Risk appetite in the markets increased yesterday with the world’s largest asset management firm BlackRock saying it will favour quality US blue-chips and small-cap stocks. The latter group usually outperforms during times of economic growth. US equity indices moved higher and the price of gold dropped to levels last seen in July this year. Both of these moves were accelerated by much better than expected US manufacturing PMI release. While analyst consensus expectation was 52.5 the actual number was confirmed at 56.7. After Gold violated our key support level at 1868.60 (see yesterday’s report) there were no significant attempts to support the price and it fell all the way to 1821.30. At the same time, we saw the price of oil moving higher. In addition to good PMI numbers, the overall bullishness in the markets was attributed to increasingly positive news about Covid-19 vaccinations. Today’s risk events include CB Consumer Confidence numbers from the US and the RBNZ Financial Stability report from New Zealand. See our economic calendar for times and details.  By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

S&P 500 index rallied yesterday mainly due to the strength seen in the energy sector and industrials. Tech stocks lagged behind. The 2h chart shows how the index is trying to break out of a triangle formation. In our view, the most important technical factor is the higher low created near the 23.6% Fibonacci retracement level. This indicates that buyers are ready to defend those levels and believe in higher prices, at least in the short term. Bullish remarks from the global asset management behemoth BlackRock add to the bullish sentiment in the short term and suggest that US stocks are likely to attract buyers and that possible dips are bought. The key support and resistance levels in the S&P 500 are 3516.85, 3544.50, 3585.65 (supports) and 3640.80, 3674.00 (resistances). We are looking for long trades above the 3544.50 support with target zones as follows, T1: 3628.00 – 3646.00 and T2: 3662.00 – 3680.00. For more analysis on this and many other markets, you may want to subscribe to TIOmarkets YouTube channel.

Recent macroeconomic data releases

  • Canadian Core Retail Sales 1%, 0.0% expected
  • Canadian Retail Sales 1.1%, 0.2% expected
  • French Flash Services PMI, 38, 39.2 expected
  • French Flash Manufacturing PMI 49.1, 50.2 expected
  • German Flash Manufacturing PMI 57.9, 56.0 expected
  • German Flash Services PMI 46.2, 46.1 expected
  • UK Flash Manufacturing PMI 55.2, 50.5 expected
  • UK Flash Services PMI 45.8, 43.2 expected
  • US Flash Manufacturing PMI 56.7, 52.5 expected

Macroeconomic data releases today

  • US CB Consumer Confidence 97.7 expected
  • RBNZ Financial Stability Report

You may access the times and dates in the economic calendar here.

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Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

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