Dow Jones, S&P 500 Hit New Highs on Trade Optimism, ASX 200 To Follow?

Wall Street indices reached record highs by Wednesday’s close on trade deal optimism. Trump’s announcement of a trade deal with Japan via Truth Social during Asian trade had sent the Nikkei 225 futures above 41k and within striking distance of its 2024 high. This then sparked expectations of a trade deal with the EU, with some reports suggesting 15% tariffs on most exports from the bloc.

The bullish mood extended to US and Australian equity futures, with traders maintaining a risk-on stance and eyeing higher targets. Below we break down the technical landscape for the S&P 500, Nasdaq 100, Dow Jones, and ASX 200 futures — along with today’s key economic events.

Dow Jones, S&P 500 Hit Record Highs, ASX 200 May Follow

Wall Street indices reached record highs by Wednesday’s close on trade deal optimism. Trump’s announcement of a trade deal with Japan via Truth Social during Asian trade had sent the Nikkei 225 futures above 41k and within striking distance of its 2024 high. This then sparked expectations of a trade deal with the EU, with some reports suggesting 15% tariffs on most exports from the block.

Wall Street Futures Technical Analysis: S&P 500, Nasdaq 100, Dow Jones

Wall Street indices continued higher, with the Dow Jones leading the way with a 1.1% gain and a close above 45,000. S&P 500 futures rose 0.8% to a new record high, while the Nasdaq 100 lagged behind.

The S&P 500 continues to use the 10-day EMA as support, and bullish momentum has strengthened at the highs, reflecting strong demand for US equities. While the daily RSI (2) and RSI (14) are both overbought, there are no bearish divergences warning of a pullback.

Until price action says otherwise, bulls are assumed to be in control and likely to retain a 'buy-the-dip' mentality. Note the gap target — projected from the April low to the runaway gap — sits around 6,638.

The Nasdaq 100 is also using the 10-day EMA as dynamic support, but it remains the clear laggard of the Wall Street indices. Its daily high failed to surpass last week's high, leaving a potential double top pattern on the daily chart. The daily RSI (2) has also dipped from overbought levels, showing a bearish divergence and signalling a loss of bullish momentum.

However, the bigger picture still assumes further upside, with its own runaway gap projecting an upside target around 23,365.

Dow Jones futures delivered a strong bullish breakout from recent consolidation. As the strongest performer of the day, it also shows the cleanest price action and potential to close some of the performance gap with the S&P 500. A move to 46,000 and a potential retest of its all-time high at 76,326 could now be on the cards.

Chart analysis by Matt Simpson, Source: TradingView, CME Futures, S&P 500 E-mini Futures, NASDAQ 100 E-mini Futures, Dow Jones E-mini Futures

 

 

ASX 200 Futures (SPI 200) Technical Analysis

I outlined my bullish bias for the ASX 200 and AUD/JPY in yesterday’s report, and both have turned higher amid the risk-on sentiment. The ASX 200 futures chart has formed a 3-day bullish reversal pattern known as a dark cloud cover. The fact it appeared at support (which previously acted as firm resistance) suggests we may have seen an important swing low on the daily chart.

A decent bullish trend has also emerged on the ASX 200 intraday chart. Bullish momentum overnight saw an upside break of a retracement line, and it looks like bulls could target Friday’s cash-session VPOC (volume point of control) at 8737.

I suspect we may see a bit of a shakeout or potential retracement around Friday’s high (8751), though like Wall Street traders, bulls seem more likely to view dips as opportunistic.

Chart analysis by Matt Simpson - Source: TradingView, ASX SPI 200 Index Futures, S&P/ASX 200 Index

 

 

Key Economic Events for Traders (AEST / GMT+10)

08:45 AUD Judo Bank Manufacturing PMI, Services PMI (Jul) (AUD/USD, ASX 200)
10:30 JPY au Jibun Bank Manufacturing PMI, Services PMI (Jul) (USD/JPY, Nikkei 225)
11:30 AUD RBA Bulletin (AUD/USD, ASX 200)
13:05 AUD RBA Gov Bullock Speaks (AUD/USD, ASX 200)
16:00 EUR GfK German Consumer Climate (Aug) (EUR/USD, DAX)
17:30 EUR HCOB Germany Composite, Manufacturing, Services PMI (Jul) (EUR/USD, DAX)
18:00 EUR HCOB Eurozone Composite, Manufacturing, Services PMI (Jul) (EUR/USD, DAX)
18:30 GBP S&P Global Composite, Manufacturing, Services PMI (Jul) (GBP/USD, FTSE 100)
22:15 EUR ECB Deposit Facility Rate, Interest Rate Decision, Monetary Policy Statement (EUR/USD, DAX)
22:30 USD Building Permits (MoM), Building Permits (Jun), Chicago Fed National Activity (Jun), Initial Jobless Claims (USD, S&P 500, Nasdaq 100, Dow Jones)
22:30 CAD Core Retail Sales, Retail Sales, Manufacturing Sales (May/Jun) (USD/CAD, TSX)
22:45 EUR ECB Press Conference (EUR/USD, DAX)
23:45 USD S&P Global Manufacturing, Services, Composite PMI (Jul) (USD, S&P 500)

00:00 USD New Home Sales (MoM), New Home Sales (Jun) (USD, S&P 500)
00:30 USD Natural Gas Storage (WTI Crude Oil, USD)
01:00 USD KC Fed Composite, Manufacturing Index (Jul) (USD, S&P 500)
03:00 USD 10-Year TIPS Auction (USD, Treasury Markets)