Daily Price Outlook
The global market sentiment failed to stop its downward trend and remains pessimistic amid growing concerns over China's mounting debt issues and escalating global political tensions. As the new week begins, risk appetite continues to dwindle, exacerbated by weekend reports from China highlighting further economic challenges.
In the meantime, the geopolitical worries about Russia are also contributing to the negative mood. This is evident in the S&P500 Futures' decline and US 10-year Treasury bond yields nearing a yearly high of 4.18%.
Market Sentiment Sours Amid China's Debt Woes and Geopolitical Tensions
The global market sentiment turned negative as China's Country Garden has stopped trading its bonds, and some Chinese companies are complaining about not getting paid by a subsidiary of Zhongzhi Enterprise Group. This has triggered record-low bond prices and trading halts for Country Garden. Furthermore, tensions from the US-China trade war and Russia's actions in the Black Sea are also adding to market uncertainty.
US Data and Fed Views Create Mixed Sentiment in Forex Markets
Apart from this, the global market sentiment was also influenced by US data. July's Consumer Price Index (CPI) had a minor effect on September's expectations for the Federal Reserve's actions. Nonetheless, other indicators suggesting a potential interest rate increase bolstered optimism for the US Dollar. The US Producer Price Index (PPI), coupled with the August Consumer Sentiment Index (CSI) and inflation expectations, offered additional backing for the strength of the USD.
Meanwhile, Fed Governor Michelle Bowman supported more rate hikes, while others like Mary Daly, Patrick Harker, and John Williams suggested rate cuts in 2024 but emphasized data dependence, leaving policy doves seeking more details for confirmation. Therefore, this news had a mixed impact on the market sentiment as the lack of change in the Consumer Price Index (CPI) for September Fed policy lessened expectations, but other positive price measures boosted USD.
Upcoming Data Releases and FOMC Minutes Awaited for Market Direction
Looking forward, investors are keeping their eyes on China's upcoming Industrial Production and Retail Sales data for July, set to release on Tuesday. These figures will offer important initial cues, especially ahead of Wednesday's housing data. Besides, the market focus remains on Tuesday's US Retail Sales for July and Wednesday's release of the latest Federal Open Market Committee (FOMC) meeting Minutes, providing insights for market sentiment.
S&P500 (SPX) - Technical analysis
The prominent S&P 500 stock market index is currently oscillating around the 4464 mark. This specific support is reinforced by the 61.8% Fibonacci retracement level, and the candlestick patterns suggest that there is a strong possibility for a continued decline. The S&P 500 finds its next support at approximately 4437, underpinned by the 78.6% Fibonacci level.
Key technical indicators, such as the RSI and MACD, are currently positioned within the bearish territory. Meanwhile, the 50-day exponential moving average indicates a bearish sentiment, offering immediate resistance near the 4472 level. For now, traders should closely monitor the 4475 mark.
A move below this could usher in a more pronounced bearish trend. Conversely, if the index surpasses this level, we could anticipate an uptrend towards 4490 or even an ascent towards 4525. Should the index descend below 4475, there's potential for the S&P 500 to plummet to the 4435 level, with a further potential drop bringing the index close to the 4400 benchmark.
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