The S&P 500 broad index market futures
surged by 0.5% to reach 5282 points this week, indicating a notably rapid pace
of growth. Despite no trading sessions on Friday, investors had the opportunity
to react to the release of important PCE index data for February, which was
released prior to the market closure.
Wall Street had anticipated the Core PCE,
which excludes volatile food and energy prices, to remain steady at 2.8%
year-on-year and decrease slightly to 0.3% on a monthly basis. The actual data
aligned with these forecasts. However, the headline PCE index remained at 0.3%
month-on-month, falling short of the expected 0.4%. This suggests a potential
slowdown in overall inflation, which is considered favorable news for
investors.
The increased bets on a potential interest
rate cut by the Federal Reserve (Fed) in June, rising to 65.9% from 61.9% the
previous week, reflect market sentiment following the data release. U.S.
10-year Treasuries yields retreated to 4.19% from 4.21%, with the potential for
further declines as American investors return to trading.
While the SPDR S&P 500 ETF Trust (SPY)
reported modest capital inflows of $86.6 million last week, compared to the
significant $24.2 billion inflows in the previous week, this single-week drop
is not necessarily indicative of a reversal in the current upside trend.
However, it warrants monitoring, particularly if inflows turn into outflows.
Investor focus this week will be on PMI data
in the United States, following positive numbers reported for China over the
weekend. Additionally, attention will be on the March Nonfarm Payrolls data
from ADP, scheduled for Wednesday, and the official Nonfarm Payrolls data on
Friday. Any deviation from expectations in these data sets could signal shifts
in the American economy, potentially influencing Fed interest rate decisions,
Dollar strength, and stock market performance.
Technically, the
S&P 500 index has surpassed the final upside target zone at 4850-4950
points and entered a period of potential correction opportunities. Therefore,
monitoring any reversal patterns that may emerge on the chart is advisable. The
existing reversal pattern suggests a standard correction of 5-7%, with
potential downside opportunities possibly emerging soon. The market is craving
for correction, but when it could start remain unclear. The nearest resistance
is at 5300 points, while support is at 5200-5220 points.
In the oil market,
prices were trying again to breach the resistance at $87.00-92.00 per barrel of
Brent crude. From a technical standpoint, downward pressure prevails in the
market, expected to continue throughout mid-May. Therefore, a breakthrough is
unlikely. The nearest resistance is at $87.00-92.00 per barrel, while support
is at $81.00-83.00 per barrel.
Gold prices, having
reached mid-term upside targets at $2000-2100 per troy ounce, established a new
all-time high at $2265 following optimistic PCE index data. Prices have
surpassed the resistance at $2210-2230 per ounce. If they could hold above this
level then the may continue up to the next resistance at $2300. A technical
period favorable for downside scenarios has commenced, expected to last until
mid-April.
The Greenback slightly
paused its strengthening. The EURUSD is trading around to 1.07800. Lower-than-expected
PCE data released last Friday could continue to weaken the Dollar further. Betting
on both the rising and declining EURUSD remains risky, with a return to the
1.11500-1.12500 area likely, but a drop to 1.05000 should not be excluded.