The S&P 500 futures are trading neutrally
at 5626 points, slightly below Friday’s close of 5636 points, but still near
the all-time high of 5670. Investors remain focused on this week’s key events,
particularly the Federal Reserve's anticipated interest rate decision on
Wednesday, which could shape market direction.
Donald Trump's close encounter with an
apparent assassination attempt at his golf club in Florida on Sunday failed to
impact market sentiment, as the upcoming Fed meeting holds investors'
attention. The Fed is expected to cut rates by 0.25%, but there's notable
speculation of a 0.50% cut, a scenario that could signal economic distress. A
0.25% cut is seen as a positive, suggesting a soft landing for the economy and
potential further gains for the S&P 500, while a larger cut would likely
trigger concerns of a recession, prompting market declines.
Investor uncertainty is reflected in the
massive $6.4 billion outflow from the SPDR S&P 500 ETF Trust (SPY) last
week. Similar outflows in June led to a 10% correction, raising the possibility
of another significant sell-off unless inflows return this week. The release of
August retail sales data, expected to show a 0.2% MoM drop, could amplify
recession fears, increasing the chances of a more significant Fed rate cut and
heightened market volatility.
Meanwhile, other central banks, including the
Bank of England on Thursday and the Bank of Japan on Friday, are also scheduled
to make interest rate decisions. Any hawkish signals from these institutions
could further elevate market volatility.
On the technical side, the S&P 500 remains
within its upside formation with primary targets at 5700-5800 points.
Currently, the index is holding above the key resistance level of 5590-5610
points. Securing this range could push the index to 5690-5710 points. However,
it’s prudent to wait for clearer signals from the Fed’s meeting. A break below
the support at 5490-5510 points could lead to a more pronounced downturn.
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. This has provided some support for prices. 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 The next
resistance is located at $2590-2610. If no reversal will occur after the Fed
meeting prices could continue to rise towards $2,700-2,800 per ounce, and
possibly further up to $3,200-3,300 per ounce.
The EURUSD is trying
to move higher above 1.10000-1.11000 support. This could be a temporary upside effort
followed by a retracement to 1.10000. The pair has higher chances to break
through the support at 1.10000. 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. The direction could be
defined after the Fed meeting on Wednesday.