U.S. Stock Market Sentiment Upsurge

Fundamental Overview

The U.S. equities market, with a spotlight on the Nasdaq, witnessed a notable ascendancy, reaching unprecedented highs, primarily propelled by Nvidia’s stellar earnings announcement. This development underscores a bullish outlook for the technology sector, reflecting in the Nasdaq’s significant 3% leap, pushing past the 18,000 threshold. Such a rally in the tech-centric index exemplifies the growing investor confidence in the sector’s growth potential and robust financial health. Concurrently, Chinese equity markets have demonstrated resilience, with both the China A50 and Hang Seng Index showcasing consistent weekly advances through February, signalling a rejuvenation in investor sentiment towards Chinese equities.

On the foreign exchange landscape, the U.S. Dollar Index has persisted in its trajectory below the 104 benchmark, subsequent to the dissemination of the minutes from the Federal Open Market Committee (FOMC) meeting. Despite encouraging employment data, the prevailing market consensus suggests a diminished likelihood of further interest rate hikes by the Federal Reserve, with a pivot towards rate reductions anticipated within the year. This shift in expectations has somewhat tempered the dollar’s vigour, as market participants recalibrate their outlook on the Fed’s future monetary policy stance.

In the realm of commodities, crude oil prices have registered a modest uptick of 0.4%, buoyed by positive U.S. crude inventory data. Nonetheless, the escalation of geopolitical tensions in the Middle East, marked by increased hostilities involving rebel factions deploying ballistic missiles and drones in the Red Sea region, continues to inject a degree of uncertainty and volatility into the oil market, influencing price dynamics.

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Current rate hike bets on 20th March Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (92%) VS -25 bps (8%)  

Economic Calendar

(MT4 System Time)

Source: MQL5 

Market Movements

DOLLAR_INDX, H4

The Dollar Index initially experienced a retreat due to technical correction but staged a robust rebound following the release of exceptionally positive US economic data. Key indicators, including a decline in Initial Jobless Claims and better-than-expected readings in S&P Global US Manufacturing PMI and US Existing Home Sales, contributed to heightened market confidence in the trajectory of the US economy. However, the overall gains were moderated by less favourable results in S&P Global Services PMI.

The Dollar Index is trading higher, indicating a resurgence from the support level. The MACD (Moving Average Convergence Divergence) has shown diminishing bearish momentum, and the RSI (Relative Strength Index) is at 45, suggesting that the index might extend its gains, particularly since the RSI rebounded sharply from oversold territory.

Resistance level: 104.60, 105.70

Support level: 103.80, 103.00

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XAU/USD, H4

Gold prices witnessed a pullback amid market speculation that the Federal Reserve might delay rate cuts, following a series of stronger-than-expected US economic indicators. The subsequent rise in US Treasury yields, which tends to negatively affect non-yielding assets such as gold, was a key driver behind the precious metal’s decline. Nevertheless, ongoing geopolitical uncertainties in the Middle East have lent some support to gold’s safe-haven appeal, creating a nuanced market environment with potential for further consolidation. 

gold prices are exhibiting a flat trajectory, hovering close to a critical support level. The MACD indicator points to increasing bearish momentum, while the RSI stands at 54. This positioning suggests that gold may face further downward pressure, particularly as the RSI has notably pulled back from previously overbought conditions.

Resistance level: 2035.00, 2060.00

Support level: 2015.00, 1985.00

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CL OIL, H4

Crude oil prices saw a notable upswing, driven by an optimistic Energy Information Administration (EIA) inventory report that revealed a substantial reduction in US crude oil inventories. The data, indicating a decrease from 12.018 million barrels to 3.514 million barrels, exceeded market expectations. Additionally, mounting geopolitical tensions in the Middle East, characterised by Yemen’s Houthis threatening heightened attacks and introducing “submarine weapons,” heightened concerns about potential disruptions in the global oil supply.

oil prices are on an upward trajectory, testing the resistance level. The MACD indicator indicates an increasing bullish momentum, and the RSI is at 55, suggesting the possibility of further gains, particularly as the RSI maintains a position above the midline.

Resistance level: 78.65, 81.20

Support level:75.20, 71.35