Potential Corrections Begin to Surface in Notable Markets This Week
29 September 2023
With Thursday behind us, it's essential to distill its market nuances to navigate Friday's trading landscape effectively. From retail sales in Australia to the wavering performance of major indices, the markets certainly kept investors on their toes.
Australia's retail sales data set the stage for Thursday, unfortunately underwhelming many as the numbers failed to meet expectations. On the European front, inflation figures from both Germany and Spain aligned with predictions, ensuring no unexpected market tremors. However, the US economy painted a slightly contrasting picture, with its GDP clocking in at a modest 2.1% — a smidge below the anticipated 2.2%.
Fast forward to Friday, and the Asian market was the first to show its cards. The Tokyo Core CPI from Japan dipped to 2.5%, marking a decline from its previous 2.8%. This shift appears even more significant when juxtaposed against the Bank of Japan's impromptu bond-buying exercise, a response to the 30-year bond yield soaring to heights unseen since 2013.
As the trading hours unfold, eyes are now set on Europe, where market enthusiasts await ECB President Lagarde's speech. Moreover, a flash estimate of the Eurozone's inflation is also on the horizon. Simultaneously, across the Atlantic, traders will be keeping a keen eye on Canada's GDP figures and the revised consumer sentiment data from the University of Michigan.
Technically speaking, Thursday was a beacon of potential shifts, especially for major indices. The S&P 500, Dow Jones, and Nasdaq all demonstrated bullish zest, possibly indicating the onset of a mid-term bullish correction. Yet, it would be premature to coin this movement as a definitive trend reversal. In the forex realm, EURUSD has shown intentions of scaling back within the channel down formation, while the USDJPY and USDCHF are on a downward trajectory.
Commodities, too, offered their own tale. Gold, on Thursday, navigated to its nadir since March 10th. Silver, however, showcased a sturdier front, firmly grasping its key support levels. In the energy sector, WTI oil echoed bearish undertones, with price movements playing around the $94 per barrel resistance, a significant level that has repeatedly entered market discussions. This resistance, combined with an evident hesitation at the upper boundary of its prevailing upward channel, indicates a potential shift in momentum.