Nick Goold
Dow Jones Index
Recent lower-than-expected inflation and robust U.S. economic data saw the Dow Jones index easily break above resistance at the 2023 highs. U.S. Treasury Secretary Janet Yellen added to the bullish mood stating she expects the U.S. to avoid recession after the recent strength of the labor market and slowing inflation.
Corporate earning results were positive last week, which showed the U.S. consumer is still confident and banks remain financially strong. This week will see many technology firms like Microsoft release their earnings, impacting market sentiment.
The Federal Reserve should increase interest rates as expected this week, and the market will focus on the language around the announcement for clues to further policy. The Dow has risen 10 days in a row, so profit-taking selling is expected ahead of the Fed meeting. The medium-term outlook remains strong, so buying weakness looks best this week.
Resistance: 35500, 36000, 36500, 37000
Support: 35000, 34600, 33610, 33000, 32550, 31750
Nikkei 225 Index
Japanese stock markets continued to trade sideways in the past week as the market waited for the Bank of Japan's monetary policy announcement at the end of this week. Recent Japanese inflation data has increased so the BOJ could raise its inflation forecasts. However, the market still believes they will not change monetary policy, so the USDJPY rose back above 140.00 again.
While monetary policy remains favorable for equities and U.S equities move higher, the Nikkei continued to move in a narrow sideways range which is concerning. This week could see the Nikkei break out of the 32,000 to 33,000 range, but forecasting the direction of the break is difficult. Given how far the market has risen in 2023, there is more risk to the downside, but trading the range remains the best strategy in the short term.
Resistance: 34000, 35000
Support: 31650, 30800, 30500, 30000
