The last
week of 2023 end on a very positive note. The S&P 500 broad market index
already rose by 1.0% to 4793.3 points, the highest since January 5 2022. The
index is just 0.5% away from the new all-time record above 4819 points.
Despite the absence of
significant macroeconomic data, market sentiment remained buoyant. The Redbook
retail sales index in the U.S. showed a slight increase, while unemployment
also experienced a modest uptick. However, these data did not significantly affect
market expectations. Bets on Federal Reserve interest rates cut in March rose to 72.8% from 71.3%
over the week, according to the CME FedWatchTool. This rise is likely more
reflective of the momentum from a Santa rally than a response to incoming data.
The next crucial set of macroeconomic data is
expected on January 5, with the release of the U.S. labor market report for
December. A noticeable slowdown in the American economy has been evident, with
an increase in initial jobless claims toward the end of December. However,
investors are presently overlooking these indicators.
The S&P 500 index is now in close proximity
to its targets at 4850-4950 points, signaling a potential new record.
Similarly, the U.S. dollar is nearing the end of its downward correction, with
the EURUSD reaching 1.11390, close to the targets at 1.11500-1.12500. These
objectives could be attained in the first week of 2024, setting the stage for a
possible market turnaround.
Technically, the S&P 500 index is thriving
in the territory of new all-time highs after surpassing the resistance zone at
4740-4760 points. Its current trajectory is aimed at the new targets of
4850-4950 points.
In the oil market, Brent crude prices faced
challenges. After briefly surpassing the support at $74.00-76.00 per barrel and
approaching $80.00 per barrel, prices retraced to $77.00 per barrel. The
nearest upside targets are at $84.00-85.00 per barrel. However, the upside
period for oil prices is concluding in December, and a decline may be
anticipated in January, potentially dropping below $74.00 per barrel to the
support at $65 per barrel.
Gold prices are navigating within a mid-term
upside formation with targets at $2000-2100 per troy ounce, which have already
been achieved. Prices breached the resistance at $2100 per ounce, reaching
$2141, before retracing to the nearest support at $2010-2030 per ounce. The
fragile recovery is influenced by a weakening Dollar, but a potential technical
weakness period until mid-January might lead gold prices to $1800-1850 per
ounce. A dip below $2010 per ounce could actualize this scenario.
The Greenback continues its decline, approaching
primary correction targets at 1.11500-1.12500 against the Euro. It is advisable
to monitor the pair's movement toward these targets before the end of the next
week and be alert for potential reversal signals.