Tag: Equities

  • Dow Jones backslides on trade war rhetoric

    Dow Jones backslides on trade war rhetoric


    • The Dow Jones shed 400 points on Thursday, falling 1.45%.
    • US PPI inflation hit a soft patch, further easing fears of an inflation reignition.
    • Despite easing price pressures, equities still took a hit as Trump threatens more tariffs.

    The Dow Jones Industrial Average (DJIA) fell some 400 points on Thursday, declining around one full percent after United States (US) President Donald Trump and his administration ramped up their trade war rhetoric. President Trump pivoted to threatening new tariffs on targeted goods from the European Union after his tactic of trying to strong-arm Canada into making trade concessions went nowhere earlier this week.

    The US Producer Price Index (PPI) cooled faster than expected in February, with core PPI inflation easing to 3.4% YoY versus the expected print of 3.5% and January’s 3.6%. Headline PPI inflation also chilled, falling to 3.2% on an annualized basis compared to the forecast of 3.3%, however January’s headline PPI print was revised higher to 3.7% as revisions continue to be a thorn in the side of preliminary data watchers.

    Despite a general easing in this week’s batch of inflation data, the odds of another rate cut from the Federal Reserve (Fed) next week look slim. Inflation metrics are still running well above the Fed’s 2% annual target, and according to the CME’s FedWatch Tool, rate markets are pricing in functionally 100% odds of the Fed holding rates steady after its rate call meeting next week. Rate traders expect the Fed’s next move on rates to be in June, if not later.

    US President Donald Trump hit the ground running on Thursday, vowing to impose a stiff 200% tariff on European wines if the EU doesn’t back off from its 50% tariff on US-produced whisky, which was imposed as a retaliatory measure against the US’s global 25% steel and aluminum tariff that went into effect this week. President Trump attempted to strong-arm his Canadian neighbors into not retaliating against his steel import fees. 

    However, those measures largely fizzled and resulted in no concessions from Canada, and now the Trump administration is shifting its tit-for-tat tariff strategy on Europe. Donald Trump also returned to musing about ‘taking’ Greenland from Denmark as the US president revisits talking points from his campaign trail.

    Dow Jones news

    A large majority of the stocks listed on the Dow Jones fell back on Thursday, with two-thirds of the index’s securities slipping into the red. Verizon (VZ) rebounded 2.5% to above $43 per share as the telecoms giant recovers from a rout earlier this week. Salesforce (CRM) and Home Depot (HD) both fell over 4%, falling to $271 per share and below $350 per share, respectively. Tech stocks and building suppliers are growing increasingly uneasy in the face of the Trump administration’s trade policies.

    Dow Jones price forecast

    Losses are beginning to accumulate on the Dow Jones Industrial Average chart, dragging the major equity index into correction territory with the Dow Jones down 2,000 points on the week. The DJIA has shed nearly 10% from last November’s record highs just north of 45,000, and price action is back below the 41,000 handle for the first time in 6 months.

    Dow Jones 4-hour chart

    Tariffs FAQs

    Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

    Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

    There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

    During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

     



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  • Dow Jones backslides amid wavering sentiment

    Dow Jones backslides amid wavering sentiment


    • The Dow Jones shed around 575 points on Thursday, as trade war fears resume.
    • The more the Trump administration tries to soothe tariff fears, the worse things get.
    • Market sentiment is still churning despite announced tariff delays and upbeat jobs data.

    The Dow Jones Industrial Average turned tail and ran on Thursday, in tandem with the rest of the US equity indexes. United States (US) President Donald Trump continues to waffle on his own trade war rhetoric, exploring tariff exemptions and extensions on a sector-by-sector basis. However, the lack of clarity and consistency in policy that tends to get announced off-the-cuff via social media posting is beginning to weigh on market sentiment.

    The Trump administration is continuing to pivot on its own tariff threats, granting a 30-day reprieve for the US automotive industry, which remains heavily reliant on foreign trade to produce its vehicles. Other industries, sectors, and businesses are up for making a case for why they should receive an exemption, at least for a little while, and the ongoing uncertainty around President Trump’s trade war rhetoric is sinking investor risk appetite.

