Market Summary:
- The latest government-shutdown saga has been avoided once more as the US senate passed a stopgap bill to fund the government through March
- AI optimism drove gains in Nvidia and other chipmakers higher, after the world’s largest semiconductor producer, Taiwan Semiconductors, projected 2024 revenue growth of 20% and rallied 10%.
- US building permits rose 1.9% in December and initial jobless claims were below expectations, helping to add to the soft landing (or no landing at all) scenario
- The Nasdaq 100 led the S&P 500 and Dow Jones higher, to reach a YTD high by a cats whisker.
- The DAX rose in line with our bullish bias and stopped just shy of our 16,600 target
- AUD/USD was the strongest forex major despite a surprise -64k employment print, over 100k of which was due to full-time jobs being shredded in December. The Aussie was lifted by improved appetite for risk, which saw CHF as the weakest major.
- Crude oil rose to a 4-day high following the OPEC monthly report, where they expect to see robust demand in 2025. The IEA also upgraded their won forecast for next year.
- Gold managed to lift itself from the $2000 support level despite higher yields, although such a level was more likely than not to prompt at least a minor bounce
Events in focus (AEDT):
- 10:30 – Japan’s inflation report
- 18:00 – German PPI
- 18:00 – UK retail sales
- 20:30 – ECB McCaul speaks
- 21:00 – ECB President Lagard speaks
- 02:00 – US consumer sentiment, inflation expectations (University of Michigan)
- 05:00 – Fed Barr speaks
ASX 200 at a glance:
- The ASX 200 fell for a third day to extend its drop from the late December high to -4.1%
- 9 of its 11 sectors declined, led by real estate and industrials, as did 123 of its stocks (61.5%)
- Yet the bounce on Wall Street suggests it’s time for a cycle low to form
- The ASX also stabilised around a 100% Fibonacci projection level and the September high, RSI (2) is oversold and ASX futures point to a positive open for the cash market today
- But as outlined previously I suspect there could be further downside for the ASX 200 in the weeks for months ahead
WTI Crude oil technical analysis (chart):
Price action on oil markets have been choppy for several weeks now. One of the few things going for the bull camp is that it has continued to hold above $70, although each rally higher has been short lived and ended the day with an upper wick to fall back within the choppy range. However, conditions could be changing. Wednesday’s bullish hammer formed a higher low above $70, and Thursday produced a bullish range expansion which closed at a 3-week high (on a closing basis).
On that note, it can be beneficial to use a line chart during choppy conditions, as it can help cut through the noise. In this case it better shows momentum turning higher out of a classic pennant/triangle counter to the trend.
With the 200-day MA and 233-week EMA sitting around $77 I’m not looking for a home run. But bulls could seek to buy small dips and trade the range between $72 - $77.
View the full economic calendar
-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
