Another record high for Wall Street overnight with strong breakouts on both sides of the Atlantic as European shares soared on speculation the ECB will cut rates tonight. The Canadian central bank started the trend overnight with a rate cut, with the latest US ISM services survey surprising to the upside but showing employment markers a bit tender, lending speculation to the Fed joining the party soon. The USD was relatively unchanged amid the equity upside with the Australian dollar also unmoved following yesterday’s tepid GDP print as it remains above the 66 cent level.
10 year Treasury yields fell again and lost another 5 points to just above the 4.2% level while oil prices climbed back with Brent crude finishing just above the $78USD per barrel level but still looking very weak. Gold was able to rebound on the weak USD, pushing back above the $2350USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets are down following the latest services PMI survey with the Shanghai Composite down more than 0.8% while the Hang Seng Index was doing better before playing catchup to finish down 0.1% to 18424 points.
The Hang Seng Index daily chart was starting to look more optimistic with price action bunching up at the 16000 point level before breaking out in the previous session as it tried to make a run for the end of 2023 highs at 17000 points with the downtrend line broken. Price action was looking way overextended but this retracement is now taking some heat out of the market but needs to stop soon before moving into corrective mode:
Meanwhile Japanese stock markets are facing a headwind with the higher Yen with the Nikkei 225 down more than 1% to 38446 points.
Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Short term resistance had been defended with short term price action now rebounding off former support at the 39000 point level with short term momentum and futures indicating another solid rebound:
Australian stocks were able to brush off the GDP print with the ASX200 moving 0.3% higher to 7759 points.
SPI futures are up at least 0.6% on the back of the breakout on Wall Street overnight. The daily chart was showing a potential bearish head and shoulders pattern forming with ATR daily support tentatively broken, taking price action back to the February support levels. Momentum is finally getting out of its oversold condition and now rebounding back into the positive zone:
European markets finally stopped their lacklustre performance and soared higher across the continent with the Eurostoxx 50 Index closing 1.6% higher at 5036 points.
The daily chart shows price action off trend after breaching the early December 4600 point highs with daily momentum retracing well into an oversold phase. This was looking to turn into a larger breakout with support at the 4900 point level quite firm with resistance finally brushed aside as it breaks the 5000 point barrier – lets wait for the ECB meeting tonight however for confirmation:
Wall Street lifted the strongest however with tech stocks leading the way with the NASDAQ up nearly 2% while the S&P500 was up about the same, still trying to get back above the 5300 point level, closing at 5293 points.
The four hourly chart shows the Friday night rebound coming up against a lot of hesitation here at the 5300 point level with short term momentum ready to launch higher, as I said yesterday watch for an imminent breakout and here we are:
Currency markets are moving away from USD but not in unison following the weaker ISM print with Euro unable to hold on to its new monthly high above the 1.09 handle as it retraces to the mid 1.08 level.
The union currency had previously bottomed out at the 1.07 level at the start of April as medium term price action with a reprieving reversal in price action back towards the 1.09 level before its own inflation print. Medium term support was briefly tested at the 1.08 level with momentum rebounding back into the positive zone, but not able to sustain overbought conditions yet:
The USDJPY pair was able to bounceback in the Asian session yesterday following its breakdown, eventually finishing just above the 156 level as resistance was too high to overcome.
Short term momentum has gotten out of oversold condition but has not yet gone positive with some tentative price action suggesting a pause here:
The Australian dollar was almost able to break the 67 cent level at the start of the week but was again unable to sustain it overnight, falling back to the mid 66 cent level following yesterday’s GDP print.
Early markers yesterday indicate some weakness is built into the GDP print but also the Pacific Peso itself can’t seem to take advantage of any USD weakness with momentum barely in the positive zone:
Oil markets remain in correction mode although Brent crude was able to lift slightly overnight after breaking below the $81USD per barrel level in the previous session, settling just above the $78 level.
After breaking out above the $83 level last month, price action has stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Watch daily ATR support here at the $86 level which is still broken and will likely be resistance for sometime with short term momentum quite oversold:
Gold is trying hard to get back on trend as it moves further towards the $2300USD per ounce level, able to breakout to a new intrasession high just above the $2350 level.
Short term momentum has retraced out of oversold mode and is actually slightly overbought but price action is still below trailing ATR resistance with the potential to get out of trouble here, but needing a catalyst to get going:
