S&P 500 broad market index futures added
0.1% to 5473 points, inching close to the record high of 5516 points. The
triple witching had minimal effect on the markets, despite U.S. PMIs exceeding
Wall Street expectations. Manufacturing PMI rose to 51.7 points versus an
expected 51.0 points, marking the highest since March. Services PMI surged to
55.1 points against a consensus of 53.8 points, the highest reading since May
2023.
The U.S. debt market remained indifferent to
this strong data, with 10-year debt yields unchanged at 4.25%. Bets on an
interest rate cut by the Federal Reserve (Fed) in September increased to 65.9%
from 64.1%. However, large investors remain skeptical of the Fed’s influence.
The SPDR S&P 500 ETF Trust (SPY) reported $13.4 billion in net outflows
last week, an increase from $12.2 billion, marking the largest outflow since
February 2020, when weekly outflows hit $21.0 billion.
Geopolitics and politics are currently driving
the markets. A debate between Joe Biden and Donald Trump is scheduled for this
week, with significant attention on President Biden's physical condition and
ability to respond effectively. Additionally, France will hold an early
parliamentary election this Sunday, with the far-right National Rally party led
by Marine Le Pen having strong chances to win, adding further market stress.
Given these fundamentals, the technical
outlook suggests a slight retreat for the S&P 500 index this week, followed
by a potential jump to new highs at 5650-5750 points next week. If President
Biden performs well in the debate, investors will shift their focus to
macroeconomic data. The U.S. final Q1 2024 GDP estimate, to be released on
Thursday, is expected to rise to 1.4-1.5% QoQ from 1.3%. The Fed’s preferred
inflation gauge, to be published on Friday, is expected to slow down, which
would be positive for stocks. This news may drive the stock benchmark to new
highs in the first week of July, though the chances for a deep market
correction will rise dramatically afterward. Investors should reconfigure their
strategies in the next couple of weeks.
From a technical perspective, the S&P 500
index outlook remains largely unchanged. It has surpassed its primary targets
of 5250-5350 points and is now aiming for extreme targets of 5650-5750 points,
potentially achievable in the first week of July. Immediate resistance is at
5570-5590 points, with support at 5470-5490 points.
Oil prices are holding above the support level
of $80.00-82.00 per barrel for Brent crude. Prices have been climbing toward
the resistance at $88.00-90.00 per barrel, supported by OPEC+, which indicated
that any increase in oil production in October would be symbolic compared to
current levels.
Gold prices, having reached 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 occur soon.
For a downside scenario targeting $2200 per ounce to materialize, support at
$2300-2320 must be breached. Immediate resistance is at $2390-2410.
The U.S. Dollar is retreating, with EURUSD
bouncing from last week's lows at 1.06700-1.06900. The nearest support has now
moved down to 1.06000, allowing further room to the downside. The primary
technical downside target for EURUSD is at 1.05000, potentially achievable in
early July.