The S&P 500 broad
market index futures showed a modest increase of 0.2%, reaching 4854 points
this week, following a noteworthy surge of 1.3% the previous Friday. The index set a new record at 4842 points, with the potential for more
all-time highs soon.
However, caution is advised among investors as
capital outflows from the SPDR S&P 500 ETF Trust (SPY) persisted for the
fourth consecutive week. Despite the ongoing upward momentum, investors are
opting to take profits, overlooking potential buying opportunities.
Additionally, bets on a Federal Reserve (Fed) interest rate cut in March
dropped to 44.0%, down from 73.0% at the start of the previous week, according
to the FedWatch Tool. The U.S. 10-year Treasuries yields responded with a
slight rise to 4.19%, maintaining levels not seen since December 13. The
diminishing belief in rate cuts in March is evident, with San Francisco Federal
Reserve Bank President Mary Daly expressing that it is "premature" to
anticipate imminent interest-rate cuts.
The upcoming week is a blackout period for the
Fed, meaning no comments from Fed officials are expected as they prepare for
the meeting on January 30-31. Meanwhile, major central banks, including the
Bank of Japan, the Bank of Canada, and the European Central Bank, are set to
hold their meetings this week. Any indication of persistent inflation pressures
leading to an extended period of high-interest rates could impact the U.S.
Dollar. The S&P 500 index is likely to remain stable amid this news.
Notably, big tech companies Netflix (NFLX) and
Tesla (TSLA) are reporting this week, and the U.S. Q4 2023 GDP first estimate
will be released on Thursday. Analysts expect a 2.0% QoQ growth, with the
Atlanta Fed GDPNow model suggesting an increase to 2.4%, up from the previous
estimate of 2.2%. If these estimates are confirmed, investors may be convinced
that fund rates will remain unchanged in March.
The S&P 500 broad market index is on the
brink of reaching new all-time highs, having reached the final upside target at
4850-4950 points. While potential reversal patterns should be anticipated, none
are apparent at this point.
Oil prices are consolidating below $80.00 per
barrel for Brent crude, with another upside attempt expected. Ongoing tensions
in the Middle East are moving prices away from the $74.00-76.00 per barrel
support, and further movements are contingent on developments in the Middle
Gold prices, which previously reached mid-term
upside targets at $2000-2100 per troy ounce, are currently testing the support
at $2010-2030 per ounce. A potential technical weakness period could lead gold
prices to $1920 if the support at $2010 per ounce is breached.
The Greenback is weakening, potentially
indicating another wave of the upcoming downside correction. This scenario is
supported by the sell-off of the Dollar last week at its highs. Monitoring
potential reversal signals is advisable, as the Dollar may strengthen
unexpectedly, despite the EURUSD potentially rising to 1.11500-1.12500.