    US Nonfarm Payrolls (NFP) net job gains numbers for February are due on Friday, and Thursday’s Challenger Job Cuts number is providing little reason for traders to hope for a decent NFP print this week. Challenger firings reached their highest level since August of 2020 in February, climbing to 172K net terminations in key industries, strongly implying that a general slowdown is gathering speed.

    Dow Jones news

    Nearly the entire Dow Jones equity board is falling back on Thursday, with all but three listed securities trading into the red. Verizon Communications still managed to find some gains, climbing 1.2% to cross above $43 per share. Nvidia (NVDA) fell back once again, falling nearly 5% and dipping below $112 per share as the AI trade continues to fizzle out.

    Dow Jones price forecast

    Thursday is turning into a lunchbag letdown for bullish hopefuls, shredding the midweek rebound that has vanished as quickly as it disappeared. The Dow Jones is trading back into the 42,500 handle, with a near-term technical floor priced in at the 42,400 level.

    The Dow Jones is poised to make contact with the 200-day Exponential Moving Average (EMA) near the 42,000 key figure, but only if selling pressure is able to push bids down another 500 points, a move that would likely require a shift in fundamentals… or a bad employment data print.

    Dow Jones daily chart

    Tariffs FAQs

    Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

    Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

    There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

    During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

     



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  • BP fails to impress the market, as Fed rate cuts get priced back in

    BP fails to impress the market, as Fed rate cuts get priced back in


    BP has released what it calls its reset, with a renewed focus on oil and gas, reallocated capital and more cost cutting.  All of this is  aimed at driving shareholder returns in the long term. Unfortunately, this means reduced shareholder returns in the short term, which has triggered a small sell off in the stock price. The shareholder presentation will be delivered later today, but the company had to announce its plans to the LSE earlier this morning.

    The highlights from the ‘reset’ include reducing capex spend by $1-3bn compared to 2024 levels, with capex expected to be $15bn this year. The bulk of this spend will be on oil and gas investment projects, with $10bn currently allocated. Net zero/ transition investment has been dramatically slashed to $1.5bn – 2bn, down from the $5bn that was previously announced.

    Although there were no new job cuts announced, the plan includes cutting costs by $4-5bn, which is likely to include job losses in the future. These will likely hit non-oil and gas sectors and the energy transition  teams. As expected, the company will also make $20bn of divestments over the next 2 years, including Castrol oil, which will go some way to reducing the company’s net debt pile by $14-18bn by 2027.

    The company is optimistic for shareholder returns. The guidance included in the reset includes a distribution of 30-40% of operating cash flow over time to shareholders, through share buybacks and what it calls a ‘resilient dividend’ which could rise by up to 4% a year.

    The company is also setting a primary target of generating higher returns of more than 16% by 2027 . However, if the company hoped to get a head start on this, it hasn’t worked as yet. The stock has reversed earlier gains and is now down nearly 1% on Wednesday. This could be a reaction to the pledges on shareholder returns: 1, BP has cuts its current share buyback plan and 2, it has failed to give a concrete timeline for when it can deliver shareholder distributions of 30%-40% of free cash flow.

    Slashing shareholder returns in the near term could be a tough pill for investors to swallow

    In Q4, BP’s share buyback programme totaled $1.75bn, this has been slashed to $0.75-$1bn in Q1. The fact that the company is saying it wants to boost shareholder returns at some point in the future, at the same time as slashing its buybacks for this quarter could be hard for some investors to swallow.

    Added to that, for BP to meet its goals of increasing free cash flow and raising returns, it needs a Brent crude price of $70 per barrel or more, the Brent price is currently just above $73 per barrel, which may be too close for comfort, which may also curb investor enthusiasm for this stock.

    BP’s timing is wrong, yet again

    The problem for BP is that it flip flopped away from net zero and back to oil and gas too late. Added to this, the reset could not come at a worse time, when the price of oil is falling. The key event will not be the presentation from BP CEO Murray Auchincloss, but the judgement from Elliott Management, the activist investor who has built a near 5% stake in BP and is threatening to oust management if the company does not pivot back to oil and if performance does not improve. Its Elliott’s time scale that really matters for BP, and whether the investor will give the company time to see if its reset will work.

