The S&P 500 broad market index futures
have surged by 1.94% this week, reaching 6,110 points and setting three
consecutive all-time highs. The index climbed to 6,121 points on Friday, driven
by optimism surrounding U.S. President Donald Trump’s policies, which have
significantly influenced market sentiment.
During his inauguration on Monday, Trump
avoided mentioning immediate tariff hikes, calming markets. However, by
Tuesday, he proposed increases targeting Canada and Mexico, later adding China
to the list. Despite this, his measured approach reassured investors, further
buoyed by a stellar Q4 2024 earnings report from Netflix (NFLX), released on
Tuesday after hours, which helped propel the index to new highs. At the World
Economic Forum on Thursday, Trump urged the Federal Reserve to lower interest
rates. His remark in a subsequent interview, expressing a preference against
imposing tariffs on China, boosted investor confidence. This news drove the
S&P 500 higher while also impacting other markets, with EURUSD approaching
1.05000 and Brent crude briefly falling below $78.00 per barrel.
Trump’s aggressive stance on OPEC, urging
lower oil prices to influence the Ukraine conflict, has added a layer of market
dynamics. Combined with his pressure on the Fed to adopt dovish policies—likely
inspired by softer inflation, rising jobless claims, and reduced tariff
threats—the environment appears conducive for continued stock market gains.
Technically, the index must breach 6,150 points to confirm a continued uptrend.
Should this materialise, extreme targets at 6,550–6,650 points are in play,
representing an additional 8.2% upside. This movement could be bolstered by
upcoming quarterly earnings reports from key players like Microsoft (MSFT),
Apple (AAPL), and Amazon (AMZN) next week.
The Federal Reserve’s policy meeting on
Wednesday will be crucial. Wall Street anticipates the central bank will
maintain interest rates at 4.50%. Any dovish commentary from Chair Jerome
Powell—perhaps citing falling inflation, softer labour market data, and easing
tariff threats—could reinforce expectations of a March rate cut, further
supporting equities. The SPDR S&P 500 ETF Trust (SPY) recorded net outflows
of $1.69 billion last week, compared to $1.51 billion inflows previously
reported. This week’s outflows have slowed to just $300 million, reflecting a
cautious but stabilising investor sentiment.
From a technical
perspective, the S&P 500 outlook is tense. The benchmark hit its primary
targets at 6,050-6,150 points, trying to continue up. In the upside scenario extreme
targets at 6550-6650 points.
In commodities, Brent
crude is losing momentum trading close to the support at $78.00 per barrel. If
prices surpass the support they could continue down to $69.00-71.00 per barrel.
Gold prices have risen
to $2,777 per troy ounce this week, hitting primary targets of $2,700-2,800 per
ounce, potentially updating new all-time highs. But, first prices could take a
break either at $2,760-2,780, or at $2,860-2,870. The upside trajectory would largely
depend on Fed actions and Trump comments next week.
In the currency
market, the U.S. Dollar has entered a correction phase due to lower inflation
and the potential for revised tariff policies. The EURUSD pair has reached a
primary upside targets at 1.04700-1.05700, and is trying to climb further
towards 1.09500-1.10500.