Nikkei Index Falls Below 38,000 Points This Month for First Time
According to today’s Nikkei 225 (Japan 225 on FXOpen) chart, the index quote dropped below 38,000 points at Monday’s low, followed by a recovery (shown by an arrow).
One of the drivers of the decline was the automotive sector, whose shares led during the downturn. In particular, according to Reuters, Toyota Motors’ shares fell by more than 2% as the company faces difficulties due to a certification scandal. Japanese national broadcaster NHK reported that Toyota will extend the production halt for some models until the end of July.
The fact that the Nikkei 225 (Japan 225 on FXOpen) price is recovering after dropping below the 38,000 mark suggests a false bearish breakout below this psychological level.
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Adobe’s Stock Surges Approximately 15% After Report Publication
On June 5th in the article “Is ADBE Stock Undervalued?”, we highlighted several bullish signs, suggesting that the report published on June 13th could be a driver for a resumption of the uptrend.
Adobe’s report released on June 13th proved to be strong:
→ Earnings per share: Actual = $4.48, Forecast = $4.39;
→ Revenue: Actual = $5.309 billion, Forecast = $5.291 billion. A 10% increase compared to the same quarter last year.
Furthermore, the company stated that:
→ AI is more of an advantage than a hindrance to business development;
→ “We’re seeing early success monetizing new AI technologies across our Digital Media and Digital Experience businesses,” said Shantanu Narayen, Adobe’s CEO.
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Nasdaq 100 Index Reaches 20,000 Points for the First Time
On 30 May, we noted some uncertainty in the price behaviour of the Nasdaq 100 (US Tech 100 mini on FXOpen) near the resistance level of 18,840, as shown by arrow #1.
Following this, the price declined and tested the former resistance at 18,250 (indicated by arrow #2) – the long lower shadow on the candle indicated aggressive demand (more details in the article on the Hammer pattern).
This test gave the bulls confidence to break through the 18,840 resistance.
In June, the price continued to rally within the ascending channel (shown in green), which is part of a larger ascending channel (shown in blue), driven by:
→ prospects for AI implementation;
→ prospects of Fed rate cuts.
Yesterday, the Nasdaq 100 (US Tech 100 mini on FXOpen) rose by approximately 1.2%, reaching the psychological level of 20,000 points. This record was supported by influential analysts raising their forecasts for US stock markets. For example:
→ Goldman Sachs raised the year-end 2024 target for the S&P 500 (US SPX 500 mini on FXOpen) from 5200 to 5600;
→ Evercore ISI increased its forecast for the same index from 4750 to 6000.
Market sentiment was also buoyed by the anticipation of several comments from FOMC members scheduled for this week. These might confirm the Fed’s intention to cut rates as early as September this year.
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European Currencies Adjust to Support Levels: Is Growth Possible?
A week rich in macroeconomic data contributed to the decline of the euro, yen, and pound. Notably, the following events were significant:
- Inflation falling for the second consecutive month (0.2% against the expected 0.3%);
- The publication of the updated forecast from the Federal Reserve (one reduction in the federal funds rate by 0.25%, presumably in September).
Nonetheless, despite the hawkish stance of the Federal Reserve and the steady slowdown in inflation, European currencies managed to stay above key levels relative to the dollar, even laying the groundwork for forming reversal patterns.
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TSLA Shares Revive After Shareholder Meeting
Last week, Tesla held a shareholder meeting where the main events included:
→ Shareholders approving Elon Musk’s $56 billion compensation package in TSLA stock options;
→ Relocating the company’s legal headquarters to Texas;
→ Elon Musk’s statements on robotics, asserting that Optimus robots could make Tesla a $25 trillion company.
Approving the massive compensation eliminated the risk of Musk leaving the company (which would likely have caused a sharp drop in TSLA stock price). The billionaire thanked shareholders and today, 18 June, posted on X (Twitter) announcing that he is working on a new master plan for Tesla’s development, likely focusing on the prospects of Optimus robots.