    For now, the reaction to the reset has been tepid, and we do not think that this alone can boost the share price or narrow the valuation gap with its peers.

    Chart: BP, Shell and S&P 500 Oil and Gas sector, normalized for five years

    Source: XTB and Bloomberg

    US economic weakness: Focus on rate cuts and FX so far, but could stocks be next?

    Elsewhere, there has been a turnaround in US Fed rate cut expectations.  As economic data has surprised on the downside, the market has priced in more rate cuts by the Fed by year end. The market now expects US interest rates to end the year at 3.78%, this is the lowest level of the year so far. The market is now expecting just over 2 rate cuts from the Fed this year. There is now a 50% chance of a rate cut in July, a month ago it was 42%. Added to this, there is also a 36% chance of two rate cuts by October, this was 26% a week ago. The increase in Fed rate cut expectations explains the weakness in the dollar. The USD is the weakest performer in the G10 FX space so far this year, especially vs. the yen.

    The weakness in the economic data has played out in the FX market and in the interest rate futures market. Although US stock markets have underperformed European markets, they are still higher on the year. If weakness in US economic data accelerates, stocks could be next to come under downward pressure. However, it’s worth remembering that most US blue chip and mid cap stocks have international exposure, and this could protect them from a domestic US economic downturn, which explains US stock market outperformance relative to other US assets.



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  • Procter & Gamble stock leads Dow Jones lower

    Procter & Gamble stock leads Dow Jones lower


    • Procter & Gamble stock sinks 4.75% on Friday.
    • Dow Jones sheds 0.37% despite NASDAQ gains.
    • BNP Paribas analyst cites volatility in US consumer staples category.
    • US Retail Sales for January hit -0.9%, surpising market.

     

    Procter & Gamble (PG) stock was the worst performer in the Dow Jones Industrial Average (DJIA) on Friday. Normally a less volatile holding, PG shares tumbled after a PNB Paribas analyst questioned 2025 guidance for the maker of well-known, fast-moving consumer brands like Pampers, Gillette and Crest. 

    The outlook for Procter & Gamble was exacerbated by a poor US Retails Sales print that showed the US economy might be in bad shape. The DJIA slumped nearly 0.4%, but the NASDAQ gained a similar amount as some investors thought the poor economic data might usher in an interest rate cut from the Federal Reserve (Fed) on a closer timeline.

    Procter & Gamble stock news

    Kevin Grundy, the PNB Paribas analyst, met with Procter & Gamble CEO Jon Moeller Thursday and didn’t like what he was hearing. Moeller admitted that his company is experiencing high volatility in the US consumer staples sector that is “probably higher today” than at any time in the CEO’s tenure.

    Moeller claimed to be seeing slowing demand across categories in the US market despite seeing good traction globally and especially in Latin America and Europe. Additionally, he said that de-stocking was an added obstacle. 

    Grundy’s client note argues that the volatility makes P&G’s 2025 organic sales growth less certain. Moeller claimed that there was enough flexibility to protect earnings per share from any slowing in US organic growth. 

    Grundy said that Procter & Gamble’s guidance for the year was now probably in doubt until more clarity was achieved via further quarterly results.

    The news hit harder as it came during the same session when US Retails Sales for January plummeted, coming in as it did at -0.9% MoM. The market had expected the figure at -0.1%. However, December’s figure was revised upward from 0.4% to 0.7% MoM, so that also exacerbated the monthly print.

    US Retails Sales in January fell on account of consumers reducing spending in the autos and auto-related merchandise category, as well as sporting goods, furniture and home furnishings.

    PG stock forecast

    Procter & Gamble stock, not known for wild swings, fell off a cliff on Friday. PG shares are now treading water well below the 200-day Simple Moving Average (SMA).

    The Moving Average Convergence Divergence (MACD) indicator shows a general crossover that makes further downside more likely. The MACD had been trending upward since January, and that rally appears to be over.

