Dow Jones Index
In a relatively subdued week, the Dow Jones index closed nearly unchanged compared to the previous week. The market witnessed a balancing act, where the weakness in the technology sector stocks was counterbalanced by stronger oil stocks, following a hike in the West Texas Intermediate (WTI) prices that soared above $91. Investors were encouraged by a streak of positive economic data from the US, including beating expectations in retail sales and industrial production, sustaining the ongoing trend of optimistic data releases.
The latest releases indicated mixed signals on the inflation front, with the Consumer Price Index (CPI) aligning with the expectations and the Producer Price Index (PPI) exceeding them. However, these figures were perceived to have a limited impact on the imminent Federal Reserve interest rate decision slated for this week, thereby only marginally influencing the Dow's performance. The encouraging trend of higher interest rates seemingly began manifesting the desired effect of curbing inflation. Supporting this outlook, the University of Michigan's recent consumer sentiment survey shed a positive light on the economy, as it marked a dip in one-year inflation expectations to 3.1% in September, a figure mirroring the lowest recordings since January 2021.
This week, the reduced volatility is likely to continue, with the Federal Reserve anticipated to maintain the status quo regarding interest rates in the upcoming week. This scenario makes range trading a promising strategy for investors in the short term, particularly if the market retains its stance within the 34,000 to 35,000 range. However, traders should remain vigilant, as unforeseen remarks in the aftermath of the Federal Reserve meeting have the potential to result in unexpected market movements.
Resistance: 35000, 36000, 36500, 37000
Support: 34600, 34,000, 33610, 33000, 32550, 31750
Nikkei 225 index
The Nikkei index experienced a particularly buoyant week, appreciating by over 2.5% and inching ever closer to its yearly peaks. Sustained weakness in the Yen and an influx of optimistic data from the Chinese markets fostered a favourable environment for investment in Japanese stocks.
The Bank of Japan (BoJ) Governor Kazuo Ueda hinted at the possibility of ending the protracted period of negative interest rate policy by the year-end. Ueda indicated that the central bank might gather sufficient data by the end of the year to evaluate if the upward trajectory in wages would be sustained, a critical parameter in contemplating a shift in its current policy stance. Even though these comments initiated a brief rally in the Yen, the effects were short-term as the market remained focused on the large difference between the US and Japanese interest rates.
The introduction of new Government stimulus measures in October is anticipated to bolster the market, maintaining the strong outlook. The 10-day moving average signals further strength and is expected to serve as a support zone for traders. Traders looking to join the current uptrend could find profitable buying opportunities should the market return to the moving average this week.
Resistance: 33375, 34000, 35000
Support: 33000, 31650, 30800, 30500, 30000