The S&P 500 broad market index futures
have risen by 0.83% to 6,081 points this week, recovering from Monday’s 2.1%
decline. The benchmark is attempting to regain its upward trajectory but must
surpass the 6,100–6,120 resistance range to confirm an upside formation.
However, this remains uncertain as no official meeting between U.S. President
Donald Trump and China’s President Xi Jinping has taken place, despite
Tuesday’s announcement that talks were expected within 28 hours.
Investor sentiment is in need of positive
developments, especially after disappointing Q4 2024 earnings reports from
Alphabet (GOOGL) and Amazon (AMZN). Alphabet narrowly missed its revenue
consensus of $96.70 billion, while Amazon issued weak forward guidance for Q1
2025, causing its stock to fall 4.0% to $229.15 in pre-market trading.
Economic data has also introduced uncertainty.
December’s JOLTs job openings fell to 7.6 million, the lowest since September,
raising concerns after the Federal Reserve’s (Fed) half-point interest rate cut
that month. The upcoming January labour market report on Friday is now even
more critical. The consensus expects Nonfarm Payrolls (NFP) to decline to
169,000 from December’s 256,000, while unemployment and hourly earnings are
forecasted to remain steady at 4.1% and 0.3% month-over-month, respectively.
Model estimates suggest NFP could range between 183,000–205,000, with
unemployment at 4.1%. While this would be a neutral-to-slightly-positive
outcome, December’s weak JOLTs data could indicate broader softening in the
labour market.
Market reaction will depend on the labour
report’s outcome. If figures align with expectations, the S&P 500 could
gradually move toward 6,100–6,120 points. A weaker-than-expected report could
still be interpreted positively if investors believe it increases the
likelihood of further Fed rate cuts. However, a strong report might trigger a
sell-off due to concerns over delayed rate cuts. In this context, news from
Trump-Xi trade negotiations is crucial. Positive developments could overshadow
any negative labour market data or corporate earnings disappointments. Despite
a few underwhelming reports, the overall Q4 earnings season has been relatively
strong.
Investor sentiment remains cautious. The SPDR
S&P 500 ETF Trust (SPY) reported net outflows of $1.7 billion last week and
another $361.1 million this week. While not a significant decline, these
outflows reflect concerns over Trump’s recent tariff actions.
The S&P 500’s technical outlook is
improving. After previously testing the 6,050–6,150 resistance zone, the index
pulled back to key support at 5,930 points before rebounding. A sustained move
above 6,100–6,120 could clear the path for further upside. Key support remains
at 5,920–5,940.
Oil prices continue to decline, currently at
$74.70 per barrel, with a downside target of $68.00–70.00. Prices have retested
the $78.00–80.00 resistance from below, and the recent OPEC+ meeting provided
no bullish catalyst.
Gold prices hit a new all-time high of $2,882
per troy ounce. A consolidation phase is likely before a potential breakout,
with resistance at $2,860–2,880. Prices may pause at this level for a week.
In the forex market, the U.S. Dollar has
erased earlier gains, with EURUSD up 0.18% to 1.03850. If the pair regains
momentum above 1.05700, it could advance toward 1.09500–1.10500.