The S&P 500 broad market index rose by
1.8% to 6,356 points this week, slightly retreating from Thursday’s high of
6,401. However, this rebound is not enough to invalidate the technical
correction scenario toward the 6,030–6,130 range. Large investors appear to be
positioning for further downside. The
SPDR S&P 500 ETF Trust (SPY) recorded net outflows of $10.4 billion this
week, an unusually high figure for the summer that signals a deeper seasonal
correction may be underway.
Historical performance data supports this
view. September and October are typically the weakest months for the S&P
500. This seasonal weakness would also work in favour of U.S. President Donald
Trump, as a market downturn would increase pressure on the Federal Reserve to
cut interest rates, potentially by 50 basis points in September.
Trump has appointed Stephen Miran, former
Chair of the Council of Economic Advisers, to replace Adriana Kugler on the
FOMC after her unexpected resignation last week. This move ensures at least
three votes in favour of a September rate cut. These members may push for a
50-basis-point reduction, with the possibility of support from several others
favouring a more moderate 25-point cut. Such a shift would send a dovish signal
ahead of the October meeting.
Markets are also speculating on the
possibility of Christopher Waller, a Republican and Trump ally, being
positioned as the next Fed Chair. If Trump promotes a replacement for Powell in
the autumn, Powell’s influence could diminish significantly, making a rate cut
even more likely. This scenario would be favourable for equities, as it
combines both monetary and potential fiscal easing.
Looking ahead, July inflation data will be
released next Tuesday in the U.S., with consensus expectations supporting
Powell. Wall Street anticipates an increase in the Consumer Price Index (CPI).
Meanwhile, Trump is working to position himself for a Nobel Peace Prize. A
breakthrough in the Ukraine conflict emerged on Wednesday, with Moscow and
Washington agreeing to a leaders’ meeting that could take place as early as
next week. The location and format are still being finalised. Markets believe
most of the groundwork has already been completed, suggesting that a new round
of U.S.–China tariff tensions may be avoided. This lowers the risk of a repeat
of the 19% correction seen in March–April.
Technically, the S&P 500 remains in a
bearish formation, with a primary downside target of 6,030–6,130 points. A sell
signal appeared earlier at 6,230. With the current level at 6,356, immediate
resistance is found at 6,370–6,390, while the nearest support is at
6,270–6,290. A break below this zone would open the way toward the primary
target.
In the oil market, the technically favourable
period continues into September. Brent crude is currently trading at $67.16 per
barrel, within the support zone of $66.00–$68.00. Weakness is driven by OPEC+’s
decision to raise production by another 548,000 barrels per day starting in
September, as well as ongoing progress in resolving the Ukraine conflict. The
next resistance is seen at $76.00–$78.00, with further support at
$56.00–$58.00.
Gold prices remain stable. The market
continues to respect the key support zone at $3,230–$3,250 and has been unable
to break through resistance at $3,430–$3,450. A rebound has occurred from the
$3,330–$3,350 area, with the current price at $3,394. The summer consolidation
phase is ending, and a breakout from the $3,250–$3,450 range could occur from
mid-August onward.
In the currency market, the U.S. dollar has
weakened slightly. The EURUSD pair has reached its primary target of
1.16500–1.17000 and tested resistance. To extend gains toward the extreme
target of 1.19500–1.20500, the pair must hold above the 1.17000–1.17200 range.