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Equity market end the week strongly after holding support levels

Nick Goold

Dow Jones Index

The Dow Jones index was under pressure at the start of the week as US 10 year interest rates pushed above 4%. The equity markets are very closely correlated with interest rates at the moment. On Thursday Fed Governor Waller indicated the next interest rate rise might only be 0.25% despite high inflation numbers which saw the index bounce off support from December last year. Friday saw another positive US data release which helped the Dow close the week strongly.

Fed Chairman Powell will be speaking on Tuesday and Wednesday to explain current and future monetary policy to the US government. The market is looking for good news so should Powell indicate he is not too worried about inflation expect the Dow Jones index to rise quickly. US employment figures will be released on Friday and investors will be looking to see the strong employment growth is continuing.

Technically the market has broken the recent short term downtrend following the close above the 10 day moving average on Friday. In the medium term the range of 32500 to 34500 remains so expect a push higher this week as investors gain confidence after 32500 held last week.

Resistance: 33500, 34000, 34500, 35000, 35500, 36000

Support: 32500, 32000, 31000, 30500, 30000

Nikkei 225

A great performance from the Nikkei index last surging to new highs for 2023. The catalyst for the rise was increased confidence in the Chinese economy and the continued weak Yen during Tokyo trading Friday. The large gain from the Dow Friday night then pushed the Nikkei even higher.

The outlook remains positive for the Nikkei index in both the short and medium term with resistance at 28500 likely to be tested in the next week or two. Short term expect some profit taking selling to enter at the start of the week but expect the recent uptrend to continue towards the end of the week.

Resistance: 28300, 28500, 29000, 29250

Support: 27500, 27000, 26250, 25500, 25000, 24500