Global Markets Face Challenges Amid Rate Uncertainty, Eyes on Nvidia and Walmart Earnings

Global stock markets faced challenges in gaining traction on Monday as the possibility of early global interest rate cuts diminished, and Chinese markets posted modest gains following the lunar new year break. The absence of U.S. market activity due to a holiday resulted in thin trading, with the focus turning to AI giant Nvidia's earnings report on Wednesday, potentially influencing the recent surge in tech stocks.

U.S. stock index futures dipped in Asian trade on Tuesday amid ongoing uncertainty about interest rate trajectories. The anticipation of key earnings reports, especially from Nvidia, heightened traders' anxiety. The previous day saw U.S. stocks closing lower, primarily driven by losses in the Technology, Telecoms, and Consumer Goods sectors.

Friday's decline in U.S. stock indexes was attributed to stronger-than-expected Producer Price Index inflation data for January, following a recent surge in consumer price index inflation. Concerns grew that the Federal Reserve might maintain higher interest rates for an extended period, exacerbated by a weaker retail sales report indicating slower economic momentum. While the U.S. labor market continued to exhibit robust job numbers and elevated wage growth, providing some stability to the markets.

The shift in market sentiment regarding rates was evident in the spike of two-year Treasury yields to a 2024 high of 4.72% on Friday. While Treasury futures remained relatively stable on Monday, the potential impact of this sea change in rates on market dynamics remained a significant point of consideration.

The recent rally on Wall Street has been largely driven by the technology sector, particularly the demand for artificial intelligence. Nvidia, a key player in this space, is expected to report fourth-quarter earnings, serving as a crucial test for the optimism surrounding AI. The company's stock has surged, contributing significantly to the S&P 500's gains. Walmart, another major player, is also set to report earnings, offering insights into U.S. consumer spending trends amid prevailing economic conditions.

As Nvidia and Walmart's earnings reports unfold, the market is at a critical juncture, where positive updates could fuel enthusiasm, while disappointments may have broad implications. The global economic outlook, highlighted by PMI data, provides a broader context, suggesting that while concerns about a global recession have eased, challenges persist in certain regions, with ongoing strength in emerging markets outside China.

Looking ahead, investors are keenly awaiting the latest Federal Reserve minutes for insights into future monetary policy. Key Fed officials are scheduled to provide commentary during the week. Additionally, economic data on existing home sales and initial jobless claims will be monitored.

Data for Technical Analysis (5H) CFD US30 DJIA

Resistance : 38596.3, 38628.7, 38681.0

Support : 38491.7, 38459.3, 38407.0               

5H Outlook

Source: Investing.com                            

Buy/Long 1 If the support at the price range 38391.7 - 38491.7 is touched, but the support at 38491.7 cannot be broken, the TP may be set around 38596.3 and the SL around 38341.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 38596.3 - 38696.3, TP may be set around 38731.0 and SL around 38441.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 38596.3 - 38696.3 is touched, but the resistance at 38596.3 cannot be broken, the TP may be set around 38491.7 and the SL around 38746.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 38391.7 - 38491.7, TP may be set around 38320.5 and SL around 38646.0, or up to the risk appetite.       

Pivot Points Feb 20, 2024 02:45AM GMT