Stocks cautious ahead of central bank pow-wow
<p><strong>By <a href="http://investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a> </strong></p>
<ul>
<li><strong>NQ100_m</strong> attempts to <strong>stabilise </strong>around <strong>21-day SMA </strong>after recent losses</li>
<li><strong>Recession fears</strong> weigh on <strong>“expensive” </strong>US stocks</li>
<li>Talk of <strong>further rate hikes</strong> by central bankers this week <strong>may drag US stocks even lower</strong></li>
</ul>
<h3></h3>
<h3>US stocks futures are trying to find a more solid footing after Monday’s declines.</h3>
<blockquote><p><em>The <strong>21-day simple moving average</strong> is offering immediate support on the <strong>NQ100_m index</strong> at <strong>14,751.</strong></em></p></blockquote>
<p>Further declines may call upon the following support levels to the fore:</p>
<ul>
<li>The <strong>early-June cycle high</strong> at <strong>14,673.9</strong> may be the next area of interest for bears (those hoping prices will move lower)</li>
<li>Further south, the <strong>61.8% Fibonacci level</strong> from its long term (November 2021 – October 2022) peak-to-trough price action, may offer stronger support around <strong>14,351.</strong><br />
<em>(Note that this region had offers support for this index, which tracks the tech-heavy Nasdaq 100, on a couple of occasions since late May.)</em></li>
</ul>
<p><img decoding="async" loading="lazy" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/NQ100_mDaily_2.png" alt="" width="1024" height="768" data-entity-type="file" data-entity-uuid="a48aabb2-b25d-489b-a7fa-ddc1f06814b1" data-src="/s3-static/users/user16/NQ100_mDaily_2.png" /></p>
<p> </p>
<h3><strong>US equities extend last week’s losses</strong></h3>
<p>On Monday, the benchmark S&P 500 lost 0.45% and the Nasdaq 100 finishing lower by 1.36%.</p>
<p>The tech sector underperformed with big losses in Meta, Nvidia and Alphabet while Tesla fell more than 6% after cautious commentary from investment bank, Goldman Sachs.</p>
<p>Interestingly, small caps were resilient with the Russell 2000 closing in the green amid gains in the regional banking sector.</p>
<blockquote><p><em><strong>Tech stocks</strong> have led markets strongly higher in the first two quarters of the year with <a href="https://www.forextime.com/market-analysis/can-us-share-markets-go-higher-today">moderating inflation and AI-led gains to the for</a>e.</em></p></blockquote>
<p>We’ve also seen narrow leadership from a handful of megacap, growth companies with the wider blue-chip S&P 500 up around 12.7% this year, while the tech-laden Nasdaq 100 index still boasts of a year-to-date advance of over 34%.</p>
<blockquote><p><em>This has driven equities to more<strong> expensive levels with valuations above historic averages</strong>, which is starting to grab the headlines and offers a<strong> note of caution </strong>to some of these handsome gains. </em></p></blockquote>
<p><a href="https://www.forextime.com/market-analysis/can-us-share-markets-go-higher-today">READ MORE: (June 14) Can US share markets go up higher today?</a></p>
<h3></h3>
<h3><strong><span lang="EN-GB" xml:lang="EN-GB">Sintra on the market’s mind</span></strong></h3>
<blockquote><p><em><span lang="EN-GB" xml:lang="EN-GB">This week sees the <strong>ECB annual forum</strong> on central banking which takes places at <strong>Sintra </strong>in Portugal. </span></em></p></blockquote>
<p><span lang="EN-GB" xml:lang="EN-GB">The symposium is entitled “Macroeconomic stabilisation in a volatile inflation environment” with the key segment being the policy panel tomorrow featuring:</span></p>
<ul>
<li><span lang="EN-GB" xml:lang="EN-GB">Fed Chair Powell</span></li>
<li><span lang="EN-GB" xml:lang="EN-GB">BoE Governor Bailey</span></li>
<li><span lang="EN-GB" xml:lang="EN-GB">BoJ Governor Ueda</span></li>
</ul>
<p><span lang="EN-GB" xml:lang="EN-GB">Several ECB speakers are scheduled to appear today including <strong>ECB President Lagarde and Schnabel</strong> as well as members of the Bank of England’s MPC. </span></p>
<p><span lang="EN-GB" xml:lang="EN-GB">Central bankers as a whole remain relatively hawkish after changing gears slightly in recent weeks in their battle against sticky, core inflation. </span></p>
<blockquote><p><em><span lang="EN-GB" xml:lang="EN-GB">But markets are <strong>fearing a recession </strong>even though they price in more rate hikes.</span></em></p></blockquote>
<p><span lang="EN-GB" xml:lang="EN-GB">So any signs of a change in the hawkish policy drumbeat certainly might hit risk assets, including the US share market.</span></p>
<blockquote>
<h3><em>However, if risk-on sentiment can be restored should markets<strong> overcome recession fears</strong>, that may prompt the <strong>NQ100_m</strong> to <strong>revisit its recent high</strong> at the <strong>15,300 </strong>mark.</em></h3>
</blockquote>
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