The Nikkei 225 index plunged by over 3% on Thursday as investors dumped top Japanese stocks following Donald Trump’s Liberation Day speech. It plunged to a low of ¥34,150, its lowest level since August 5, and 18% below the highest point this year. That is a sign that it may move into a bear market soon.

Japan and US trade war escalates

The Nikkei 225 and Topix indices plunged after Trump unveiled a 24% tariff on many Japanese products on top of the 25% tariff he placed on imported auto and parts. 

These tariffs will have a major implication on the trade volumes from Japan to the US, two of the top allies. Trump has also hinted that he will retaliate if Japan imposes tariffs on US goods. Instead, he argued that the only way that the US would lower its tariffs on imported goods would be if other countries lowered tariffs on US goods.

The US and Japan have had an impressive trade relationship over the years. Japan exported goods worth about $140 billion to the US in 2024, while the US sold goods valued at about $70 billion. Trump has always been concerned about this large trade deficit, especially since the US is responsible for protecting Japan. 

Japan banks lead the sell-off

Most companies in the Nikkei 225 index slumped on Thursday. Top exporting companies dropped as investors focused on their potential slower sales to the US. At the same time, most bank stocks plunged as analysts predicted that the Bank of Japan (BoJ) will not deliver more interest rate cuts this year. 

Resona Holdings, which runs the fifth-largest banking group in Japan, crashed by over 9% on Thursday. Mizuho Financial Group, Chiba Bank, Nomura Holdings, Mitsubishi UFJ, Concordia Financial Group,  and Sumitomo Mitsui Financial Group crashed by over 7%. 

Analysts now believe that the BoJ will pause its rate hikes to prevent Japan from tumbling towards a recession. Banks usually do well when the central bank is hiking interest rates since this leads to a higher net interest income. 

Other top Japanese exporters were among the laggards. For example, Kawasaki Heavy Industries, Subaru, Mazda, Japan Steel, Isuzu Motors, and Toyota crashed by over 5%.

Still, analysts believe that Japan will maintain its role as one of the biggest exporters to the US. That’s because the cost of doing business in Japan is lower than in the US, meaning that companies will be comfortable to maintain status quo and then boost prices. 

Nikkei 225 index technical analysis

The daily chart shows that the Nikkei 225 index has been in a strong downtrend in the past few days. This crash intensified on Thursday after Trump imposed these tariffs. It moved below the key support at ¥35,250, the lowest swing in September last year.

The index has also formed a death cross as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other. It is one of the most bearish signs in technical analysis. 

Also, top oscillators like the Relative Strength Index (RSI) and the MACD have all pointed downwards. Therefore, the index will likely remain under pressure in the coming days as sellers target the key support at ¥33,000. A move above the resistance point at ¥35,250 will invalidate the bearish outlook.

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US stock index futures plummeted on Thursday as investors gave a thumbs down approval to Donald Trump’s tariffs. 

Dow Jones Index futures plummeted by almost 1,000 points, while those tied to the S&P 500 and Nasdaq 100 fell by 170 points and 700 points, respectively. Popular ETFs like the DIA, QQQ, and SPY will open much lower.

DIA, QQQ, and SPY crash to accelerate

Popular ETFs tracking the Dow Jones, Nasdaq 100, and S&P 500 indices are set to crash once the market opens if the futures market is to go by. 

The Dow Jones Index has crashed by over 8.2% from its highest level this year, while the Nasdaq 100 and S&P 500 have dropped by over 13% and 9%, respectively.

These indices have been in a downtrend this year, mostly because of the fears that the AI bubble is bursting. Now, they are selling off as concerns rise that the US is heading toward a catastrophic recession.

Odds of a recession have jumped in the past few days. This week, Goldman Sachs analysts boosted their recession odds to 35%, joining other powerhouses like PIMCO and Morgan Stanley that have warned about the US.

We believe that the Trump tariffs he announced this year will be a black swan event because of their severity. He has announced a 25% tariff on all imported vehicles, steel, and aluminum. He also added a 25% tariff on goods from Canada and Mexico. 

Trump has also boosted tariffs on imported goods from countries like China and those in the European Union. 

Gold has emerged as a good place to hide

A common question among investors is whether there is a good place to hide as popular ETFs like DIA, SPY, and QQQ plummet. Gold has emerged as one of the best hiding places as these risks rise. It has soared to a record high of $3,150, and is up by over 20% today. Gold ETFs like GLD and IAU have accumulated substantial assets in the past few months. 

Gold has jumped because of its strong history as a store of value. Besides, gold has maintained its value for centuries, demand from central banks is rising, and global supplies are falling. 

Vanguard Utilities ETF (VPU)

The other hiding place to run as recession odds rise and QQQ, SPY, and DIA plunge is in the utilities. These are companies that provide essential and irreplaceable services like electricity, gas, and water. 

