This week is going to be difficult for the markets as major indices
showed at the beginning of the week. European indices dropped by 0.7% in
average on Monday, U.S. 10-year Treasuries yields declined by more than 4%
while only U.S. stock indices managed to stay on the positive territory with a
help of high-tech companies.
But we have admit that the rise in some tech majors like Apple with
3.6%, Microsoft – by 1% and Tesla – by 4% may look like a false start as they
will report their quarter earnings only on Wednesday. So, no surprise that they
have lost some of the gains before the closing bell. Some investors might be
afraid that they will miss another rally in these stocks as they did with
Netflix last week after an outstanding reporting by the entertainment giant,
when its shares rocketed by 18% just after releasing of quarterly results.
If the tech sector would not disappoint the market with its financial
results, and the Federal Reserve would contain investors’ fears over rising
inflation and 10-year Treasuries yields we may S&P broad market index to
hit the target of 4040 points this week. Elsewise, disappointment and rising
correction risks would trigger the index to drop to the support level at 3620
points.
Other markets would likely to follow American stock market. Oil market
is struggling trying to breakthrough a strong resistance at $56 per barrel for
Brent crude benchmark. But this week breaching this level is highly unlikely as
economic indicators worldwide point to a slowing down global economy. So, any
prices close to the $56 landmark would look like an attractive opportunity to
sell Brent crude with a target at $52-54 per barrel.
Gold prices remain close to the $1850 per troy ounce level and are seen
unlikely to leave the trading range of $1800-1880/toz. However, the Federal
Reserve in its notes on Wednesday may leave some “winks” about the future of
close-to-zero interest rates. So. We have to wait to the mid of the week
keeping in mind the most likely scenario for gold prices to slide below $1800
level and further down to $1650-1700 per troy ounce.
The situation of the FX market would be determined on Wednesday and
Thursday. The major EUR/USD pair is trading below weekly resistance levels of
1.21600 and 1.22700 with a possible upside potential. However, the Greenback is
likely to return on the rising track. So, a sell position in EUR/USD close to
1.22700 could be worth opening.
The situation with the British Pound is rather paradoxical. Despite
worsening pandemic and economic situation in the United Kingdom, technical
picture suggests that the Cable is unlikely to drop below 1.36500. So, in this
controversial situation it would be wise to avoid trading of this instrument.
USD/JPY is following recent weeks’ scenario with a resistance level at
105.20 and good options to sell if the pair comes somewhere near this level.
For any buy positions only levels close to 100.20 may be suggested as
attractive.