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S&P 500 Confronts Geopolitical Uncertainties and Surging Yields.

The Nasdaq 100 and S&P 500 experienced a notable downturn in the past week, approaching multi-month lows, primarily in response to the surge in U.S. yields and escalating geopolitical tensions in the Middle East. The ongoing earnings season, which has recently commenced, has yielded mixed results, with banks and technology companies reporting satisfactory performances but failing to stimulate an upward trajectory in stock prices.

Given the rising yields and prevailing geopolitical uncertainties, the S&P 500 and Nasdaq 100 face a formidable challenge in maintaining their stability. To invigorate market sentiment and bolster confidence, Corporate America must produce robust results for the third quarter, ideally surpassing Wall Street's expectations.

What are the primary factors contributing to the recent downturn in the Nasdaq 100 and S&P 500, including their sensitivity to rising U.S. yields and escalating Middle East conflicts?

Read below what our desk thinks, and the important levels to watch this week.

This market brief is an overview of the week ahead and some of the events we see as being important to the markets.

Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes. For up-to-the-minute market analysis see our live trading room.

INDICES

AUSTRALASIA

ASX – 6828 (-204 or -2.9%)

The ASX is down over -2% this past week, bouncing on the lowest levels in the past 12 months.

VOLATILITY ALERTS:

Tues 09:00 – AUD Judo Bank Manufacturing & Services PMI

Wed 11:30 – AUD CPI

Wed 11:30 – AUD Inflation Rate

For a move higher, we would like to see the ASX close above 6828. Should this occur, a move above 6991 should be expected, and if momentum is strong, we cannot rule out moves to 7112 and 7196.
Failure to close above 6828 means a potential move into 6775. 6854 is the next support level down if 6717 doesn’t hold. If downside momentum is really strong then we could see another leg down into 6646.

EUROPE

DAX (30) – 14798 (-382 or -2.52%)

The DAX is following the current trends of the markets and has moved down -2.5% this last week.

VOLATILITY ALERTS:

Tues 17:00 – EUR Consumer Confidence

Tues 19:00 – EUR PMI

Thur 23:15 – EUR Interest Rate Decision

Thur 23:45 – EUR Press Conference

For the DAX to move higher, we would like to see it close above 14800. Should this occur, then 14974 is the next level ahead. If upside momentum is strong, then 15087 and 15243 cannot be ruled out. 

To the downside, should we not see it hold above 14800, we will look for a move into support at 14672. A strong break and close below this handle and 14457 is the next level down. If downside pressure mounts, then 14116 cannot be ruled out.

US

S&P 500 – 4232 (-110 or -2.53%)

Following the current global moves the SPX500 is down -2.5% this past week.

VOLATILITY ALERTS:

Wed 00:45 – USD PMI

Thur 01:00 – USD New Home Sales

Thur 23:30 – USD GDP Growth Rate

Thur 23:30 – USD Initial Jobless Claims

Fri 23:30 – USD Personal Spending

For a move higher, we would like to see the S&P hold above 4232. Should this occur, we will look for a move through 4339. And if momentum is strong, we cannot rule out moves to 4412 and 4480.

If we cannot hold above 4232, we could see this market move down into 4144 A break of this level, however, may result in a quick move down to 4118. And if momentum to the downside remains strong, we may see a fast move back down to 4005.

FOREX

AUD/USD – 0.6308 (-8 or -0.13%)

The AUDUSD is coming into a busy week of news at an important support area, will we see new 12 month lows? Or will the news give AUD the support it needs?

VOLATILITY ALERTS:

Tues 09:00 – AUD Judo Bank Manufacturing & Services PMI

Wed 11:30 – AUD CPI

Wed 11:30 – AUD Inflation Rate

Wed 00:45 – USD PMI

Thur 01:00 – USD New Home Sales

Thur 23:30 – USD GDP Growth Rate

Thur 23:30 – USD Initial Jobless Claims

Fri 23:30 – USD Personal Spending

For a move higher this week, we would like to see it hold above 0.6308. We will then be targeting a move through 0.6327. If we see a strong break and close above this level, then we can’t rule out a move to 0.6377. Should momentum to the upside be really strong, then 0.6426 could be targeted.
If this market cannot hold above 0.6308 we could see a move down to 0.6274. A strong break of this level may result in a move into 0.6214 however, any weakness below this level could see a sharp drop into 0.6167.

