- The future Dow Jones index point to a slightly negative opening with fears of tariffs in sight.
- Trump postponed the deadline until August 1 and kept the door open for negotiations, which has relieved risk aversion.
- A climate of caution in the market is weighing on the shares and supporting the US dollar and the yields of the treasure bonds on Tuesday.
Dow Jones index signs a slightly negative opening on Tuesday after a significant fall on Monday. Futures markets anticipate a 0.15% drop in the DJ, while Nasdaq index are 0.15% and the S&P is quoted flat before the opening bell.
Investors remain cautious about the risk in the midst of Trump’s commercial policy. The US administration sent letters to a group of countries, including Japan and South Korea, confirming 25% tariffs on the second and third main US commercial partners in Asia.
The US president, however, postponed the implementation day until August 1 and kept the door open to adjustments if a commercial agreement is reached, which left the markets wondering what taxes will finally apply and when.
The last developments on tariffs have contributed to relieve the aveverse feeling of the risk observed on Monday, which caused a drop of almost 1% in the Dow Jones index, extending its reversal from the maximum of four months last week above 44,800 to session minimums below 44,200.
The negative feeling of the market is providing some support to the US dollar, which maintains a moderately demanded tone on Tuesday, with the USD index by moving about 97.00, supported by the increase in the yields of the US Treasury bonds.
Dow Jones – Frequently Questions
The Dow Jones Industrial Avenge, one of the oldest stock market indexes in the world, consists of the 30 most negotiated values ​​in the United States. The index is weighted by the price instead of capitalization. It is calculated by adding the prices of the values ​​that compose it and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, also founder of the Wall Street Journal. In recent years it has been criticized for not being sufficiently representative, since it only follows 30 companies, unlike broader rates such as S&P 500.
There are many factors that promote the Dow Jones Industrial Average (DJIA) index. The main one is the added performance of the companies that compose it, revealed in the quarterly reports of business benefits. The American and world macroeconomic data also contribute, since they influence investor confidence. The level of interest rates, set by the Federal Reserve (FED), also influences the DJia, since it affects the cost of credit, on which many companies depend largely. Therefore, inflation can be a determining factor, as well as other parameters that influence the decisions of the Federal Reserve.
Dow’s theory is a method to identify the main trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Avenge (DJIA) and the Dow Jones Transportation Average (DJTA) and just follow the trends in which both move in the same direction. The volume is a confirmation criterion. The theory uses elements of maximum and minimum analysis. Dow’s theory raises three phases of the trend: accumulation, when intelligent money begins to buy or sell; Public participation, when the general public joins the trend; and distribution, when intelligent money abandons the trend.
There are several ways to operate with the DJ. One of them is to use ETF that allow investors to negotiate the DJ as a single value, instead of having to buy shares of the 30 companies that compose it. An outstanding example is the SPDR Dow Jones Industrial Avenge ETF (day). Future contracts on the DJ allow the specular operators about the future value of the index and the options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Investment funds allow investors to buy a part of a diversified portfolio of DJ values, which provides exposure to global index.
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
