The S&P 500 futures rose by 0.2% to 5818
points this week, breaking through resistance at 5790-5810 points and setting a
new all-time high of 5823 points. This breakout paves the way for potential
extreme targets at 6100-6200 points.
The banking sector surprised investors
positively, with JPMorgan (JPM) and Wells Fargo (WFC) delivering
better-than-expected Q3 results, fueling a market rally. This has provided a
solid foundation for the stock market to perform well throughout October.
In contrast, the U.S. September Producer Price
Index (PPI) increased by 1.8% YoY (versus expectations of 1.6%), and core PPI
rose to 2.8% YoY, slightly higher than expected. While this suggests persistent
inflation, it also raises concerns that the Federal Reserve may delay further interest
rate cuts.
Looking ahead, major financial institutions
like Bank of America (BAC), Goldman Sachs (GS), Citigroup (C), and Morgan
Stanley (MS) will release Q3 earnings this week. If they exceed low consensus
estimates, the positive market sentiment could continue. Similarly, Netflix's
(NFLX) earnings report could set the tone for the tech sector, with analysts
expecting over a 40% profit increase compared to Q3 2023. A strong report could
solidify the market's bullish momentum through the end of October.
On Thursday, the European Central Bank (ECB)
is expected to cut interest rates by a quarter-point, aiming to weaken the
Euro. If the EURUSD breaches 1.12000, the Euro could strengthen significantly,
worsening the Eurozone's economic struggles, including weak exports.
In the U.S., retail sales for September are
projected to increase to 0.3% MoM from 0.1% MoM in August, which could bolster
the positive trend in American equities. However, China's economic outlook is
concerning. Analysts predict Q3 GDP growth will slow to 4.6% YoY, with
industrial production growing marginally at the same rate. Unless the Chinese
government introduces new stimulus measures, global market sentiment may
suffer.
Geopolitical risks, especially in the Middle
East, remain a major factor. Concerns about a possible Israeli retaliation
against Iran and rising tensions between China and Taiwan are weighing on
investor confidence. China's large-scale military drills around Taiwan are
particularly unsettling.
From a technical standpoint, the S&P 500
has achieved its initial target of 5700-5800 points. Having passed the
potential reversal zone, the index is on track toward the 6100-6200 range. The
next resistance lies at 5890-5910 points, with support at 5790-5810 points.
In the commodities market, Brent crude oil has
surged above $79.00 per barrel, driven by OPEC+ delaying production increases
until December and geopolitical tensions in the Middle East. Brent is now
targeting resistance at $89.00-91.00, though Saudi Arabia's potential production
increase may cap the rally.
Gold prices, currently between $2,000-$2,100
per ounce, are approaching resistance at $2,750-$2,770. If no significant
reversal occurs, gold could continue its rise towards extreme targets of
$2,850, with potential highs of $3,200-$3,300 per ounce.
In the currency market, EURUSD has retreated
by 0.2% to 1.09150, hovering near a downside scenario with targets at
1.05000-1.07000. A dovish move by the ECB this week could push the Euro lower,
but the pair may return to the 1.10000-1.11000 range if no significant action
occurs.