S&P 500 broad market index futures are
down by 0.51% to 5,725 points this week, following a steep 4.76% decline last
Friday when the benchmark hit 5,664 points, its lowest level since September
19, 2024. The Trump-driven rally has been completely erased. Stocks rebounded
later in the day, closing Friday with a modest 0.19% gain but still recording a
significant 3.0% weekly decline.
Market participants are closely watching the
key support level at 5,720–5,740 points. If this level is breached, the index
could plunge towards extreme downside targets of 5,300–5,400 points. However,
large investors and President Donald Trump seem unwilling to allow such a
scenario. Institutional investors are not showing signs of capitulation. The
SPDR S&P 500 ETF Trust (SPY) recorded net outflows of $2.80 billion last
week, excluding Friday. If no significant outflows are reported for the
remaining trading day, previous upside bets of $15.28 billion could continue to
stabilise the market.
Trump remained silent on tariff issues over
the weekend. When discussing the economy, he described it as being in a
"transition." The U.S. labour market, however, appears moderately
strong, with February Nonfarm Payrolls coming in at 151,000 versus a consensus
of 159,000. Meanwhile, unemployment edged up to 4.1% from an expected 4.0%.
Investors are now waiting for February
inflation data, set to be released on Wednesday, to gauge potential stimulus
measures from the Federal Reserve. Consumer
prices are expected to decline to 2.9% YoY
from 3.0%, while core CPI, which excludes food and energy, is forecast to drop
to 3.2% YoY from 3.3%. If these estimates hold, they could
support a market recovery. However, if inflation remains stubbornly high,
concerns over stagflation may intensify, reinforcing the downside risks for the
S&P 500.
European Central Bank President Christine
Lagarde is scheduled to speak on Wednesday and is expected to address Germany’s
rising budget spending, a sensitive issue for the EURUSD. Her comments could
trigger a correction in the currency pair towards 1.0600. Meanwhile, the Bank
of Canada may cut interest rates on Wednesday, followed by the release of the
U.S. Producer Price Index for February on Thursday.
The technical outlook for the S&P 500
remains precarious, with the index in a clear downtrend. The primary target
range is 5,730–5,830 points, but if support at 5,730 points is broken, a
further decline to 5,300–5,400 points is likely. The nearest resistance stands
at 5,830–5,850 points, while key support remains at 5,720–5,740 points.
In commodities, Brent crude remains under
pressure at $70.58 per barrel, with support at $68.00–70.00 and resistance at
$78.00–80.00. While prices are attempting to recover this week, a failure to
hold support could see them fall further to $58.00–60.00.
Gold is trading around $2,900 per troy ounce,
close to its all-time high of $2,954. The next resistance is at $2,950–2,980,
with extreme upside targets of $3,200–3,300. However, a drop below $2,850 would
invalidate the bullish scenario.
The U.S. Dollar has weakened after Germany
announced a significant government spending plan, which is expected to raise
borrowing costs and strengthen the Euro. The EURUSD reached 1.08750 and is now
trading at 1.08470, aiming for 1.09500–1.10500. However, overbought conditions
suggest a possible pullback towards 1.06000.