    Without much nearby support on the daily chart, traders should expect support to appear in the large green-shaded band running from $153.50 to $160.00. That is where PG discovered support beginning in April 2024 and running through most of last year. PG stock will need to form a new range high above $172.00 in order to put the present negativity behind it.

    PG daily stock chart

     



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  • Dow Jones backslides amid wavering sentiment

    Dow Jones gains ground as investors shrug off new tariff threats


    • The Dow Jones rose on Thursday, testing near 44,750.
    • Equities are cautiously optimistic after PPI numbers softened inflation blow.
    • Markets continue to shrug off US President Donald Trump’s tariff threats.

    The Dow Jones Industrial Average (DJIA) found some room on the high side on Thursday, rising around 350 points and testing the 44,750 level. Equities were jarred by some steep upside revisions in Producer Price Index (PPI) inflation figures, but the overall print hit a decidedly softer tone than this week’s Consumer Price Index (CPI) inflation figures. A spike in inflation fears has subsided, and rate markets are now pricing in revisions to when the Federal Reserve (Fed) is expected to deliver its next rate cut.

    United States (US) President Donald Trump delivered his latest batch of tariff threats on Thursday. “Reciprocal tariffs” on most of the US’ closest trading partners are now on the block, alongside specific flat tariffs against Canada and Mexico, as well as punitive import taxes on things like automobiles, microchips, and pharmaceuticals. Markets are getting used to brushing off trade war threats from Donald Trump, and this represents the fourth consecutive time that the Trump administration’s threats of imposing steep import taxes on foreign goods have been announced and then put off until some point in the future.

    Core US PPI inflation clocked in at 3.6% YoY in January, well above the forecast of 3.3%. The previous period also saw a sharp revision higher to 3.7% from 3.5%, but the overall tick lower post-revision helped to assuage market fears of a resurgence of widespread inflation pressures. According to the CME’s FedWatch tool, rate markets are now pricing in better-then-even odds that the Fed will deliver at least a 25 bps rate trim in September compared to Wednesday’s forecast of December.

    Dow Jones news

    The Dow Jones saw a late bullish break across the board on Thursday, and nearly every single listed security is finding room on the green side for the day. Nvidia (NVDA) rallied 3.0% to $135 per share on stronger-than-expected microchip demand, giving the overall tech sector a leg up. Merck & Co (MRK) fell 1.35% to $84.50 per share.

    Dow Jones price forecast

    44,500 is becoming familiar territory for the Dow Jones. The mega-cap index has been churning within a choppy range between 45,000 and 44,000 since mid-January with bidders unable to find a foothold into fresh record highs, but short pressure is still unable to knock the DJIA lower.

    Price action is still leaning in favor of buyers with bids churning north of the 50-day Exponential Moving Average (EMA) near 43,850. The gap between intraday prices and the long-run 200-day EMA near 41,800 has closed in recent weeks, but the Dow Jones is still trending well above its long-term average, outpacing the 200-day EMA since November of 2023. The Dow Jones has closed higher for all but three of the last 14 consecutive months.

    Dow Jones daily chart

    Economic Indicator

    Producer Price Index ex Food & Energy (YoY)

    The Producer Price Index ex Food & energy released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Those volatile products such as food and energy are excluded in order to capture an accurate calculation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).

    Read more.

     



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  • Dow Jones backslides amid wavering sentiment

    Dow Jones trims gains on Friday but still green for the week


    • The Dow Jones eased somwhat on Friday, testing into 44,300.
    • Despite a quiet end to the week, equities are poised for strong bullish closes.
    • US PMI data came in more mixed than expected, to little effect.

    The Dow Jones Industrial Average (DJIA) churned into a soft backpedal on Friday, testing down around 200 points on a slow trading day. The Dow Jones is capping off an otherwise firmly bullish week, with the index gaining around 2.3% from Monday’s opening bids. The DJIA has gained ground for the second week in a row, firmly hinting that the bull market is back after a six-week backslide.

    President Donald Trump stoked the flames of pro-equity sentiment this week by not instituting the day-one tariffs he promised on the campaign trail. He also announced this week that he would “demand” lower interest rates from the Federal Reserve (Fed) and plans to request a drop in oil prices from Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC).