Additionally, news emerged about the launch of Tesla Model 3 sales at a new price in China. This spurred activity in the TSLA stock market.
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Market Analysis: AUD/USD and NZD/USD Sight Steady Increase
AUD/USD is attempting a recovery wave from 0.6590. NZD/USD could gain bullish momentum if there is a clear move above the 0.6150 resistance.
Important Takeaways for AUD/USD and NZD/USD Analysis Today
- The Aussie Dollar found support near 0.6590 and is now recovering against the US Dollar.
- There was a break above a key bearish trend line with resistance at 0.6630 on the hourly chart of AUD/USD at FXOpen.
- NZD/USD is attempting a recovery wave above the 0.6110 resistance.
- There is a major bearish trend line forming with resistance near 0.6150 on the hourly chart of NZD/USD at FXOpen.
AUD/USD Technical Analysis
On the hourly chart of AUD/USD at FXOpen, the pair dipped from the 0.6700 resistance zone. The Aussie Dollar declined below 0.6660, but the bulls were active near 0.6600 against the US Dollar.
A low was formed near 0.6590 and the pair is now correcting losses. There was a move above the 50% Fib retracement level of the downward move from the 0.6704 swing high to the 0.6585 low. There was also a break above a key bearish trend line with resistance at 0.6630.
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Nvidia Becomes World’s Most Valuable Company
According to the NVDA chart today, the share price rose yesterday to a new all-time high, surpassing $135 (after a 10-to-1 split). This pushed Nvidia’s market capitalisation to $3.34 trillion, overtaking Microsoft, which is currently valued at $3.32 trillion.
As CNBC reports:
→ Nvidia shares have risen by more than 170% this year, with a strong driver being the first-quarter earnings report released in May.
→ Since the end of 2022, the shares have increased more than ninefold, driven by the emergence of generative artificial intelligence.
→ Nvidia holds around 80% of the AI chip market used in data centres, with this business expanding thanks to purchases by OpenAI, Microsoft, Alphabet, Amazon, and Meta.
What are the prospects for NVDA’s share price? Will the company be able to maintain its status as the most valuable company, a title that has traditionally belonged to either Apple or Microsoft?
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Brent Crude Oil Price Hits Highest Since 1 May
As the chart shows, yesterday the price of Brent crude oil rose to $84.40, which is the highest level since 1 May 2024.
The demand for Brent crude oil was driven by the following factors:
-
The holiday season and increasing consumption from automotive and aviation transport. We wrote about this in the Brent market analysis on 11 June. Let us recall that Goldman Sachs analysts suggest that by the end of the summer, the price of Brent may rise to $86 per barrel with a “ceiling” around $90.
-
Geopolitical tension, namely:
→ Ukrainian drone strikes on Russian oil refining bases.
→ The likelihood of escalation in the Middle East. For instance, Reuters reports that Israel’s Foreign Minister Israel Katz warned of an impending “total war” with Lebanon’s Hezbollah, which is backed by Iran.
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GBP Awaits Bank of England Verdict: Volatility Ahead?
GBP/USD
In the first half of the current trading week, the GBP/USD pair has confidently stayed above the significant range of 1.2700-1.2650, continuously attempting to resume its upward trend. Today, everything could change. Depending on the outcome of the Bank of England meeting and the market’s reaction to the officials’ decision, the pair could either strengthen to 1.2860 or fall to 1.2600. Additionally, we cannot rule out the possibility of the pair continuing its sideways movement, which it has been in for over four weeks.
What do experts expect from today’s Bank of England meeting:
- The interest rate is expected to remain at 5.25%.
- The number of votes for a rate cut is expected to be 2, and for the rate to remain unchanged, 7.
Therefore, if any officials change their stance and the current balance shifts dramatically, volatility in the pound could sharply increase.
