S&P 500 broad
market index futures have advanced by 0.2% to reach 5230 points this week,
positioning itself just 1.1% away from the all-time high record at 5286 points.
The pivotal question looming over the market: Will there
be a new all-time high? The answer hinges largely on the April inflation
numbers in the United States, scheduled for release on Wednesday.
Last week favored the benchmark, with a 1.6%
increase propelled by robust corporate earnings, moderately dovish rhetoric
from Federal Reserve (Fed) officials, and lackluster macroeconomic data in the
United States. Nearly 92% of S&P 500-listed companies have unveiled their
Q1 2024 earnings reports, with over 80% surpassing earnings consensus. Notable
among upcoming reports is Wallmart's, although it's unlikely to overshadow the
forthcoming consumer sector data.
Fed’s Chairman Jerome Powell is expected to
consolidate policymakers’ opinions of the previous week after Governor Michele
Bowman refuted a possibility of interest rates cuts this year. She sees further
monetary policy stance restrictive.
However, this week's market trajectory will
largely depend on macroeconomic data. Producer and consumer price indexes will
serve as vital indicators for shaping Fed interest rate decisions. Consensus
forecasts suggest a moderation in headline inflation to 3.4% YoY in April from
3.5% in March, with core CPI expected to dip to 3.6% YoY versus 3.8% in March.
Coupled with the unexpected uptick in U.S. Initial Jobless Claims last week,
signs of a cooling American economy are emerging, potentially paving the way
for the S&P 500 index to achieve a new all-time high by week's end.
Nevertheless, any uptick in inflation remains
a concern, as investors continue to shy away from stocks. The SPDR S&P 500
ETF Trust (SPY) reported a net capital outflow of $2.3 billion last week,
extending a negative streak to four out of the last five weeks. Achieving and
sustaining the index's highs without genuine capital inflows presents a
considerable challenge. Caution is warranted for investors, even amidst the
prospect of a new all-time high.
From a technical perspective, the S&P 500
index remains within an upside formation, with targets at 5250-5350 points, some
of which have been met. Immediate resistance lies at 5240-5260 points, with
support at 5140-5160 points.
Oil prices continue to test the support range
at $81.00-83.00 per barrel of Brent crude, following a downside breakout from
the consolidation range of $87.00-92.00 per barrel. Persistent downward
pressure is anticipated, with potential for further rapid declines if the
$81.00-83.00 support level is breached.
Gold prices, having achieved mid-term upside
targets, are expected to consolidate around $2000-2100 per troy ounce, with
extreme targets at $2400-2500. The nearest support lies at $2290-2310, while
resistance is at $2390-2410 per ounce. A breach of support may trigger
additional correction.
The Greenback continues its descent following
weak U.S. macroeconomic data releases and interventions by the Bank of Japan.
The EURUSD is poised to ascend further, with potential to surpass
1.08000-1.08300 and advance towards 1.09300-1.10300, contingent on continued
slowing inflation in the U.S.