    The S&P Global Purchasing Managers Index (PMI) survey results for January were even more mixed than analysts anticipated. According to an ambiguous number of survey respondents, businesses saw a better-than-expected improvement in forward-looking expectations for growth in the manufacturing sector. Still, services-based businesses are more despondent about future business conditions than most anticipated.

    January’s Manufacturing sector PMI rose to 50.1 from the previous month’s 49.4, surpassing the forecast of 49.6. The Services PMI for the same period shrank to 52.8 from 56.8, well below the expected 56.5, but still remains in positive territory overall, meaning purchasing managers who bothered to respond to the survey don’t expect much growth in the coming month, but don’t expect an outright contraction in business conditions either.

    Dow Jones news

    Despite some steeper losses in key overweighted stocks dragging the Dow slightly lower on Friday, the index itself is roughly on balance, with about half of the board’s listed equities still finding higher ground to wrap up the trading week. Walt Disney Co (DIS) rallied 1.8% to $113 per share, mainly on the back of expectations that past performance is indicative of future results after the entertainment monolith returned 24% over 2024 to people holding its shares. On the low side, Nvidia (NVDA) fell 2.5%, declining below $144 per share as investors fear the company may be doomed now that its run of seeing 100%-plus growth in annualized revenues may be over.

    Dow Jones price forecast

    The Dow Jones Industrial Average is once again knocking on record highs just above 45,000 set late last November. The DJIA initially declined 7.4% top-to-bottom in a six week backslide after posting the fresh record, but the wheels are back on the road as buyers continue to tilt into risk appetite.

    The Dow Jones has climbed 6.8% from January’s swing low into 41,730, testing the 44,500 region after closing in the green for all but one of the last nine consecutive trading sessions. The immediate barrier to fresh record highs will be 45,000 major handle itself, while a pullback to the 50-day Exponential Moving Average (EMA) near 43,275 could hamper bullish momentum.

    Dow Jones daily chart

    Dow Jones FAQs

    The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

    Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.

    Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.

    There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.

     



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  • COL stock analysis and Elliott Wave technical forecast [Video]

    COL stock analysis and Elliott Wave technical forecast [Video]


    COLES GROUP LIMITED – COL Elliott Wave Technical Analysis TradingLounge.

    Greetings, our latest Elliott Wave analysis for the Australian Stock Exchange (ASX) highlights COLES GROUP LIMITED – COL. The current outlook suggests that ASX:COL may advance within the (5)-orange wave.

    There exists some ambiguity between the two primary perspectives. However, readers can rely on key indicators to determine whether a bullish trend is commencing or if the bearish trend remains dominant, based on a logical and data-driven approach.

    COL (1D chart) Elliott Wave technical analysis

    • Function: Major trend (Minute degree, navy).

    • Mode: Motive.

    • Structure: Impulse.

    • Position: Wave 3-grey of Wave (5)-orange.

    Details:

    The primary wave count scenario suggests that the 3-grey wave is trending upward from 18.35. However, this outlook has weakened due to insufficient clarity and strength in the movement. As a result, the ALT alternative scenario is gaining prominence. It is essential to monitor this stock further for confirmation.

    COL 4-hour chart analysis

    Function: Major trend (Minor degree, grey).

    Mode: Motive.

    Structure: Impulse.

    Position: Wave 3-grey of Wave (5)-orange.

    Details:

    As previously mentioned, there is noticeable weakness in the upside momentum. This could indicate a developing 2-grey wave. However, if the stock surpasses 19.37, it would strengthen the primary outlook. Otherwise, both scenarios hold comparable probabilities.

    Chart

    Conclusion

    Our analysis provides a comprehensive forecast of market trends and short-term expectations for COLES GROUP LIMITED – COL. We deliver insights to help investors navigate the market effectively, offering specific price points that serve as validation or invalidation markers for our Elliott Wave counts. This approach enhances confidence in our market outlook.

    By considering these factors, we aim to provide a well-balanced, professional perspective on the current market landscape.

