S&P 500 index futures are up 0.4% this week,
trading at 5995 points, nearing the all-time high of 6026 points. The benchmark
opened the week with a gap up from last week’s close at 5970 points, a
technical formation often followed by corrections to fill the gap. The rally
was fueled by U.S. President-elect Donald Trump's nomination of hedge fund
manager Scott Bessent as Treasury Secretary, signaling potential import tariffs
targeting China and supporting expectations of continued Federal Reserve rate
cuts. Following the announcement, U.S. 10-year Treasury yields fell to 4.32%
from 4.41%, while bets on a quarter-point Fed rate cut in December rose to
55.9% from 52.7%. Concurrently, EURUSD climbed 0.88% to 1.05020.
The nomination has created speculative
pressure, particularly on the U.S. Dollar. While Trump’s verbal interventions
may relieve some overbought tension, the Federal Reserve will also weigh recent
macroeconomic improvements. Notably, U.S. manufacturing PMI rose to 48.8 from
48.5, and services PMI surged to 57.0, beating a consensus of 55.2. Rising
inflation and strengthening business activity may prompt the Fed to pause rate
cuts in December.
The release of key economic data this week,
including the FOMC Minutes, Q3 GDP, PCE Index for October, durable goods
orders, and initial jobless claims, will be crucial for market direction. The
Thanksgiving holiday on Thursday and Friday could heighten volatility earlier
in the week. Market participants anticipate Q3 GDP and jobless claims could
reveal economic softening, while a projected rise in the PCE Index to 2.8% YoY
from 2.7% could drive the S&P 500 above 6000 points and potentially trigger
a U.S. Dollar correction.
Despite $5.5 billion in net outflows from the
SPDR S&P 500 ETF Trust (SPY) last week (excluding Friday), large investors
appear to be taking profits rather than signaling broad market weakness.
NVidia’s Q3 results, while slightly tempered by cautious forward guidance, have
not significantly deterred sentiment.
From a technical
perspective, the S&P 500’s outlook has slightly improved. The index
surpassed initial targets at 5700-5800 and began a rally toward the 6100-6200
range. The benchmark surpassed the resistance at 5930-5950 points and continues
up to 6030-6050 points.
In commodities, Brent
crude prices recovered to $74.93 per barrel. The nearest resistance is at
$78.00-80.00, with strong support at $69.00-71.00.
Gold prices have slightly
retreated, down 1.1% to $2,684 per troy ounce this week. The nearest resistance
is at $2,750-2,770. In case of a breakthrough, prices could continue toward
$2,870-2,890, with possible highs of $3,200-$3,300.
In the currency market,
the U.S. Dollar has trampled down all rival reserve currencies with the EURUSD plummeting
to 1.03310 last week. This flash crash could be transformed into an extreme
reversal formation if the pair continues to recover. The key milestone is at
1.05500.