Markets wobble later than US-China tensions

The previous week in the financial markets has ended with a shockwave across stock and cryptomarkets, triggered by tensions between the US and China. VIX has climbed above 20, S&P 500 has lost more than 2.5%, and Nasdaq – around 3.5%. But the most impact was visible for crypto markets, with around 20 billion dollars worth of liquidations, with BTC sliding for $15k down overnight, and Ripple losing 50%. Crude oil has been pushed to almost $58, while Gold has kept its gains.

The notable observation is that the fall of cyclical assets had happened along with the bearish day for the US dollar index too, as yields of 30-year bonds of the US have also slipped down. Thus, the current reaction of the market might be imposed by a massive liquidity squeeze rather than a financial crisis. 

The ahead Monday’s action have shown signs of relief, as Donald Trump softens his tone, with indices and cryptos regaining almost half of previous week’s losses on the Asian session.

The US-China trade tensions has quite a history, with the previous round of escalation in April, 2025 (the liberation day), when markets were knocked out and US stocks indices have corrected with high volatility. Thus, markets are reacting nervously to revival of these tensions. 

Will it lead to escalation of losses?

Currently, the sudden rise of volatility falls into the expected cyclical behavior of the markets in October, though the trigger event may be diverse. In today’s market logic, geopolitical statements drive the market quicker than economic publications.

A government shutdown in the US still persists, so until it lifts, all official economic publications will be on hold, otherwise, traders will monitor for a pack of publications at the end of week, such as jobs data from the US Department of Labor, PPI e t.c.

The speech of FED’s chief Jerome Powell will also take place on Tuesday – it might bring more clarity to the upcoming FED’s actions. Now the markets are pricing two more rate cuts by the year end.

This week, stock traders will be monitoring earnings releases of large US companies – especially, financial companies, such as JP Morgan, Bank of America, Morgan Stanley. The behavior of related stocks would be indicative for either the escalation of a current market turmoil, or the situation going back to the bullish trend.

BTC

We will begin our review with BTC, which has suffered from Friday’s trade-off, though it tends to show signs of recovery during Monday’s session. later than record liquidations worth of 20 billion dollars on the crypto markets, the sentiment for cryptos remains halted, but BTC tends to act as a “digital gold”, and a secure haven to some degree, that’s why it’s possible to observe some demand coming in to the BTC market later.

From a technical standpoint, BTCUSD has come to the dynamic resistance area (the distance between 20 and 50 moving averages), and if it would not show any signs of further recovery, it would probably pull back to the $110000 price area with a further consolidation.

Nikkei

Another idea on our list today is a potential long Nikkei index. The Friday’s trade-off had knocked down stock indices around the globe, and boosted Yen as a secure haven. Though narratives playing on the short side of the Japanese Yen are still active, and should the situation resolve, the Japanese Yen may continue sliding down, supporting the Nikkei index.

The technical position of the index is relatively interesting for building a long trade, as it has touched the 20-50 day moving average support.

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