S&P 500 broad market index futures are rising by 0.1% to 5434 points,
close to the all-time high of 5447 points. The benchmark may need some time
before resuming its climb to new highs, potentially reaching new targets at 5650-5750
points by the end of next week. The rally could begin this week, driven by the
slowing inflation in the United States. However, the SPDR S&P 500 ETF Trust
(SPY) reported net fund outflows of $5.2 billion, a sharp drop compared to net
inflows of $3.2 billion by the end of last Thursday.
The disappointment on Friday could be associated with political hassles in
France, where left parties formed a coalition that could derail centrist French
President Emmanuel Macron's reforms, potentially leading to a defeat of the
presidential party in parliamentary elections on June 30. This may hold back
the rally in the S&P 500 index. However, the inertia of the U.S. stock
market is strong, and investors are quickly digesting negative news to push
stocks up. Therefore, the U.S. stock market benchmark may resume climbing at
the end of this week or at the beginning of the next one.
Financial conditions are supporting stocks. U.S. 10-year Treasuries yields
stabilized at 4.23% after tumbling to 4.18% last week. Bets on an interest rate
cut by the Federal Reserve (Fed) in September jumped to 66.7% from 49.0%,
according to the CME FedWatch Tool.
Investors will have more reasons to consider further market directions
following the release of macroeconomic data in the United States this week.
U.S. May retail sales are expected to increase to 0.3% MoM compared to 0.0% in
April. The Eurozone, the United Kingdom, and the United States will publish
manufacturing and services PMIs for June on Friday. Business activity in the
Eurozone and the U.K. is expected to climb, while the U.S. may show a slowdown.
If expectations meet forecasts, the S&P 500 index may first slow down on
rising retail sales in the U.S., and then resume climbing on declining business
activity in America. Political tensions in France may be resolved by the end of
the week.
The Reserve Bank of Australia (RBA), Bank of England (BoE), and Swiss
National Bank (SNB) will hold their meetings this week. The RBA and SNB are
expected to cut interest rates, while the BoE may adopt a more hawkish stance
considering early parliamentary elections.
From a technical perspective, the S&P 500 index has surpassed its
primary targets at 5250-5350 points and is now aiming for the extreme targets
of 5650-5750 points, potentially achievable by mid-July. Immediate resistance
is at 5460-5480 points, with support at 5360-5380 points.
Oil prices are resting slightly above the support at $80.00-82.00 per barrel
of Brent crude. OPEC+ plans to increase oil production in October have limited
the upside opportunities for oil prices. A decline towards $70.00 per barrel
and a rise to $90.00 per barrel have equal chances of materializing.
Gold prices, after reaching mid-term targets of $2000-2100 per troy ounce,
are now eyeing extreme targets of $2400-2500. There is limited room for further
increases, and a pullback could soon occur. For a downside scenario with a
target of $2200 per ounce to materialize, the support at $2300-2320 must be
breached. Immediate resistance is at $2390-2410.
The U.S. Dollar slowed down its strengthening after the EURUSD hit the
support at 1.06700-1.06900. The pair may continue its decline towards 1.06000
in the second half of the week. The primary technical downside target is at
1.05000 for EURUSD.