Americans will continue to pay for these services whether there is a recession or a great depression. These companies are also mostly domestic, meaning that they will not be affected by tariffs. Instead, they will benefit from domestic policies like tax cuts and deregulation. 

This explains why the VPU ETF has done well in the past few days. It has risen in the last six consecutive days, and is hovering at its highest point since February 24.

Vanguard Financials ETF (VFH)

The other hiding place to watch as the QQQ, DIA, and SPY ETFs crash is financials. The VFH ETF tracks the biggest financial services companies in the United States. The most notable companies in the fund are JPMorgan, Berkshire Hathaway, Mastercard, Visa, Bank of America, Wells Fargo, and S&P Global. 

These companies will likely be less affected by tariffs because customers will continue to use their services. The only impact may come from the Federal Reserve, which may decide to slash interest rates if the US sinks to a recession. 

Vanguard Real Estate ETF (VNQ)

Real estate companies are also expected to do well if the US sinks into a recession because it will force the Fed to cut interest rates. With many of them facing a wall of maturities, lower rates will be a welcome move for these companies. 

Most importantly, many of these firms like Prologis, Welltower, Equinix, Simon Property Group, and Digital Realty, and Realty Income are domestic and will not be impacted by these tariffs and retaliatory ones. 

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The South African rand continued its downward trend against the US dollar after Donald Trump’s Liberation Day speech on Wednesday. The USD/ZAR exchange rate rose to a high of 18.97 on Thursday, its highest level since February 3. It has jumped by over 4.7% from the lowest point this year. 

US and South African trade concerns

Donald Trump announced that the US will impose huge tariffs on imported goods from South Africa when he delivered his closely-watched Liberation Day speech,

Trump noted that South Africa charges a 60% tariff on South African goods. As a result, the US will impose a universal 30% tariff on goods coming from the country. 

These tariffs will have a big impact on trade flows between the two countries since South Africa is bound to respond. 

Data shows that the trade volume between South Africa and the US totaled about $20.5 billion in 2024. The US exported goods worth over $5.8 billion, while South Africa sold products worth $14.7 billion. This means that the US had a trade deficit of about $9 billion. 

The top South African exports to the US are platinum, cars, and other precious metals. In this case, the country will continue shipping its platinum and other precious metals to the US because of its big role in the industry. It is hard to replace the country’s platinum.

The products that could be impacted are the Mercedes-Benz C-Class, which is assembled in East London, and BMW X3, which is made in Pretoria. There is a risk that the auto sector will be impacted as the vehicles become unaffordable once a 25% tariff is added.

US and South Africa tensions have risen

The new tariffs add on the tensions that have been going on since Trump became president. His administration has accused South Africa of targeting white people because of a land bill that the parliament passed.

This bill will enable the government to take over underutilized land and pay a fair market price. It was a better bill than most activists advocated, which called for taking the land without payments.

Trump has also slashed some funding to South Africa when it cut the USAID budget. That move halted about $440 million in aid allocated in 2023 and another $439 million allocated this year. 

Therefore, the USD/ZAR pair has soared as analysts expect that the South African Central Bank will slash interest rates further even as inflation rises. The most recent data showed that the country’s inflation jumped to 3.2% from a low of 2.4% last year.

USD/ZAR technical analysis

USDZAR chart by TradingView

The daily chart shows that the USD/ZAR pair surged, as we predicted in this article. It moved to a high of 18.97, its highest level since February 3rd. This rebound happened after the pair formed a falling wedge pattern, a popular bullish continuation sign. This pennant came after the pair surged, meaning that it was part of a bullish pennant pattern.

The USD to ZAR exchange rate has remained above the 50-day and 100-day moving averages. Also, the Relative Strength Index (RSI) and the MACD indicators have all pointed upwards. 

Therefore, the pair will likely keep rising as bulls target the next key resistance level at 19.21, its highest point this year.

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The Nasdaq 100 index has crashed into a correction as concerns about Donald Trump’s reciprocal tariffs and the artificial intelligence (AI) industries remain. It closed at $19,580 on Wednesday and then plunged by over 600 points in the futures market. This article explains why this crash could be a golden opportunity to buy these stocks.

2 reasons why the Nasdaq 100 index has crashed

There are two main reasons why the Nasdaq 100 index has crashed this year. First, there are serious concerns about the artificial intelligence (AI) industry, which is showing signs of slowing down. This explains why most AI stocks like NVIDIA, AMD, Intel, BigBear, C3.ai, and SoundHound have plummeted this year.

These fears have been compounded by the ongoing trade war, which escalated on Wednesday when Trump unveiled his Liberation Day tariffs on all US imports. The US will impose 10% to 35% tariffs on all imported goods. 

Trump aims to use these tariffs to increase the government’s revenue and reduce the deficit, a move that will be difficult to achieve. Analysts believe that these tariffs will lead to weak consumption in the US and even sink the US into a recession this year.

