LIVE MARKETS-Floors and ceilings

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FLOORS AND CEILINGS

As equity markets remain highly volatile, investors might be wondering how far markets might fall and how high they might rebound.

The STOXX 600 .STOXX, Europe's benchmark index, is down 10.6% since Trump's "Liberation Day", having closed at 536.92 points on April 2. By Monday it had fallen as low as 464.26, but bounced as Trump postponed some tariffs.

Most analysts are arguing that it was the bond market that spooked Trump and pushed him towards the 90-day pause, but there is no doubt he would have been watching the slide in equities too. Also, any turmoil in the bond market won't be good for stocks either.

Whatever your thoughts, Trump's about turn provides evidence that the "Trump put", a reference to the belief that Trump would reverse policy if markets ran into trouble, is still in play.

"The triggering of the Trump put likely provides a floor to equities for now, which arguably saw some capitulation and touched oversold levels earlier this week," writes Barclays head of European equity strategy Emmanuel Cau.

So, where's the ceiling?

"We think pre-Liberation day market levels are also a cap, given that questionable Trump governance and erratic policies should warrant higher risk premia, in our view," Cau writes.

"And much uncertainty remains about the trade war endgame."

(Samuel Indyk)

FRIDAY'S OTHER LIVE MARKETS POSTS:

STOXX 600 TURNS LOWER, CHINA RETALIATES AGAIN CLICK HERE

EUROPE BEFORE THE BELL: FUTURES UP TO END HECTIC WEEK CLICK HERE

BACK TO WHITE-KNUCKLE RIDE IN THE MARKETS CLICK HERE