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SNB Unexpectedly Lowers Interest Rate from 1.50% to 1.25%
Today, it was announced that the Swiss National Bank (SNB) decided to lower the interest rate to 1.25%. According to ForexFactory, the analyst consensus had expected the rate to remain at 1.50%, making this decision a surprise.
According to SNB Chairman Thomas Jordan:
→ Inflation in Switzerland is decreasing;
→ In recent weeks, the Swiss franc has significantly strengthened due to geopolitical tensions, and the SNB is prepared to be active in the Forex market if necessary.
The market’s reaction to the SNB’s decision and the statements from its chairman resulted in a sharp weakening of the Swiss franc. Specifically, the USD/CHF rate rose by approximately 0.7% in the first few minutes.
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Market Analysis: Gold Price and Crude Oil Price Turn Green
Gold price started a fresh increase above the $2,335 resistance level. Crude oil prices are gaining bullish momentum and might rise toward $82.50.
Important Takeaways for Gold and Oil Prices Analysis Today
- Gold price started a decent increase from the $2,300 zone against the US Dollar.
- A connecting bullish trend line is forming with support near $2,345 on the hourly chart of gold at FXOpen.
- Crude oil prices rallied above the $79.00 and $80.00 resistance levels.
- There is a key rising channel forming with support at $80.85 on the hourly chart of XTI/USD at FXOpen.
Gold Price Technical Analysis
On the hourly chart of Gold at FXOpen, the price found support near the $2,300 zone. The price formed a base and started a fresh increase above the $2,320 level.
There was a decent move above the 50-hour simple moving average and $2,335. The bulls pushed the price above the $2,350 resistance zone. Finally, the bears appeared near $2,365. A high was formed near $2,365.43 and the price is now consolidating gains.
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The Price of Gold Reached a Two-Week High
As shown on the XAU/USD chart, this morning the price of gold exceeded $2360 per ounce (approximately +1.5% since the start of the week).
According to Reuters, the increase in the price of gold was driven by:
→ Rising geopolitical tensions in the Middle East.
Hezbollah leader Sayyed Hassan Nasrallah warns of an “all-out war” if Israel launches a full-scale invasion against the Lebanese militia after concluding a military cooperation agreement with Cyprus, with Cyprus potentially becoming a target for Hezbollah.
→ Expectations of a decrease in Fed interest rates.
ANZ Research analysts note that the latest US economic data has shown improved conditions for the Fed to lower rates. High rates typically reduce the attractiveness of gold bars, which do not generate income.
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Natural Gas Price: Bullish Trend Weakens
Forecasts of a hotter summer, published during April and May, led to a sustained bullish trend in the natural gas market, as this commodity is heavily used for air conditioning.
Specifically:
→ The XNG/USD chart indicates that from 1st April to today, the price of natural gas has increased by more than 55%.
→ According to Bloomberg, there is a 61% chance that 2024 will be the hottest year on record, surpassing 2023.
→ Natural gas supplies may be unstable due to an unforeseen maintenance shutdown at the Freeport plant.
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Weekly Market Wrap With Gary Thomson: Nasdaq 100 Index, GBP, SNB Interest rate, Brent Crude Oil
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- Nasdaq 100 Index Reaches 20,000 points for the First Time
- GBP Awaits Bank of England Verdict: Volatility Ahead?
- SNB Unexpectedly Lowers Interest Rate from 1.50% to 1.25%
- Brent Crude Oil Price Hits Highest Since 1 May
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S&P 500 Falls from Record High in Anticipation of Key News
On Friday, at 15:30 GMT+3, the Core PCE Price Index values will be released – an economic indicator to which the Federal Reserve pays special attention when assessing inflation levels in the US. This event is likely to cause a surge of news in the financial markets, and its anticipation will influence sentiments throughout the week.
On Monday morning, the S&P 500 Index (US SPX 500 mini on FXOpen) fell to 5465 points after a historical record above 5500 points was set on June 20th. The decline was contributed by Friday’s report from the National Association of Realtors, which showed a drop in existing home sales in May compared to the previous month.
