S&P 500 broad market index futures rose by
0.32% to 6,315 points this week, approaching the previous all-time high of
6,317 points. It now appears highly likely that this peak will be surpassed in
the coming days. A significant boost in confidence came from a strong $4.21
billion in net inflows into the SPDR S&P 500 ETF Trust (SPY), suggesting
that large institutional investors are becoming increasingly optimistic. This
renewed confidence follows a reduced perception of risk around the potential removal
of Federal Reserve Chair Jerome Powell and is largely fuelled by solid
corporate earnings.
Netflix (NFLX) set the tone last Thursday with
a strong Q2 earnings report, sending a clear signal that other members of the
“Magnificent Seven” could also outperform Wall Street estimates. Alphabet (GOOG) and Tesla (TSLA) are due to
report this week, while expectations remain high for the entire group.
If these earnings reports continue to impress, the S&P
500 could easily be propelled into the 6,350–6,450 target range.
The European Central Bank (ECB) will hold its
policy meeting on Thursday. The key question is whether the ECB will pause or
even end its rate-cutting cycle, which has continued without a break since September
2024. The consensus forecast for July 2025 points to no rate change, signalling
a likely temination to the easing phase.
On the U.S. data front, the July PMI figures
will also be released on Thursday. While
expectations are mixed with manufacturing activity weakening and the services
sector continuing to expand there is growing sentiment that the Eurozone and
U.K. may show stronger business activity overall. This
dynamic could present a less favourable environment for the U.S. Dollar in the
short term.
Political risk remains a factor, though some
concerns have eased. Speculation
around Jerome Powell’s possible removal has subsided after U.S. Treasury
Secretary Scott Bessent reportedly advised President Trump against such a move.
Bessent himself is widely seen as a leading candidate to replace Powell. Meanwhile, the looming August 1 tariff deadline is causing greater
unease. U.S. Commerce Secretary Howard Lutnick confirmed the deadline remains
in place. The potential for
sweeping tariff hikes on imports from most countries, excluding China, the
U.K., and a few others, could trigger significant volatility or market sell-offs
as the deadline approaches.
From a technical perspective, the S&P 500
remains on solid ground. Futures are holding firmly above the 6,250–6,270
support zone, and at the current level of 6,315, a move toward the next
resistance at 6,350–6,370 is increasingly likely. The path to the broader
extreme target of 6,350–6,450 remains fully open.
Brent crude oil
continues to test support between $67.00 and $69.00 per barrel. So far, this level has held, suggesting a potential rebound toward the
$76.00–$78.00 range. OPEC+’s decision to increase production by 548,000 barrels
per day in August had little effect, indicating strong underlying demand.
However, if the $67.00–$69.00 support fails, prices could fall as low as
$57.00–$59.00.
Gold prices remain in consolidation. Having
held above key support at $3,230–$3,250 per troy ounce, gold has rebounded
toward $3,330–$3,350 and is currently trading at $3,365. This sideways summer
phase is likely to persist into mid-August. A breakout above $3,450 or below
$3,230 would be needed to signal the next major move.
In currency markets, the U.S. Dollar remains
in a tight range. The EURUSD is
currently at 1.16410. While it briefly fell to 1.15560
last Thursday, a decisive move lower toward 1.15000–1.15500 remains slightly
more probable. Still, a near-term bounce toward 1.17000–1.18000 cannot be ruled
out. The balance between bullish and bearish momentum is now more evenly
poised.