EUR/USD – 1.0576 (+53 or +0.5%)

After an extended short run EURUSD has found support coming into a high impact news week, will the support hold?

VOLATILITY ALERTS:

Tues 17:00 – EUR Consumer Confidence

Tues 19:00 – EUR PMI

Thur 23:15 – EUR Interest Rate Decision

Thur 23:45 – EUR Press Conference

Wed 00:45 – USD PMI

Thur 01:00 – USD New Home Sales

Thur 23:30 – USD GDP Growth Rate

Thur 23:30 – USD Initial Jobless Claims

Fri 23:30 – USD Personal Spending

For a move higher, we would like to see the Euro close above 1.0576. Should this occur, we should see a move above 1.0634. A break of this level could see this market rally further to 1.0754 and 1.0773.

If the EURO cannot close above 1.0576, we will see a move into 1.0411. A strong break of this level may result in a move into 1.0369, however, any weakness below this level could see a move into 1.0299.

GBP/USD – 1.2153 (+2 or +0.02%)

Following a similar trend to the EURUSD, GU has formed a strong-looking downtrend and is sitting on an important support level.

VOLATILITY ALERTS:

Tues 17:00 – GBP Unemployment Rate

Tues 19:30 – GBP PMI

Wed 00:45 – USD PMI

Thur 01:00 – USD New Home Sales

Thur 23:30 – USD GDP Growth Rate

Thur 23:30 – USD Initial Jobless Claims

Fri 23:30 – USD Personal Spending

For a move to the upside, we would like to see Cable hold above 1.2151 before a break higher into 1.2176. If this market can see a strong close above this level, we may then see a strong pushback into 1.2243. If upside momentum is really strong, then a move back into 1.2346 can’t be ruled out.

Should we fail to hold above 1.2151, we will look for a move down to 1.2129. A break below this level, however, could see Cable further depreciate to 1.2035 by the week’s end. And if momentum is very weak, we cannot rule out a move to 1.2000.

USD/JPY – 149.92 (+44 or +0.29%)

USDJPY is pushing up against a major resistance level, could a new multi-year high be formed?

VOLATILITY ALERTS:

Wed 00:45 – USD PMI

Thur 01:00 – USD New Home Sales

Thur 23:30 – USD GDP Growth Rate

Thur 23:30 – USD Initial Jobless Claims

Fri 23:30 – USD Personal Spending

For a move to the upside, we must now see this market close above 149.15. Should this occur, we will look for a move into 150.133, and if the upside momentum is strong, we could see a move higher into 151.00 and potentially 152.00.

If we cannot close above 149.15, we could see a move back to test 148.92 before a pause to the downside. A break below this level may result in a sharp move lower into 148.06, and any further breaks to the downside may see a bigger move into 147.59.

COMMODITIES

GOLD – 1972 (+51 or +2.65%)

After a big dip, Gold has seen a 14-day rebound. Will the momentum continue to all-time highs?

For a move higher, we need to see this market close above 1972. Should this occur we could see a move into 1988; and any break of this level could see a stronger move into 2005. If momentum is strong, then 2032 cannot be ruled out.

If Gold cannot close above 1972, we can see a move down to 1944 A break below this level could see a move lower into 1892 and if momentum is very strong to the downside, we could see a move to 1866.

CRYPTOS

BITCOIN – 30416 (+3167 or +11.62%)

Bitcoin has seen an 11% rise since last week, moving into its yearly highs area. Can the bulls break the high?

For a move higher, we must now see this market close above 30000. Should this occur, we could see a move into 31000 before retesting 32000. If the upside momentum is really strong, then we can’t rule out 33000.

Failure to close above 29000 could see a move into 26000. If selling pressure takes control, then we could see a move down to 25000. A close below this level and 24000 can’t be ruled out. 20000 is the more psychological handle below that.

DISCLAIMER

The views represented on this website do not contain (and should not be construed as containing) financial advice, recommendations, opinions in relation to acquiring, hold or disposing of a financial product of any kind, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Trade View accepts no responsibility for any use that may be made of these comments for any consequences that result. No representation or warranty is given as to the accuracy or completeness of the above information. Consequently any person acting on it does so entirely at his or her own risk. The research does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.