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Equities look to build on recent gains as banking worries subside

Dow Jones index

A quiet news week was welcomed by investors helping the Dow Jones index close the first quarter positively. Fears surrounding the banking system are now much reduced with the support of the US central bank. A lower-than-expected inflation release last Thursday also helped sentiment.

The US jobs data and ISM surveys are the highlights this week and will help shape expectations around Fed policy. Now the banking system worries have subsided, the market will focus on economic data on inflation and future US interest rate movements.

The large rise on Friday sees the Dow Jones close to the highs from the start of March, which will likely be surpassed this week. While a significant gap from the 10-day moving average indicates an overbought condition, selling looks dangerous. Focusing on buying opportunities looks to be the best strategy for now.

Dow Apr 3

Resistance: 33500, 34000, 34500, 35000

Support: 32950, 32550, 31750, 31450, 31000, 30500, 30000

Nikkei 225 index

The Nikkei had a very positive week, helped higher by the US market and the USDJPY breaking the downward trend and moving back above the 10-day moving average. Little news in Japan has recently been relevant to the stock market, so investors remain focused on overseas markets. The rebound in 10-year US interest rates from the lows of 2023 is bullish for the USDJPY, which will help the Nikkei index.

This week expect the Nikkei index to continue the recent upward trend and test 28750. Monday`s Tankan survey is a crucial indicator regarding the Japanese economy and could impact sentiment. The upward-sloping 10-day moving average points the market higher and should provide support this week.

Nikkei Apr 3

Resistance: 28500, 29000, 29250

Support: 27815, 26950, 26500, 26250, 25500, 25000