The S&P 500
futures are showing a modest 0.2% increase to 5349 points this week, effectively recovering from the sharp 4% drop
experienced last Monday. This recovery signals a potential
upside, but market sentiment is clouded by uncertainty ahead of the U.S. July
inflation data release. Investors are particularly on edge, anticipating either
a significant positive surprise or a potentially market-shaking negative
outcome.
Last week’s small but positive change in
initial jobless claims data led to a surprising 3.0% surge in the S&P 500,
raising questions about the market's sensitivity to relatively minor economic
data. This kind of reaction underscores the heightened emotional uncertainty
among investors, who are now eagerly awaiting the July inflation figures. The
Producer Price Index (PPI) for July, expected to show a moderate slowdown, will
be released first on Tuesday, followed by the Consumer Price Index (CPI) on
Wednesday. Expectations are for a slight annual slowdown in both headline and
core CPI, but with a potential acceleration in monthly readings.
A notable shift in market logic has emerged:
previously, weaker economic data was seen as positive because it implied a
potential Fed rate cut. Now, strong macroeconomic data is lifting the market,
while declining inflation could signal an economic slowdown, and rising
inflation might suggest economic resilience. If the upcoming inflation data
aligns with forecasts—showing an annual slowdown but a monthly increase—it may
have a neutral effect on the market. However, any significant deviation could
trigger another wave of market volatility.
Large investors appear to be adopting a
cautious approach. The SPDR S&P 500 ETF Trust (SPY) reported $1.0 billion
in net outflows last week, indicating that major players are not yet ready to
buy the dip. They seem to be waiting for the inflation numbers before making
further moves. Historically, after a spike in the VIX volatility index like the
one seen last Monday, the S&P 500 tends to rise over the following months,
which could explain some hesitancy as investors anticipate a more gradual
upward trajectory.
Technically, the S&P 500 index still
targets the 5450-5550 range by mid-September. Immediate resistance lies at
5390-5410 points, with support at 5290-5310 points.
In other markets, Brent crude oil prices are
retesting the $80.00-82.00 per barrel support, with the next key level at
$70.00-72.00 per barrel. While a technical period favorable for oil price
declines has ended, a recovery from current levels seems likely.
Gold, meanwhile, has
reached its mid-term targets of $2000-2100 per ounce, with potential for
further consolidation within the $2400-2500 range in August. The immediate resistance for gold is at $2490-2510, with support at
$2390-2410.
The EURUSD is consolidating around 1.09200,
awaiting the U.S. inflation data. The pair has already hit its primary target
at 1.10000-1.11000, and further upward movement could open the path to the
1.14000-1.15000 range.