Crude oil pressures the US stock market

US stock market futures traded flat at the start of the week after the market closed positive last week as the price index on personal consumption expenditures (PCE) declined, boosting investor confidence in the capital market.

Oil prices surged on Monday after Saudi Arabia and other OPEC+ members curtailed supplies by 1.16 million barrels per day on Sunday, surprising the market and implying a global trend of inflation that may rise again, sending S&P 500 futures down 0.3% and Nasdaq futures down 0.6% on Monday before the market ended with a gain of 0.37, supported by energy companies, and a loss of 0.27, respectively.

According to a Commerce Department report released on Friday, the PCE index rose 5.0% year on year in February, down from +5.3% in January, while core inflation rose to a lower-than-expected 4.6%, pushing the 2-year US Treasury yield up 4 basis points to 4.11%, while Fed fund futures (FFR) ruled out the possibility of a rate cut this year. The markets now expect the Fed to hike interest rates by 25 basis points in May, up 61% from 48% on Friday.

However, despite a significant sell-off in banking stocks following the failure of two banks and the rise in concerns about a wider financial crisis, the US stock market held up well in the first quarter of this year. The Nasdaq rose 16.8%, marking its highest quarterly gain since 2020, while the S&P 500 rose 7% and recovered after falling nearly 20% in 2022, and the Dow closed the quarter at 0.4%.

The following economic data is expected to affect the US stock market this week: JOLTs Job Openings for February, with the previous figure being 10.824M while the expected figure is 10.4M, Crude oil inventories, with the previous figure being -7.489M while the forecast is 0.092M, and U.S. Nonfarm Payrolls for March, with the previous figure being 311k while the expected figure is 238k, in which all of these are due Tuesday, Wednesday, and Friday evenings, respectively. Despite the fact that the number of job openings and the Nonfarm Payrolls index tend to fall, signaling a slowing of economic activity which may help boost the US stock market, yet, if the global crude oil supply situation begins to suggest a shock while demand remains stable or rises, oil prices and headline inflation may surge, as the dollar strengthens in reaction to the Fed's tightening policy and pressure on the US capital market in general.

Data for Technical Analysis (5H) CFD US 500 [S&P 500]

Resistance : 4124.5, 4126.1, 4128.9

Support : 4118.9, 4117.3, 4114.5                 

5H Outlook

1H Outlook

Source: Investing.com                      

Buy/Long 1 If the support at the price range 4113.9 - 4118.9 is touched, but the support at 4118.9 cannot be broken, the TP may be set around 4125.0 and the SL around 4110.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 4124.5 - 4129.5, TP may be set around 4132.0 and SL around 4115.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 4124.5 - 4129.5 is touched, but the resistance at 4124.5 cannot be broken, the TP may be set around 4118.0 and the SL around 4132.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 4113.9 - 4118.9, TP may be set around 4110.0 and SL around 4127.0, or up to the risk appetite.       

Pivot Points Apr 04, 2023 01:39AM GMT

Sources: Investing 1, Investing 2