Dow Jones Index
The Dow Jones experienced a turbulent week, closing with minimal change despite significant volatility. A notable point of concern for investors was the spike in the yield of the benchmark 10-year U.S. Treasury note, reaching a 16-year peak. This surge has ignited fears that rising borrowing rates might hamper the housing market and diminish the appeal of equities.
Midweek brought further uncertainty as the Dow Jones dipped below the 33,000 support mark, suggesting vulnerability in its position. However, trading volumes remained relatively subdued, hinting at investor hesitancy and anticipation ahead of Friday's official nonfarm payrolls report. The data revealed an addition of 336,000 nonfarm jobs in September—approximately twice what was expected by consensus estimates. Interestingly, the less aggressive wage figures in the jobs report might have prompted investors to re-evaluate their bearish views, leading to a significant uptick in the market.
Despite the Dow's recovery, back above 33,000 support, challenges persist. The index continues to find resistance at the 10-day moving average so that short-term traders could find better trading opportunities this week.
Resistance: 34000, 34600, 35000, 36000, 36500, 37000
Support: 33000, 32785, 32550, 31750
Nikkei 225 index
The Nikkei faced a tough week, with aggressive selling manifesting after the breach of its August low. A struggling U.S. equity market primarily propelled this downtrend. However, the drop was intensified as profit-oriented sellers took action. Japanese economic indicators revealed continuing declines in real wages and consumer spending for August, dampening investor sentiment.
On a brighter note, the Bank of Japan's recent Tankan survey indicates that the depreciating yen has fostered a positive business sentiment. Moreover, speculations were high regarding Japan's Ministry of Finance's intervention in the foreign exchange, especially after the yen's sharp rise after touching the JPY 150 against the U.S. dollar mark. While the Ministry didn't confirm or deny these speculations, the yen eventually weakened by week's end, nearing JPY 149 against the U.S. dollar.
While the Nikkei saw some recovery alongside U.S. equities on Friday, with the USDJPY facing resistance at the 150 mark, a selling strategy ahead of the 10-day moving average seems to be the tactical move for the upcoming week.
Resistance: 31650, 33000, 33375, 34000, 35000
Support: 30800, 30250, 30000