Stock Market Breadth
US and European futures are trading flat, although bargain hunting is taking place, as we saw the prices plunging in yesterday’s session. The Nasdaq is down over 30% year-to-date, and speculators believe there could be much more pain for the stock index because inflation hasn’t reached its peak level, and we still have supply chain issues.
On Thursday, the BOE increased its interest rate for the fifth time this year and raised the interest rate by 25 basis points. Market players expected the BOE to increase the interest rate by 50 basis points. The commentary from the BOE was also confusing as they raised their inflation and unemployment targets, but they fell short of expectations in terms of actually increasing the interest rate.
In addition, in the US unemployment claims data, the Philly Fed Manufacturing Index and the Building Permit numbers all came well below the market expectation. Pointing out that the US economy is highly likely to fall into recession, it is only a matter of time before we see that.
In the crypto world, bulls are nowhere to be seen as the Bitcoin price continues to fall. The fact that Bitcoin is struggling to stay above the 20K price level indicates that the path of the least resistance is skewed to the downside.
The support of 20K for the BTC price is critical, and we must see some bids coming at the current level; otherwise, the price may move towards its next support level, which is near the 15K price mark.
Overall, it seems that the last night of the crypto winter is still far away.
The GBP had CHF both had an interesting session and are likely to remain focused along with the Euro. The GBP/USD pair initially fell on the back of the BOE’s decision but gained strength against the dollar in the afternoon session and closed the day in positive territory. As for the CHF, the SNB raised the interest rate for the first time in a long time, surprising investors and traders. The EUR/USD is also trading in a tight range while traders keep a close eye on the ECB and its next monetary policy move.
Brent and crude oil prices lost their mojo this week, and prices slipped from their previous level to the downside even though the US announced a new sanction on Iran, creating further concerns among traders about oil supply. The IEA also raised its forecast for the fuel demand, and it now expects demand to rise further in 2023, and the demand can grow by 2% to a record 101.6 million barrels per day. This is mainly because economic activity in China has started to return and is more likely to continue to improve.
The Asian stock market traded mixed on the week’s last trading. The Nikkei index slipped by 1.44%. The HSI index increased by 0.98%, while the KOPSI index decreased by 0.52%. The Shanghai index increased by 0.27%.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth lost further momentum. 24% of the Dow Jones stocks are trading above their 200-day moving average.
The S&P 500 stock breadth also confirmed less improvement in its momentum. 17% 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 Jerome Powell’s speech which will be taking place at 12:45 GMT. Traders would like to know his plans for the Fed’s future monetary policy and what assets the central bank has to control recession if it does take place.
The Dow Jones futures are trading higher, and the index staged another week of losses. The index has now fallen for two straight weeks, indicating two things. Firstly, the bears are in control of the price action, and secondly, we may likely see some bargain hunters coming in as the price has also pierced the lower line of the Bollinger band.
As for the RSI, it continues to indicate that prices are oversold on the daily time frame. Currently, the RSI is trading at 28.
The near-term support is 29,418, while the resistance is 32,146.
Stock Market Rally
The S&P 500 stock index closed lower on Thursday, increasing by 1.99%. The energy sector lowered the index, and ten sectors closed lower yesterday.
The Dow index fell on the second last trading day of the week; the Dow stocks moved the index lower by 2.42%. Twenty-six shares advanced, while four shares closed lower.
The tech-heavy index’s NASDAQ composite closed lower by 4.08% yesterday.
S&P 500 Leaders and Laggards: Newmont and Norwegian
Newmont Corp stock contributed the most significant gain, soaring 3.29%. Norwegian stock was the most considerable drag; it fell by 11.5%. The S&P 500 stock index is down 22% so far this year.
Dow Jones Leaders and Laggards: Walmart and American Express
Walmart provided the most significant help for the Dow Jones; it advanced by 1.03%, while American Express was the largest decliner, it fell by 5.94%.