S&P 500, Fed, Bostic, China, Crude Oil, OPEC+, US Dollar, Gold, NZD – Talking Points
- The S&P 500 has had a reprieve going into Friday’s session
- Fed tightening and Chinese lockdowns are dampening growth outlook
- All eyes on US non-farm payrolls later today.Will theS&P 500 lift?
The S&P 500 finished the cash session up 0.30% after initially testing lower. Futures are pointing toward a soft start to today’s trading. Federal Reserve hawkishness and China’s anaemic economic prospects appear to be hampering the outlook for global growth.
Atlanta Fed President Raphael Bostic added to his hawkish rendition overnight, saying, “when you bring demand down, that has the risk of slowing the economy down.” He also mentioned the ‘R’ word. 2-year Treasury yields remain at 15-year highs near 3.50%.
The Chinese city of Chengdu has gone into lockdown as the zero-case Covid-19 policy remains in place. The city of 21 million people in the Sichuan district is also facing drought conditions and power outages.
Industrial metals are noticeably lower with the negative outlook on Chinese growth compounding global anxiety of tighter monetary policy slowing economic activity.
China’s CSI 300 and Hong Kong’s Hang Seng indices are lower. Japan’s Nikkei 225 is also down on the day, but Australia’s ASX 200 is slightly in the green.
Crude oil futures contracts recovered today ahead of next week’s Organization of Petroleum Exporting Countries (OPEC+) meeting. The cartel is considering production cuts to stem downward pressure on the energy source. WTI is above US$ 88 bbl while the Brent contract is near US$ 94 bbl.
Gold is steady so far today after losing ground into the North American close, trading around US$ 1,700.
FX land has been quiet going into Friday with the exception of the Kiwi Dollar. The growth linked currency has been further undermined by deteriorating terms of trade figures. Overall, the US Dollar continues to trade near records peaks.
The market will watching the US non-farm payrolls numbers very closely today. Durable goods and factory orders data will be released after that.
The full economic calendar can be viewed here.
S&P 500 TECHNICAL ANALYSIS
Last month, the S&P 500 failed to break above a descending trend line and the 61.8%Fibonacci Retracement at 4361.
It has since tumbled and yesterday bounced off an ascending trend line to make a low at 3903. That trend line and the two prior lows in the 3903 – 3913 area might provide support.
On the topside, the break points at 4080, 4110 and 4202 may offer resistance.
— Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter