S&P 500 broad
market index futures are rising by 0.14% to 5310 points this week. Such muted
movements are common near the all-time high of 5326 points. The benchmark has
entered a technical period of a possible reversal, expected to last until the
middle of next week.
The recent helicopter
crash involving Iranian President Ebrahim Raisi and Foreign Minister Hossein
Amir-Abdollahian has raised concerns among investors. Although there is no
evidence of Israeli involvement, and Israeli officials have denied any
connection, the potential for escalation in the Middle East remains a worry.
Consequently, gold prices surged by 1.5% to a new all-time high of $2450 per
troy ounce, while Brent crude prices gained 0.4% to $84.65 per barrel. The
subdued reaction in oil prices can be attributed to Iranian authorities'
assurances that oil deliveries will not be disrupted. Even if Iran is preparing some kind of a response
towards escalation, some time is needed for it to happen. Thus, investors are
likely to focus on other issues in the market.
The Federal Reserve
will release its FOMC Minutes on Wednesday, which are expected to have a minor
impact on the market following the official announcement of the Fed meeting
decisions earlier in May. However, the Q1 earnings report from NVidia (NVDA)
could provide enough positive momentum for the S&P 500 index to reach a new
all-time high if the company meets or exceeds expectations. Additionally, the
May Manufacturing and Service PMIs on Thursday could support the market if they
confirm economic cooling in the Eurozone, the U.K., and the U.S., providing
more reasons for the European Central Bank and Bank of England to cut interest
rates this summer, with the Fed expected to follow in September.
The SPDR S&P 500
ETF Trust (SPY) reported net capital inflows of $1.8 billion last week, a
positive sign for stocks. However, a technical reversal formation for the
S&P 500 index could develop within the next 10 days. If NVidia misses
consensus expectations or another major disappointment occurs, this formation
could lead to a decline in stocks.
From a technical
perspective, the S&P 500 index remains within an upward formation targeting
5250-5350 points, suggesting limited upside potential. Extreme targets lie at
5650-5750 points, though these levels appear unrealistic in the near term. Immediate resistance is at 5340-5360 points, with support at 5240-5260
points.
Oil prices are
recovering from the support range of $81.00-83.00 per barrel for Brent crude,
with the nearest resistance at $89.00-91.00 per barrel. If no evidence of
Israeli involvement in the Iranian president's crash is found, prices are
likely to remain stable.
Gold prices, having
reached mid-term upside targets, are expected to consolidate around $2000-2100
per troy ounce, with extreme targets at $2400-2500. There is not much room for
prices to go up. So, a consolidation should not be excluded. So far, prices
have breached the resistance at $2390-2410 and are heading towards $2500.
The Greenback
continues to unfairly descend following weak U.S. macroeconomic data releases.
The EURUSD may retest the support at 1.08000-1.08200 after the pair rolled back
from 1.08950. Primary upside targets have been met, so a drop to 1.05000 should
not be excluded in the mid-term.