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Markets Rally on Strength of Economy and Diminishing Inflation: S&P 500 Reaches New 2023 Peak
In an extraordinary turn of events that underscored the resilience of the U.S. economy, the S&P 500 leaped to a new peak for 2023, courtesy of robust economic data and a tempered outlook on inflation.
In an extraordinary turn of events that underscored the resilience of the U.S. economy, the S&P 500 leaped to a new peak for 2023, courtesy of robust economic data and a tempered outlook on inflation. This Friday, markets witnessed a remarkable rally, driven by the potent combination of a promising November jobs report and encouraging signals from the University of Michigan consumer survey. These indicators, suggesting a sturdy economic backdrop and the easing of inflationary pressures, have ignited hopes for a ‘soft landing’ scenario amidst the ongoing monetary tightening cycle.
Key Takeaways:
S&P 500 Achieves New Annual High: The S&P 500 Index marked a significant milestone by hitting a new high for 2023, reaching 4,604.37, a gain of 0.41%. This achievement not only highlights the index’s robust performance this year, up approximately 20%, but also marks its highest level since March 2022.
Nasdaq and Dow Jones Follow Suit: Complementing the S&P 500’s ascent, the Nasdaq Composite rose by 0.45% to finish at 14,403.97. Meanwhile, the Dow Jones Industrial Average experienced a noteworthy increase, gaining 130.49 points or 0.36%, ending the day at 36,247.87.
Extended Winning Streaks Across Indices: Demonstrating sustained bullish momentum, both the S&P 500 and the Dow Jones wrapped up their sixth consecutive winning week, their longest streak since 2019. The Nasdaq also advanced, registering a 0.7% increase for the week.
U.S. Job Market Exhibits Strength: A crucial driver of market optimism was the unexpected drop in the unemployment rate to 3.7% in November – down from 3.9% the previous month -coupled with the economy adding 199,000 jobs, surpassing the Dow Jones estimate of 190,000.
Consumer Sentiment on the Rise: Fuelling positive market sentiment, the University of Michigan’s consumer survey for December showed a surge in consumer confidence, reaching its highest level since July, and a significant drop in inflation expectations to 3.1%, the lowest since March 2021.
European Markets Respond Positively: Echoing the upbeat mood, European markets closed higher, with the pan-European Stoxx 600 index up by 0.7%. However, mining stocks faced a downturn, with Anglo American dropping by 19% following its expenditure cut announcement.
Corporate Highlights and Sector Movements: Key corporate movements included new highs for the year from Boeing, FedEx, and Costco. The energy sector in the S&P 500 saw the largest gain, rising by 1.1% as oil prices strengthened.
FX Today:
USD/JPY: The USD/JPY pair likely responded to the U.S. jobs report and Japanese economic data. With key resistance levels at 148.50 and 147.40, and support levels at 141.60 and 140.00, the pair could have seen fluctuations. The strengthening U.S. dollar, against the backdrop of Japan’s weaker economic data (Q3 GDP contraction and labour earnings), could push the pair towards these resistance levels.
EUR/USD: The Euro against the U.S. dollar could have experienced downward pressure due to the strong U.S. economic data. Key support at 1.0700 and resistance levels near 1.0822 (200-day MA) and 1.0840, could become focal points for traders in the coming week.
GBP/USD: The British Pound against the U.S. dollar might have weakened in response to the robust U.S. jobs report. The pair could test support levels near 1.2500, including the 200-day SMA at 1.2481 and the 50% Fibonacci retracement at 1.2471.
EUR/CAD: The EUR/CAD pair, influenced by both European economic stagnation and Canadian economic indicators, could be facing an interesting trading week. Immediate support around the 1.4600-1.46200 area, which houses the 100 and 200-day MAs, could be crucial for the pair’s movement.
EUR/JPY: The Euro versus the Japanese Yen could see movements based on both Eurozone’s economic outlook and Japan’s monetary policy. With EURJPY near a key level at the 200-day MA (154.00), the pair might target immediate resistance at 156.72 and then the 100-day MA around the 158.70 handle.
Gold (XAU/USD): Gold prices might react bearishly to the U.S. economic data, potentially testing levels below the $2010 mark. Key support at $1985 and further at the 50-day and 200-day SMAs (around $1960 and $1950) could be significant.
Silver (XAG/USD): Silver, exhibiting a consistent downward trend, could be approaching support at the 50 SMA before encountering the 38.2% Fibonacci level of $22.35. Resistance might be found near the 200 SMA and the 50% Fibonacci retracement level.
Conclusion:
As the financial week concludes, the surge of the S&P 500 to a 2023 high, portrays a market balancing optimism with caution. This dynamic is a result of strong job market figures and shifting consumer sentiments that reflect moderated inflation expectations. These elements fuel a sense of confidence but also alertness in the market, even as attention turns to the Federal Reserve’s upcoming policy decisions and their potential implications on both U.S. and global financial landscapes. Investors, poised at this crossroads of economic stability and uncertainty, are now carefully watching for signals that could dictate the market’s direction in the face of global economic and geopolitical developments.
This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
UK jobs data released today showed a surprise increase in wages, which boosted the odds of another 25 basis point rate hike by the Bank of England (BoE) to 90%.
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IX Intel
Markets Rally on Strength of Economy and Diminishing Inflation: S&P 500 Reaches New 2023 Peak
In an extraordinary turn of events that underscored the resilience of the U.S. economy, the S&P 500 leaped to a new peak for 2023, courtesy of robust economic data and a tempered outlook on inflation.
In an extraordinary turn of events that underscored the resilience of the U.S. economy, the S&P 500 leaped to a new peak for 2023, courtesy of robust economic data and a tempered outlook on inflation. This Friday, markets witnessed a remarkable rally, driven by the potent combination of a promising November jobs report and encouraging signals from the University of Michigan consumer survey. These indicators, suggesting a sturdy economic backdrop and the easing of inflationary pressures, have ignited hopes for a ‘soft landing’ scenario amidst the ongoing monetary tightening cycle.
Key Takeaways:
FX Today:
Conclusion:
As the financial week concludes, the surge of the S&P 500 to a 2023 high, portrays a market balancing optimism with caution. This dynamic is a result of strong job market figures and shifting consumer sentiments that reflect moderated inflation expectations. These elements fuel a sense of confidence but also alertness in the market, even as attention turns to the Federal Reserve’s upcoming policy decisions and their potential implications on both U.S. and global financial landscapes. Investors, poised at this crossroads of economic stability and uncertainty, are now carefully watching for signals that could dictate the market’s direction in the face of global economic and geopolitical developments.
This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
All trading carries risk.
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