The S&P 500 futures have risen by 0.2% to
5713 points, approaching the all-time high of 5734 points. However, further
upward movement is challenging as the index has already hit its initial 5700-5800
point target range. Investors are cautious, expecting a possible sideways pattern
near the resistance at 5700 and a potential slight retreat by week's end.
The focus remains on the Federal Reserve's
surprise half-point rate cut, with optimists seeing this as a step toward a soft
landing for the U.S. economy. However, there are growing concerns about global
economic weakness, particularly from mixed and potentially negative PMI data
from Europe and the U.S. To support the current bullish sentiment, U.S. Q2 GDP
needs to confirm its 3.0% YoY estimate, while the PCE inflation index, a
favored measure of inflation by the Fed, must show a slowdown to 2.3% YoY from 2.5%.
Fed Chair Jerome Powell's upcoming speech will be closely watched for clarity
on future policy, particularly in light of the swift rate cuts. If investors
sense that these actions signal economic weakness, pessimism may grow, raising
concerns of a possible deep market correction.
Investor sentiment is fragile. Large investors
continue to exit the stock market, with SPDR S&P 500 ETF Trust (SPY) seeing
net outflows of $387.1 million, marking eight consecutive weeks of withdrawals.
CME FedWatch Tool shows a 50% chance of another half-point rate cut in
November, which raises questions about the Fed's intentions if the U.S. economy
is indeed healthy.
The approaching September 30 end to the U.S.
fiscal year adds further uncertainty. Lawmakers must pass a temporary funding
bill to avoid a government shutdown, and while it's expected to pass, it
remains a key concern.
Technically, the S&P 500 index outlook is unchanged.
The benchmark hit its primary target at 5700-5800 points within an upside
formation. Extreme targets are located at 6100-6200 points. Currently, the
index is holding close to the resistance at 5690-5710 points. If it could
surpass this range to the upside, the index may continue to climb towards
5790-5810 points. The nearest support is at 5590-5610 points.
Brent crude oil prices fell to the support at
$70.00-72.00 per barrel. The Organization of the Petroleum Exporting countries
and its allies (OPEC+) has decided to postpone production increases by
December. Hurricane season has started in the Gulf of Mexico. Geopolitical
tensions in the Middle East are rising. This has provided some support for
prices pushing them up to $74.00 per barrel. The nearest resistance level is at
$79.00-81.00 per barrel. But the reach of this level is unlikely.
Gold has achieved its mid-term targets of
$2,000-2,100 per ounce and extreme target $2,400-2,500. Investors have pushed
through the resistance at $2,490-2,510 per ounce and are targeting the next
resistance at $2590-2610. If no reversal will occur prices could continue to
rise towards $2,750-2,780 per ounce, and possibly further up to $3,200-3,300
per ounce.
The EURUSD retreated to 1.10820. Weak PMIs in
the Eurozone are putting pressure on the Euro. The pair has equal chances to
break through the support at 1.10000 and the resistance at 1.11000. It will be
better to wait for a more pronounced direction. If the support fails, the pair
could fall towards 1.05000-1.07000. Alternatively, the pair may rise above the
resistance at 1.11000 to the extreme targets at 1.14000-1.15000.