Stock Markets Gain Amid Fed Rate Expectations and Chinese Stimulus Optimism

Global stock markets experienced gains on Monday, driven by increasing expectations that the Federal Reserve will refrain from raising interest rates further and optimism surrounding China's ongoing policy stimulus efforts to stabilize its economy.

Activity was subdued in the United States due to a holiday, with key economic readings on U.S. services and Chinese trade and inflation anticipated later in the week. Additional policy actions, including the relaxation of home-buying restrictions, were anticipated from China as part of its measures to bolster the struggling Chinese economy. Notably, property developer Country Garden received approval from its creditors to extend payments for an onshore private bond.

The MSCI All-World index, which recently witnessed its most robust weekly rally since mid-July, saw a 0.2% increase, while the dollar saw a 0.16% decline on the day. Investor sentiment in the tech sector was set to be tested with the upcoming initial public offering of chip giant Arm Holdings, targeting a valuation between $50 billion and $54 billion.

Meanwhile, U.S. stocks had risen on Friday following the release of August's U.S. payrolls report, which bolstered expectations of an end to rate hikes. The Dow gained 1.1%, the S&P 500 added 2%, and the NASDAQ lifted 2.4%. Although the headline jobs number exceeded forecasts, downward revisions in the previous two months and a decrease in wage growth suggested a loosening labor market.

On Monday night, U.S. stock futures traded mixed. Dow Jones Futures, S&P 500 Futures, and Nasdaq 100 Futures all dipped by 0.1%.

Market expectations were heavily favoring the Federal Reserve maintaining interest rates this month, with a 93% probability according to the CME FedWatch tool. Additionally, there was a 60% likelihood of no further rate hikes this year.

On the other hand, the safe-haven status of the U.S. dollar declined on Monday as risk sentiment improved, driven by hopes that China's policy stimulus would stabilize its economy and positive U.S. jobs data.

In the upcoming sessions, market participants will closely monitor monthly factory orders, trade balance data, Markit and ISM services PMIs and nonfarm productivity. Seven Fed officials are scheduled to speak this week ahead of the next policy meeting on September 19-20. The focus will remain on clues from these officials regarding the actions of the U.S. central bank at its next policy meeting. Hence, it is anticipated that the general performance of the U.S. stock market will remain steady or experience modest gains in this timeframe.

Data for Technical Analysis (5H) CFD US30 DJIA

Resistance : 35341.2, 35371.2, 35419.6

Support : 35244.4, 35214.4, 35166.0                   

5H Outlook

Source: Investing.com                                    

Buy/Long 1 If the support at the price range 35204.4 - 35244.4 is touched, but the support at 35244.4 cannot be broken, the TP may be set around 35375.5 and the SL around 35190.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 35341.2 - 35381.2, TP may be set around 35430.0 and SL around 35230.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 35341.2 - 35381.2 is touched, but the resistance at 35341.2 cannot be broken, the TP may be set around 35244.4 and the SL around 35395.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 35204.4 - 35244.4, TP may be set around 35155.0 and SL around 35356.0, or up to the risk appetite.       

Pivot Points Sep 05, 2023 02:24AM GMT

Sources: Investing 1, Investing 2