    Technical analyst: Hua (Shane) Cuong, CEWA-M (Master’s Designation).

    COL Elliott Wave technical analysis [Video]



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  • Does no-hedge strategy stack up for mag seven mavericks?

    Does no-hedge strategy stack up for mag seven mavericks?

















































    Does no-hedge strategy stack up for mag seven mavericks? – FX Markets



    At Amazon, Meta and Tesla, the lack of FX hedging might raise eyebrows, but isn’t necessarily a losing technique


    The so-called magnificent seven – the seven largest US tech companies that famously make up more than a third of the S&P 500 by market cap – are among the world’s largest firms. They also have some of the greatest geographical distributions – in some cases operating in over 100 countries.

    Yet filings for these tech giants show that three of them – Amazon, Meta and Tesla – choose not to hedge their day-to-day foreign exchange exposures. They reveal no holdings of offsetting FX derivatives

    You are currently unable to copy this content. Please contact info@fx-markets.com to find out more.

    Copyright Infopro Digital Limited. All rights reserved.

    You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.

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  • Dow Jones climbs despite tech sellof

    Dow Jones climbs despite tech sellof


    • The Dow Jones is looking to pare recent losses, but topside momentum remains limited.
    • Investors are pivoting out of popular tech rally favorites, dragging equity markets lower.
    • The Dow is keeping on balance as investors rotate into non-tech darlings.

    The Dow Jones Industrial Average (DJIA) skirted Monday’s broad-market declines as investors gave a second thought to their bullish outlook on the long-run tech sector rally. The Dow gained roughly 300 points to kick off the trading week, while the other major equity indexes shed weight.

    Investor hopes for continued rate cuts from the Federal Reserve (Fed) have been swirling the drain since the start of the new trading year and last Friday’s bumper Nonfarm Payrolls (NFP) sealed the deal on the Fed being in no rush to deliver more rate reductions. With a bumping US workforce and inflation pressures continuing to simmer in the background, there is little reason for the Fed to race into further moves on rates. To their credit, Fed policymakers have been warning markets for over a year that neutral rates have definitely moved higher since the pandemic and near-zero rate days of the early 2010s, and now it looks like that fact is finally taking hold in investors’ minds.

    A fresh batch of US inflation figures are due this week: US Producer Price Index (PPI) inflation is due on Tuesday and the Consumer Price Index (CPI) is slated for Wednesday. Both figures are expected to tick upwards in the near term, which could further undermine rate cut hopes. Retail Sales figures for December will land on Thursday, and the figure is expected to shift lower but remain in healthy consumer spending territory.

    Dow Jones news

    Despite a broad-market pullback out of tech stock, over half of the Dow Jones is testing into the high side on Monday, with gains being led by a fresh bout of bidding in UnitedHealth Group (UNH), which is recovering from a December bear run that dragged the health sector stock down from record highs above $600. UNH is up over 4% at the time of writing, breaking above $543 per share.

    On the low side, Nvidia (NVDA) just can’t catch a break, declining another 2.3% and trading south of $133 per share. Forecasters of tech sector stocks, which are hinged entirely around the AI tech craze, have decided that Nvidia will miss out on future earnings in the AI space as competitors sweep in and take market share from the chipmaker. The fact that the AI tech space is entirely dependent on a massive pipeline of investment funds with little to no revenue to speak of is only a minor factor as traders focus on companies situated to service the exorbitant spending habits of large-scale data modelers driving the AI space.

    Dow Jones price forecast

    The Dow Jones is catching a thin bid on Monday, pushing back upwards after a decline into the 42,000 handle. The major equity index has drifted nearly 7.5% top-to-bottom into the bearish side after tapping record peaks just above 45,000.

    Despite recent bear moves, the Dow Jones is still holding north of the 200-day Exponential Moving Average (EMA), but only just. The Dow is due for a bit of a breather after outpacing the long-run moving average since November of 2023 and closing in the green for ten of the last thirteen straight months.

    Dow Jones daily chart

    Economic Indicator

    Producer Price Index (YoY)

    The Producer Price Index released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).

    Read more.



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