Dow Jones Index
The Dow Jones Index suffered another week of losses following corporate earnings reports that failed to meet investor expectations and technical selling that got triggered as the market broke through crucial support levels. Interest rates staying higher than expected continue to weaken sentiment, as the 10-year U.S. Treasury note momentarily breached the 5% mark, which is a 16-year high. However, by the end of the week, it retreated and settled at 4.8%.
The US GDP figures surpassed expectations, recording a rise of 4.9% compared to the projected 4.3%. Additionally, the Core PCE Price Index, which stands as the Federal Reserve's go-to gauge for inflation, remained consistent with expectations. This data suggests it is unlikely we will see a decrease in the official interest rates soon.
The upcoming week should present many trading opportunities. Key events to watch include the U.S. Federal Reserve's meeting concerning interest rates and the release of U.S. unemployment data. While the prevailing downtrend in the market remains strong, there are indications that the market might be slightly oversold in the short term. Consequently, for traders, waiting for a slight upswing before selling might be the best strategy.
Resistance: 32785, 33000, 34000, 34600, 35000, 36000, 36500, 37000
Support: 31750, 31420, 31000
Nikkei 225 Index
The Nikkei, mirroring the trend in US equities, experienced a dip, though the strong USDJPY provided a supportive backdrop. The market demonstrated resilience by maintaining above the lows observed in October. The USDJPY breached the 150 mark, prompting a warning from Finance Minister Shunichi Suzuki. He cautioned speculators and emphasized that the authorities would continue to address the situation in the currency market "with a strong sense of urgency." Despite this proclamation, the evidence of any concrete intervention remains limited.
Japan's economic health is currently under the shadow of rising inflation. The consumer price index for the country escalated to 3.3%, a figure that doesn't bode well for the broader economy, especially since wage increments are failing to keep up with this pace. This disparity between inflation and wage growth could dampen consumer spending and further pressure businesses and the broader economy.
The downward pressure will likely remain in the coming week, and there's a growing probability that the Nikkei will break 30,250 support. Given the prevailing market dynamics, traders might find it prudent to sell when this support level is broken or await a return to the resistance aligned with the 10-day moving average. The latter is the more strategic move for the upcoming week.
Resistance: 31650, 33000, 33375, 34000
Support: 30250, 30000