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Equities consolidate gains ahead of inflation data

Dow Jones Index

The Dow Jones Index had a quieter week as it settled after some recent growth. Only a few economic reports came out, but the few that did matched what people were expecting, so there weren't any big surprises for the stock market. This allowed investors to catch their breath and see where things might head next.

Comments from Jerome Powell, the head of the Federal Reserve, did make some waves, however. He spoke at an International Monetary Fund event and mentioned that he wasn't sure if their efforts to control inflation by making borrowing more expensive were enough. Because of this, the interest rates for long-term loans in the U.S. increased a little, showing that investors are watching for signs that the Fed might get tougher on inflation.

This week could be more interesting for the Dow. We're expecting important updates on U.S. inflation and Retail Sales. These numbers will determine whether the stock market can maintain its positive streak. However, since the Dow has recently increased, climbing much higher in the short term might be challenging. If it gets close to 34600 points, it could be a good time to consider selling, especially if the new economic reports come under expectations. If the Dow starts to dip below the 10-day moving average, that could also be a sign that it might be time to sell.


Resistance: 34600, 35000, 36000

Support: 33800, 33000, 32785, 32300, 31750

Nikkei 225 Index

The Nikkei Index continued its recent recovery, buoyed by robust corporate earnings and a positive spill-over from gains in U.S. stock markets. The USD/JPY continued to weaken, closing above the critical 150 mark, which is seen as favourable for Japanese stocks, especially as the Bank of Japan has not stepped in to stem the yen's fall, which benefits exporters.

Bank of Japan Governor Kazuo Ueda has expressed concerns about the difficulties of raising short-term interest rates. He highlighted the risks such a move could pose to financial institutions, borrowers, and overall economic demand. On the fiscal side, the Japanese government is providing financial support. Japan's cabinet has given the green light to an extra budget that underpins Prime Minister Fumio Kishida's new economic stimulus package, valued at over USD 110 billion.

Despite the current positive trend, the Nikkei faces a potential barrier at the 33,000 level, which might be tough to cross in the near term. With this in mind, looking for selling opportunities could be a prudent approach in the coming week.


Resistance: 33000, 33375, 34000

Support: 31650, 30250, 30000