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Equity markets end the first half positively and look likely to continue

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Nick Goold

Dow Jones Index

A great week of economic news saw the Dow Jones index return close to the 2023 highs. US new home sales, the University of Michigan consumer sentiment data, and Durable goods orders all beat expectations. Worries about a US recession in the second half continue to decline, helping stock market sentiment.

The economic data release which caused the most buying on Friday was the US Core PCE Price Index being less than expected, continuing the recent trend of a slowdown of the inflation rate. Next week will start quietly as Independence Day holidays are respected in the US. The release of FOMC meeting minutes, Nonfarm Payrolls, and ISM data will see volatility return from midweek.

While resistance remains nearby at the 2023 high, it is hard to recommend buying for short-term traders who will find more opportunities in range trading. In the medium term, it looks highly likely that the market will make new 2023 highs in July, so buying weakness is the best strategy for swing trades.

US30 daily chart July 3

Resistance: 34500, 34590, 35000

Support: 34155, 34000, 33425, 33000, 32550, 31750

Nikkei 225 Index

The Nikkei Index range traded as expected last week, ending up over 1% higher on the week. The weak Yen and strong US equity markets stopped profit-taking Japanese equity investors from selling.

The USDJPY hit the 145 level, which saw the Bank of Japan (BoJ) intervene to buy the Yen in September 2022, concerning investors. While there has been no action yet, Japanese monetary authorities have stated they are closely watching currency moves and look ready to act.

While the Nikkei index stays below the recent historical high at 34,000, short and medium-term traders are better off looking to range trade and expect lower values. While higher values look possible in the longer term, the upward momentum seems to have stopped for now.

Resistance: 34000, 35000

Support: 31650, 30800, 30500, 30000

Great