Stock Market Breadth
US and European futures are trading lower as traders are primarily concerned about inflation and a hawkish monetary policy. For instance, yesterday, we had a real strong reading for the US CPI m/m, and this has sparked the conversation that the Fed in the US is more than likely to become even more aggressive with its monetary policy. Previously, the Fed Chairman, Jerome Powell, said that the Fed will not increase the interest rate by 75 basis points. Still, given the fact that inflation is showing no signs of slowing down, the Fed will do everything in its power to reduce that.
The blood bath in cryptos continues, and the BTC price has dipped below the 30K price level, and traders are eyeing the next support level, which is at 25K and followed by that is 22K. We are seeing such a tremendous sell-off in the BTC price and other cryptos, which closely follow the BTC price, is the failure of Terra’s USDT peg. Investors are worried that the company has dumped most of its Bitcoin, which at one point was helping the Bitcoin price. In addition, stable coins like USDT are supposed to bring more stability to the space, but they are likely to damage much.
It is clear that bulls have lost the battle, and the selling pressure is very much on. The big question for traders is if the current sell-off will shock Hodlers.
Euro: We argued earlier this week that a weak economy should cause the European Central Bank to reconsider raising rates. With ECB President Christine Lagarde signalling an increase in July, inflation fears have overtaken economic concerns, and the Governing Council’s hawks are winning the fight.
Today’s key question is how fast the hiking cycle will run and when it will terminate, regardless of whether lift-off happens in July or September. Rates are expected to rise again in September and December, with another hike each quarter. The benchmark rate is expected to peak around 1.5 per cent, which we consider to be neutral.
Drillers in the United States will raise oil production slower than predicted due to rising expenses, stymieing the Biden administration’s hopes that the sector would increase output to cut fuel prices.
As the US faces record-high gasoline pricing and the most considerable supply interruption in decades sparked by Russia’s war, the Biden administration attempts to coax the sector to increase output. Last week, it revealed a plan to replenish the nation’s Strategic Reserves, which are now being depleted to bring down triple-digit oil prices. The proposal to repurchase barrels for the emergency reserve sends a message to producers that there will be a market for their future supplies even if commercial demand slows down.
Soaring oil costs also hamper any potentially aggressive expansion plans, pushing corporations to adjust yearly expenditure plans merely to reach output objectives.
The Asian stock market traded sharply lower on the second last
trading of the week. The Nikkei index plunged 1.56%. The HSI index decreased by 1.05%, while the KOPSI index fell by 0.92%. The Shanghai index increased by 0.17%.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth lost further momentum. 37% of the Dow Jones stocks traded above their 200-day moving average.
The S&P 500 stock breadth also confirmed a decline in momentum. 38% of the shares traded above their 200-day moving average.
Dow Jones Futures Today
The Dow Jones futures are trading lower today. In terms of economic data, investors will be looking at the UK’s Prelim GDP q/q. The forecast is 1% lower than the previous reading of 1.3%. In addition to this, we also have the PPI m/m and Core PPI m/m data due at 12:30 GMT. The forecast for the US PPI m/m is 0.5% and for the Core PPI m/m is 0.6%.
The Dow Jones futures are trading lower, and it seems like the price is very much in free fall. The DJ 30 has pierced the lower line of the Bollinger band on the daily time frame, which suggests higher volatility and higher chances of a rebound as well. The price is trading well below the 20-day SMA in the same time frame, suggesting that bulls are not driving. The 50-day SMA continues to trade below the 100-day SMA in the same time frame, so we could see more pain heading its way.
As for the RSI, it indicates that the prices are oversold on the daily time frame. Currently, the RSI is trading at 31.
The near term support is at 30,966, while the resistance is at 33,708.
Stock Market Rally
The S&P 500 stock index closed lower on Thursday; the index decreased by 1.65%. The tech sector led the index lower, and all the 11 sectors closed lower yesterday.
The Dow index declined on the second last trading day of the week; the Dow stocks moved the index lower by 1.02%. 2 shares advanced, while 28 shares closed lower.
The NASDAQ composite, the tech-heavy index, closed lower by -3.18% yesterday.
S&P 500 Leaders and Laggards: Electronic Arts and Dish Network
Electronic Arts stock contributed the most significant gain, soaring 7.966%. Dish Network stock was the largest drag; it fell by 19.72%. The S&P 500 stock index is down 18% so far this year.
Dow Jones Leaders and Laggards: Verizon and Apple
Visa provided the most significant help for the Dow Jones; it advanced by 1.62%, while Apple inc was the largest decliner, it fell by 5.18%.