Friday night saw risk markets hinge on more trade concerns with the Trump regime pushing for a baseline 15-20% tariff on all EU products while at the same time obfuscating any real chance of a deal with Japan, which went into the final session of the trading week under an election cloud. Wall Street tried to push more record highs but the momentum is not just there for risk taking as concerns over the inflationary push of Trump’s import tax (aka tariffs) build. The USD lost some ground in the session but remains up for the week with the Australian dollar still weak at the 65 cent level while US Treasury yields remain high especially on the long end.
Looking at stock markets from Asia from Friday’s session, where mainland Chinese share markets were upbeat with the Shanghai Composite up 0.5% to extend above the 3500 point level while the Hang Seng moved more than 1.3% higher, extending its gains above the 24000 point level.
The daily chart shows a complete fill of the March/April selloff with momentum building again to make new highs. This is still looking like a strong bounceback with firm support at the 23000 point level as a springboard:
Meanwhile Japanese stock markets were the odd ones out on inflation and election concerns, with the Nikkei 225 down 0.3% to just below the 40000 point barrier.
Daily price action was looking very keen indeed as daily momentum has accelerated after clearing resistance at the 36000 point level with another equity market that looks very stretched and breaking out a bit too strongly here. Watch ATR support continue to ratchet up but also for this rally to potentially have a pullback:
Australian stocks continue to be really happy about rising unemployment because it means more interest rate relief is coming (the spending maybe not) with the ASX200 up more than 1% to extend its gains above the 8700 point level. SPI futures are down nearly 0.6% due to the uneasy session on Wall Street on Friday night.
The daily chart pattern is still suggesting further upside is still possible with a base being built here and although daily momentum has eased off from its slightly overbought status its still very positive:
European markets remain unsettled with not much movement on the continent with the Eurostoxx 50 Index closing 0.3% lower at 5359 points.
Weekly support hasn’t moved in a few months but it was never fully breached, giving time for the market to build a base and breakout here back to the pre “Liberation Day” highs. This looks like a strong, if somewhat overdone breakout with some positive momentum to the upside but watch for further retracement on any Trumpian volatility:
Wall Street tried to push to new record highs across the board but only the NASDAQ edged higher while the S&P500 eventually closed some dead flat at 6297 points.
The four hourly chart was looking confused with recent support at the 6200 point level coming under pressure before resistance at the 6350 point level was taken out as it looks like more record highs are forthcoming:
Currency markets this time had to contend with more Fed speculation while absorbing the latest initial jobless claims and retail sales data, both of which did not clear up any inflationary concerns, sending the USD higher against everything again. Euro settled around the 1.16 handle and still looks weak here without much support.
The union currency had been building strength continuously as bad domestic economic news from the US overshadowed any continental slowdown but has reversed that trend in recent weeks. Short term momentum was suggesting a proper reversal with support at the 1.1650 mid level taken out but this could be building a base here of consolidation:
The USDJPY pair was able to break through the 148 handle on the recent US CPI print, but is stalling out here without making a new daily high.
I think my contention of a completion of the multi year bearish head and shoulders setup by breaking below the 139 level is off the cards for now, but watch for the inevitable pullback on too much strength here and of the course the TACO trade as the lack of any news around a trade deal is building risk against the pair:
The Australian dollar took a big hit on the weaker unemployment print, although it managed to claw back most of that later in the week its still stuck around the 65 handle again as too many domestic and USD factors keep the Pacific Peso on a downtrend.
Keep an eye on temporary support at the 63 cent level and also the series of lower highs in recent weeks of signs of less internal support:
Oil markets were able to put in a small bounce on the unexpected spike of OPEC+ production a week or so ago but are still struggling to make significant gains with the trend starting to weaken as Brent crude stay around the $69USD per barrel level yet again on Friday night.
The daily chart pattern shows the post New Year rally that got a little out of hand and now reverting back to the sideways lower action for the latter half of 2024. The potential for a return to the previous lows is still there if it cannot make a substantive new daily high.
Gold was struggling after managing to get out of its recent hole to bounce back above the $3300USD per ounce level last week but is still stuck without any new daily high.
Short term support has been under threat most of the last three weeks with price almost returning to the late June lows as the USD gains strength. Daily momentum is neutral with clear lines of support and resistance formed on the daily chart below:
Glossary of Acronyms and Technical Analysis Terms:
ATR: Average True Range – measures the degree of price volatility averaged over a time period
ATR Support/Resistance: a ratcheting mechanism that follows price below/above a trend, that if breached shows above average volatility
CCI: Commodity Channel Index: a momentum reading that calculates current price away from the statistical mean or “typical” price to indicate overbought (far above the mean) or oversold (far below the mean)
Low/High Moving Average: rolling mean of prices in this case, the low and high for the day/hour which creates a band around the actual price movement
FOMC: Federal Open Market Committee, monthly meeting of Federal Reserve regarding monetary policy (setting interest rates)
DOE: US Department of Energy
Uncle Point: or stop loss point, a level at which you’ve clearly been wrong on your position, so cry uncle and get out/wrong on your position, so cry uncle and get out!