The Nasdaq surged 12.2%, the S&P 500 gained 9.5% and the Dow Jones Industrial Average rose 7.9% — with the sharp unwinding of extreme bearish sentiment likely amplifying the magnitude of the rally.

In a single night, market sentiments swung dramatically — from fear, uncertainty and doubt to relief and euphoria. 

This sharp shift was triggered by yet another policy reversal from US President Donald Trump, who unexpectedly announced a 90-day pause on the implementation of higher tariffs for certain countries. 

While a universal “reciprocal tariff reduction to 10%” remains in place, the move is still seen as a much more favourable outcome than initially feared, says Yeap Jun Rong, market strategist at trading solutions provider IG. “[It helps] to push back against earlier concerns that securing such a concession would be a far more arduous process.”

Still, this is a temporary reprieve rather than a full rollback of tariffs, adds Yeap in an April 10 note. “Sector-specific tariffs — potentially affecting industries such as pharmaceuticals, semiconductors and lumber — are still expected to be announced in due course. But at least for now, the immediate risk of a recession may be revisited — likely lowered at least for now.”

Tensions with China, however, remain elevated. The US has raised tariffs on Chinese goods to 125% in response to Beijing’s earlier hike, which saw duties on all US imports rise to 84%, up from the previously declared 34%. 

The spillover effects of this continued tit-for-tat US-China trade conflict cannot be understated, says Yeap, but the path to negotiation is not entirely closed. “Trump previously maintained confidence that Chinese President Xi Jinping will eventually return to the negotiating table and market participants are likely to harbour such hopes unless proven otherwise.”

What now for the Nasdaq?

The Nasdaq surged 12.2%, the S&P 500 gained 9.5% and the Dow Jones Industrial Average rose 7.9% — with the sharp unwinding of extreme bearish sentiment likely amplifying the magnitude of the rally. 

All sectors closed in the green, with growth sectors leading the outperformance, having borne the brunt of the prior market sell-off.

From a technical standpoint, the overnight rally has pushed the Nasdaq close to a key downward trendline resistance near the 19,500 level, says Yeap. “Despite the rebound, the broader lower-highs-lower-lows structure still remains intact, which will inevitably raise the question of whether this is merely a bear market rally.”

All eyes will be on whether this relief bounce has room to evolve into something more sustained, potentially with the formation of a higher low on any pullback, says Yeap.

For now, the weekly Relative Strength Index (RSI) has also headed back closer to the midline, suggesting a more neutral momentum setup for now, he adds. “A reversion back above the midline may offer greater conviction of a trend shift, which were presented in the 2018, 2020 and 2022 bear markets.” 

STI rebounds 

The Straits Times Index (STI) rebounded 4.5% at today’s open, bringing the index back to its 200-day moving average, notes Yeap. “This level may act as resistance, especially for trend-following traders.”

However, there is a chance this may just be a temporary bounce, and greater conviction likely depends on the formation of a higher low, which may take time to materialise, says Yeap.

“Meanwhile, the daily RSI has returned to the midline, echoing the setup seen during the August 2024 rally, where a sustained move above the midline may be needed to signal for a more durable bullish view.”