THE markets endured another volatile week, with US index futures paring earlier losses after a sharp Nvidia-led sell-off. Nvidia fell over 6 per cent in after-hours trading on Tuesday (April 15) following new US trade restrictions on chip sales to China, targeting its H20 and AMD’s MI308 AI chips, a move that could cost Nvidia an estimated US$5.5 billion and highlight escalating tensions in the global tech race. Market sentiment found some support from reports that China might be open to renewed talks with the US, contingent on more consistent policy from US President Donald Trump and discussions involving Taiwan and sanctions.
Further uncertainty stemmed from the White House’s inconsistent trade policies, including a new probe into critical mineral tariffs, while a transatlantic trade standoff showed little progress, with US officials indicating that tariffs on the EU are likely to persist. Despite a brief relief rally after Trump delayed reciprocal tariffs and suspended levies on consumer tech products, renewed trade war fears, sparked by the latest chip restrictions, weighed on sentiment. With a week shortened by the Good Friday holiday and ongoing tariff threats, the markets faced a spectrum of economic scenarios, from sluggish growth to deeper downturns, casting a cautious outlook for the Nasdaq 100.
The Nasdaq 100 Index is currently navigating a challenging phase, with recent price action suggesting neither a clear bullish nor bearish trend after the previous week’s movements alleviated some downward pressure. The index, now trading around 18,490 following a 1.8 per cent correlated drop, failed to breach a key resistance zone between 19,140 and 19,400, a region that previously acted as support but now aligns with a descending trendline and the 50 per cent Fibonacci retracement from February’s record high near 22,222.
A decisive move above 19,400 could open the path for a rally towards the 61.8 per cent Fibonacci level near the 20,000 psychological mark. Conversely, sustained selling pressure may push the index lower, with potential support levels at 18,200 and 18,000. A breakdown below these could trigger a further decline towards 17,435 – the August 2024 low.
Investors should approach the Nasdaq 100 Index with caution, as its current position at 18,490 at the point of writing on April 17 – near key support levels of 18,200 and 18,000 – suggests a critical juncture amid US-China trade tensions and market volatility. Consider waiting for a confirmed hold above 18,200 before entering long positions, with a stop-loss below 18,000. Alternatively, be prepared for potential short positions if the index fails to reclaim 19,400, targeting a decline towards 17,435, while closely monitoring trade negotiations and upcoming earnings for directional cues.
The Nasdaq 100’s failure to break the 19,140 to 19,400 resistance zone, coupled with ongoing geopolitical uncertainties, points to a cautious near-term outlook, though a potential rally to 20,000 remains possible if bullish momentum returns, making it essential to balance risk with opportunities in this uncertain environment.
The writer is equities specialist at Phillip Securities
