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The bulls are back Wall St.
BY Janne Muta
|June 16, 2023Yesterday was a strongly bullish day. The S&P 500 index rallied by 1.2% and Nasdaq rose by 1.1%, while Dow Jones Industrial Average jumped higher by 1.3%. The DJIA close at its highest since December. It seems that fund managers are quickly turning around some of their more bearish bets. There have been concerns among money managers about the potential recessionary impact of the Fed’s monetary policy.
However, recent economic reports indicate greater resilience than anticipated. The most recent data on the labour market and household spending indicate consumers are progressing but at a slower pace. US May retail sales showed an unexpected 0.3% month-over-month yesterday. This follows a 0.4% increase in April and exceeds the anticipated 0.1% decline. So, consumer spending continues to show resilience, even in the face of rather high inflation.
Bonds rallied yesterday, reflecting the market scepticism on Fed’s rate hike hints. The yield on the US 10-year Treasury note closed at 3.727% compared to 3.796% late Wednesday. In Europe, ECB hiked the rates by 25 bp as expected This rallied EURUSD by over 1%, rather a significant move in this currency pair. Gold rallied 0.86% as a result but remained still below key resistance levels.
China's economy has faced challenges lately. In May as industrial output and retail sales growth fell short of expectations triggering more stimulus speculation. Industrial output recorded a growth rate of 3.5% in May y/y. Retail sales, a crucial indicator of consumer confidence, increased 12.7% but the number fell short of the forecasted growth of 13.6%. A number of big banks (UBS, Standard Chartered, Bank of America) are cutting their GDP forecasts for China.
S&P 500
S&P 500 is bullish above 4346. Below the level, the market probably moves to 4322.
Nasdaq
Nasdaq is bullish above 15 046. Below the level, the market could move to 14 850.
AUDUSD
AUDUSD remains bullish above 0.6755. Below the level, the market could move to 0.6731.
USDCAD
USDCAD is trading at a major (weekly) support level. The 1.3225 is a level that sent the market strongly higher in November last year. If there’s a strong rally above 1.3240, look for a move to 1.3290. Below 1.3210, the market could move to 1.3145.
The next main risk events
- USD FOMC Member Waller Speaks
- USD Prelim UoM Consumer Sentiment
- USD Prelim UoM Inflation Expectations
- USD US Bank holiday on Monday
- AUD Monetary Policy Meeting Minutes
For more information and details see the TIOmarkets economic calendar.
Trade Safe!
Janne Muta
Chief Market Analyst
TIOmarkets
Tio Markets UK Limited is a company registered in England and Wales under company number 06592025 and is authorized and regulated by the Financial Conduct Authority FRN: 488900
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.
DISCLAIMER: TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.
Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.
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