in the U.S. economy in 2025 as well, with estimates ranging from 0.1% to 0.6%, while unemployment is expected to rise and inflation may stay persistent.”

Once the initial optimism around tariff rollbacks fades, Yeap warns that these “underlying macro headwinds” could bring markets back to a more “sobering reality”.

The question for the Nasdaq remains on whether the recent bounce is a bear market rally, which often unfolds quickly and sharply, which Yeap thinks is the case today. 

For now, the “lower highs and lower lows structure” remains intact, with a downward trendline still keeping the broader downward trend in place, says Yeap. 

“Greater conviction of a trend shift may come from a move above April 10’s high at the 19,244 level, which may mark a break of the trendline resistance. Its daily relative strength index (RSI) has also returned to its midline, with a move above the midline needed to offer further bullish bias,” he adds. 

What’s ahead for the Hang Seng Index?

Despite China being singled out as the primary target of recent US tariff measures, the Hang Seng Index found support last week at the 18,930 level, which aligned with a broader upward trendline, notes Yeap. 

Market expectations that any aggressive retaliation from China may be followed up with strong domestic policy stimulus — potentially a “bazooka” response—may have helped cushion the recent pullback, he adds.

Technically, the weekly RSI is attempting to hold at its midline, a level that has consistently provided support since April 2024, reinforcing the underlying uptrend. 

According to Yeap, immediate resistance lies at the 21,600 level, near its 100-day moving average, with focus on whether any near-term retracement will form a higher low to set the stage for the next leg up.

Charts: IG