Nick Goold
Dow Jones Index
The Dow Jones Index experienced its fourth consecutive week of losses, signaling increasing investor concerns. A factor that has influenced this negative sentiment is the ongoing U.S. government shutdown. This, coupled with the rise in oil prices, has stirred worries that inflation will persistently remain high. Such inflationary pressures continue to see an increase in long-term U.S. interest rates, further compounding investors' anxieties.
On the brighter side, U.S. durable goods orders have surpassed expectations, emphasizing the robustness of the U.S. economy. Such positive data hints at an underlying resilience, even as external pressures and concerns dominate the headlines. Investors and market watchers now focus on the upcoming release of U.S. payrolls and manufacturing data, which could provide additional insights into the health and trajectory of the nation's economic landscape.
However, with the current downward momentum strengthening, many anticipate the Dow to target the 33,000 mark. Given the prevailing conditions, selling should the market return to the 10-day moving average might be the most prudent strategy.
Resistance: 34000, 34600, 35000, 36000, 36500, 37000
Support: 33000, 32550, 31750
Nikkei 225 index
Last week, the Nikkei index trailed US equities and recorded a decline. This drop was influenced by rising concerns from the U.S., including the prospects of prolonged higher U.S. interest rates and escalating oil prices. These factors have notably affected global markets, with investor sentiment taking a hit. The situation was further complicated by the Japanese yen weakening to an 11-month low, fueling speculations that the authorities could intervene to stabilize the currency.
In response to the swirling speculations, Finance Minister Shunichi Suzuki clarified that there isn't a specific target for the U.S. dollar-Japanese yen exchange rate that would prompt an intervention. Meanwhile, the 10-year Japanese government bond (JGB) yield climbed to 0.76% in the bond market, the highest level in ten years. Prime Minister Fumio Kishida announced a new economic stimulus initiative to bolster the economy.
While the medium-term outlook for the Nikkei remains optimistic, there's a growing vulnerability in the short term. If the Nikkei were to dip below the 31,650 mark, it could trigger more aggressive selling. However, should it maintain support at 31,650, the market might see a rebound towards the 32,500 level in the short term.
Resistance: 33000, 33375, 34000, 35000
Support: 31650, 30800, 30500, 30000
