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Equities struggle but end the week positively

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Nick Goold

Dow Jones index

A poor week for the Dow Jones index as Federal Reserve Chair Powell suggested a change in policy to decrease rates might not occur as quickly as the market had hoped after the decision to increase official US interest rose by 0.25%. In addition worries remain regarding the health of regional banks in the US.

Whilst the US employment release in March, the figures for January and February were lowered so there was little impact on the Dow Jones index. The market drew strength from comments from FOMC member Bullard who said the economy can still have a soft landing and not suffer a recession as feared.

This week will get another update on US inflation on Wednesday when US CPI is released for April and PPI on Thursday. Technically the Dow Jones held 33,000 support successfully but the 10 day moving average is pointing lower so the potential for large gains looks unlikely in the short term. Range trading remains the best strategy for traders until the market moves above 34250 or below 33000.

Dow chart May 8

Resistance: 34000, 34155, 34500, 35000

Support: 33250, 33000, 32550, 31750

Nikkei 225 index

A quiet week for the Nikkei 225 index due to Golden Week holidays. The week started positively as the USDJPY surged higher following the Bank of Japan’s decision to maintain the current easy monetary policy the previous week. However US recession fears saw the yen strengthen and the Nikkei suffered along with the US market mid week.

Friday`s rally was positive and saw the market close above the 10 day moving average which is pointing higher so there is still upward momentum. The coming week could see Japanese investors return positively from their holidays and a test of 29500 is possible in the coming week.

Nikkei chart May 8

Resistance: 29360, 30000

Support: 28725, 28000, 27425, 26950, 26500

Great