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S&P 500 nears a record high as risk-on continues to fuel the rally

Bull markets

Macro Scenes:  

  • A broad-based rally: Wall Street continued to climb, with Nasdaq extending a ten-day winning streak and the S&P 500 less than 1% from its all-time high. Dow kept refreshing its record high, thanks to the broad-based rally. All the 11 sectors in the S&P 500 finished higher, with Energy leading gains.
  • The Fear & Greed Index reaches “Extreme Greed”: With the US stock markets hovering around their all-time highs, the CNN Fear & Greed Index turned into the “Extreme Greed” category, which usually indicates the rally may have been overdone. The CBOE Volatility Index remained at a low of just above 12, signalling an oversold potential.   
  • The US dollar down: The US dollar weakened against most major currencies along with a further slide in the US government bond yields as markets continued to price in rate cuts in 2024.
  • Crude oil and gas continued rebounding: Crude oil and natural gas rose for the fifth-straight trading day amid the Red Sea incident. With more shipments redirecting through southern Africa, higher freight rates may lift commodity prices and inflation.
  • The Japanese Yen weakened: USD/JPY jumped more than 100 points to nearly 144 after BOJ kept its ultra-lose monetary policy unchanged without signalling the end of the negative interest rate next year. The momentum could take the pair to further test 146, which is a potential key resistance.
  • Asian markets to open mixed: The Australian stock markets accelerated the upside movement, thanks to the sharp rebound in mining stocks due to the comeback of base metal prices. ASX 200 futures rose 0.77%, the Hang Seng Index futures were up 1.26%, and Nikkei 225 futures rose 0.55%.

Chart of the Day:

Nasdaq (Cash), daily – The index reached an all-time high back in November 2021. While the momentum remains strong, this level can be a key resistance. The RSI is in an overbought territory, which also indicates a potential pullback risk. The near-term support could be around 16,000 at the 88.6% Fibonacci retracement. However, a bullish breakout of the record high could take the Nasdaq higher, approaching 17,550 as indicated by Fibonacci extension at 112.80%.

Source: CMC Markets as of 20 December 2023

Company News:    

  • Affirm (NDX: AFRM) surged 17.6% after the payment software company announced its partnership with Walmart. Shoppers can use the “buy now, pay after” feature of the company in more than 4,500 stores. Affirm’s shares soared more than 400% this year.  
  • FedEx (NYSE: FDX) slumped nearly 8% in after-hours trading amid weaker-than-expected quarterly earnings results. The company missed both earnings per share and revenue expectations in its fiscal second-quarter earnings.

Today’s Agenda:

  • Australian MI Leading Index for November 
  • Japanese Trade Balance for November
  • China's 1-year and 5-year Loan Prime Rate
  • UK's CPI for November


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