Producer inflation rose slightly less than previous expectations, but the annual figure continues to rise. The annual PPI rose to 2.1% and the Core PPI rose to 2.4%.
The NASDAQ and SNP500 end the day higher, but the Dow Jones continues to struggle.
This morning earnings kick off with the banking sector including JP Morgan, BlackRock and Wells Fargo. All 3 stocks trade higher during pre-trading hours.
The Euro trades lower against all currencies despite the ECB’s attempt to establish a hawkish tone.
USA100 – The NASDAQ Climbs Higher, But Is the Growth Sustainable?
The NASDAQ was the only index which did not witness a significant decline at the opening of the US session. In addition to this, the USA100 is the only index which is witnessing indications of a bullish market.
The price has crossed onto a higher high breaking the resistance level at $18,269. The index is also trading above the 75-Bar EMA and at the 65.00 level on the RSI which signals buyers are controlling the market. However, a similar large bullish impulse wave was also formed on the 3rd and 5th of the month and was followed by a correction. Therefore, investors need to be cautious of a bearish breakout which may signal a correction back to the 75-bar EMA (18,165). The medium-term growth and its sustainability will depend on the upcoming earnings data.
Bond yields declined during this morning’s Asian session by 18 points, which is positive for the stock market. However, even with the decline, bond yields remain significantly higher than Monday’s opening yield. This week the 10-year bond yield rose from 4.424 to 4.558, which is a concern. If bond yields again start to rise, the stock market potentially can again become pressured.
25% of the NASDAQ ended the day lower and 75% higher. This gives a clear indication of the sentiment towards the technology sector and reassures traders about the price movement. Another positive was all of the top 12 influential stocks rose in value. Apple, NVIDIA and Broadcom saw the strongest gains, all rising more than 4%.
Producer inflation read slightly lower than expectations, however, the index continues to rise. The Producer Price Index rose from 1.6% to 2.1% and the Core PPI from 2.1% to 2.4%. Therefore, it is not indicating inflation will become easier to tackle in the upcoming months. For this reason, investors should note that inflation and the monetary policy is still a risk and can trigger strong bearish impulse waves.
EURUSD – The Euro Declines Against Major Currencies
The European Central Bank is attempting to concentrate on the positive factors and give no indications of when the committee may opt to cut rates. For example, President Lagarde advises “sales figures” remain stable, but the issue remains they are stably low.
Officials said the decline in prices generally confirms medium-term forecasts and is ensured by a decrease in the cost of food and goods. Most experts continue to believe that the first reduction in interest rates will happen in June, and there may be three or four in total during the year.
Due to this, the Euro is declining against all currencies including the Pound, Yen and Swiss Franc. The US Dollar Index on the other hand trades 0.39% higher and is almost trading at a 23-week high. Due to this momentum, the price of the exchange continues to indicate a decline in favor of the US Dollar.
Michalis Efthymiou
Market Analyst
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