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USD/JPY Analysis: Rate Rises Above 159.9 Yen per Dollar
The yen was last this weak against the US dollar in late April, leading to currency interventions as the Bank of Japan deemed a rate above the psychological mark of 160 yen per USD unacceptable.
The current weakness of the yen has triggered the usual warnings from Japanese officials against “excessive” volatility, which can be interpreted as a sign of a new wave of interventions.
It is noteworthy that following the intervention in late April (when the yen strengthened by 4.5% by the first days of May), it took the market less than two months to negate almost the entire effect of the Bank of Japan’s actions. This indicates a strong upward trend (shown in blue), driven by the interest rate differential between Japan and the US.
According to Reuters:
→ The 160.00 level is seen as a red line for the Japanese, considering that yen weakness increases imported inflation and pressures the Bank of Japan (BoJ) to further unwind its ultra-loose policy.
→ The minutes from the latest central bank meeting confirmed extensive discussions about reducing bond purchases and raising rates.
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Dollar Declines: How Deep Could the Correction Be?
By the end of last week, the American currency traded rather mixed:
- The USD/JPY currency pair strengthened by more than 200 pips and almost tested the significant resistance level at 160.00.
- The USD/CAD pair failed to break out of the medium-term flat corridor of 1.3740-1.3620.
- Sellers of the pound in the GBP/USD pair tried to push through the support at 1.2620-1.2600 but were unsuccessful.
However, despite recent successes, the upward momentum of dollar bulls began to slow down yesterday. In some directions, we observe a slowdown in the growth of the USD, and in some, reversal patterns have already formed.
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Nasdaq 100 Index Failed to Hold Above 20,000 Points
On 18th June, we reported that the Nasdaq 100 (US Tech 100 mini on FXOpen) market had recorded a historic high by surpassing the psychological level of 20,000.
At that time, we pointed to the upper line of the ascending channel (shown in green), which has been in place since 19th April, as a potential resistance level.
About a week has passed, and the Nasdaq 100 (US Tech 100 mini on FXOpen) chart indicates that the price failed to hold above the psychological level and turned downwards from the upper green line.
One of the drivers of the decline was NVDA shares, which fell by approximately 15% over three trading sessions.
Meanwhile, Bloomberg quotes Buff Dormeier, Chief Technical Analyst at Kingsview Partners, stating that Nvidia’s share price decline occurred following potentially bullish news:
→ a stock split, making the shares more accessible to a wider range of retail investors;
→ attaining the status of the company with the largest market capitalisation (a status now lost);
→ strong fundamental data related to the company’s leadership in the AI-related industry. By some estimates, the company controls about 80% of the chip market needed for AI model development.
Bearish behaviour of NVDA’s price amidst bullish news is a bearish sign.
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USD/CAD Rate Reaches Significant Support Level
On June 12, we wrote about bearish signs observed on the USD/CAD chart, pointing to the prospect of USD weakening.
Since then, the USD/CAD rate has decreased by approximately 0.75% and has reached an important support level, specifically the lower boundary of the descending triangle (with the median around 1.36700), which indicates a long-term balance of supply and demand among market participants.
The fact that today the USD/CAD rate is rising from yesterday’s minimum on June 4 at the level of 1.36408 confirms the importance of the support formed by the lower boundary of the triangle.
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AUD/USD Surges on Inflation News in Australia
This morning, the Consumer Price Index (CPI) figures for Australia were released – according to ForexFactory, the annual CPI stood at 4.0% (expected = 3.8%, previous = 3.6%).
As Bloomberg reports:
→ Rent was the main driver of inflation due to a housing shortage.
→ The spike in inflation increases the risk of an RBA rate hike (a decision might be announced on 5th August).
→ Following the release of the high CPI figures, the AUD/USD exchange rate surged by 0.6%.
Moreover, the news from Australia could be a harbinger of a new wave of inflation that may manifest in other countries as well.
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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