Indeed, flash data by the Atlanta Fed show that the US economy likely contracted in the first quarter, ending a long period of growth. PIMCO, Citi, and Goldman Sachs have boosted their recession odds lately. 

Nasdaq 100 index chart | Source: TradingView

Is the ongoing Nasdaq index crash a good buying opportunity

The financial market is often driven by fear and greed. Indeed, the CNN Money fear and greed index has now crashed to the extreme fear zone of 15. This decline will likely continue as the markets continue sinking. 

There is a likelihood that the Nasdaq 100 index will continue crashing in the coming weeks as investors digest these risks. 

However, some analysts believe that the ongoing plunge is a golden opportunity to buy the dip in tech stocks for a few reasons.

First, while a recession is highly feared, evidence shows that it is usually the best time to buy the dip in many quality stocks that become bargains. Three good examples of this are the dot com bubble, the Global Financial Crisis, and the Covid-19 pandemic. Investors who bought during those dips did better than those who bought at the top.

For example, the Nasdaq 100 index crashed from $9,715 in late February 2020 to $6,765 in early March as the COVID-19 pandemic started. Investors who sold in panic and sold during the crash, missed an opportunity that pushed the index to over $22,000 this year.

Federal Reserve interventions

The other reason why this may be a golden opportunity to invest in the Nasdaq 100 index is that the Fed will always intervene when things are not going on well.

In this case, the bank may decide to cut interest rates and even relaunch its quantitative easing policies. It will do that to flood the market with liquidity and grow the economy.

The Nasdaq 100 index often does well when the Fed is intervening. This happened in all the last recessions.

US government stimulus

There are rising odds that the US government will also intervene if there is a crisis, a move that will support stocks. Reports are that the Trump administration is considering raising money for the agricultural sector that tariffs will decimate. These funds could be in the billions of dollars. 

The administration may also decide to bail out many small companies that will be forced to close shop because of these tariffs. US stocks tend to do well when the government is printing money and offering it to businesses and individuals.

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The BP share price has lagged behind its peer companies in the past few years. Its stock jumped by about 60% in the last five years. In contrast, other oil majors like Chevron, ExxonMobil, ConocoPhilips, TotalEnergies, and Shell have more than doubled, as shown below. This article explains why the BP stock price has lagged behind other peers, and what to expect.

Why BP share price has lagged

BP stock price has lagged behind its other rivals, including Shell and TotalEnergies for several reasons. First, BP has never recovered from the 2010 Gulf of Mexico crisis known as the Deepwater Horizon. This crisis cost the company over half of its value at the time and over $60 billion in fines, which it is still paying today.

Second, BP was more affected than other companies because of the Russia and Ukraine war, which forced many Western countries to exit the country. At the time, BP generated over 40% of its oil from Russia, which is known for low oil production costs. 

Third, and most importantly, BP caved in to activists who pressured it to move away from the oil and gas sector. Under Bernad Loonie, the company announced a move to more than double its investments in renewables, which he called “transition growth sectors.”

BP has made many investments in this line. It acquired companies like Chargemaster, Bunge Bioenergia, Archaea Energy, Lightsource, and X Convenience. While these investments made sense from a climate change aspect, they did not lead to higher revenues and profits. This explains why BP decided to change its focus back to oil and gas last year.

American companies like ExxonMobil and Chevron have beaten their European rivals by focusing on their core oil and gas businesses. Instead, the companies have made their transition efforts to include technologies like carbon capture. 

Read more: BP to spend $10B annually on oil and gas, scaling back renewable energy plans

BP’s earnings are weaker than peers

The most recent results confirmed that BP’s business was doing worse than its peers like Shell, Chevron, and Exxon. 

These results showed that the company made a loss of $1.9 billion, which brought its annual profit to just $381 million. It had previously made a profit of $15.23 billion in 2023, leading the management to cut bonuses.

The numbers showed that BP’s adjusted EBITDA dropped to $8.4 billion during the quarter, down from $9.6 billion. Its annual figure dropped from $43 billion to $38 billion. 

This performance has left BP being a highly undervalued company trading at a forward P/E ratio of 10.40. In contrast, ExxonMobil has a forward multiple of 16, while Chevron has 17. 

This low valuation explains why it has attracted activist investors like Elliot Management, who believe that the company can generate value over time. Elliot and other activists wants the company to focus on the energy sector and cut costs. BP has unveiled plans to cut costs by between $4 billion and $5 billion annually. 

BP share price analysis

The weekly chart shows that the BP stock price has formed a series of lower lows and lower highs as concerns about its business rose. It has dropped from a high of 518p in October 2023 to the current 422p, and is consolidating at the 50-week and 100-week moving averages. 

On the positive side, it has formed a bullish flag pattern, pointing to an eventual rebound later this year. If this happens, the next point to watch will be at 518p, the highest swing in 2024. Losing the two moving averages will risk the stock dropping to the lower side of the channel at about 350p.

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