The S&P 500 put in a fresh record-high close on Thursday after a
stronger-than-expected manufacturing report from the Institute of Supply
Management (ISM) injected bullish energy into equity markets. US
manufacturers, according to the report, are being overrun with heavy
demand, indicated by a sharp swing higher in new orders. The benchmark
S&P 500 index closed just shy of 4,020 after rising 1.18% on the
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Technology stocks also rose strongly into the extended US holiday
weekend, with the Nasdaq 100 index recording a 1.82% rally. Elsewhere,
the small-cap Russell 2000 index gained 1.50%, while the Dow Jones
Industrial Average (DJIA) climbed 0.52%. The US Dollar weakened against
most major G10 peer currencies.
Thursday marked the end of the trading week for the United States,
with stock markets set to reopen on Monday following the Easter holiday.
Bond markets, however, will see a shortened trading day on Friday.
Speaking of bond markets, Treasuries saw buying across most tenures
except the 2-year. The benchmark 10-year yield fell 4.15%.
The US government bond market recorded its worst loss in years,
particularly in long-dated Treasuries. The iShares 20+ Year Treasury
Bond ETF – composed of bonds with a maturity over 20 years – saw a
violent 14.83% decline in the first quarter. The roiled Treasury market
will likely remain in focus going forward as investors remain doubtful
that the Fed wont prematurely raise rates amid a stimulus-fueled
domestic economy that continues to heat up.
The Asia-Pacific session is set to be a bit quieter than usual with
closed markets in Australia and New Zealand for the Good Friday holiday.
Australia’s ASX 200 gained 0.56% on Thursday to kick off the second
quarter. Equity markets across the rest of the APAC region also gained.
Market sentiment received a boost after US President Joe Biden outlined
his infrastructure plan early Thursday when the US leader called for a
$2.25 trillion investment in roads, bridges, airports, and green energy
infrastructure.
The Australian Dollar is moving higher on broader Greenback weakness.
AUD/USD initially was moving lower on Thursday, threatening to break
below a key support level from a Head and Shoulders pattern, but
subsequently shifted higher later in the session. The move higher comes
despite a worse-than-expected trade report out of Australia that showed
weakness in exports.
Friday‘s economic event calendar is void of high- and medium-impact
events, according to the DailyFX Economic Calendar. Thailand will see
business confidence and unemployment data cross the wires, while India
will release its foreign exchange reserves for the week ending March 26.
While US markets are closed tomorrow, traders will have a close eye on
the highly-anticipated non-farm payrolls report, with the consensus
estimate slated to print at 647k, which would nearly double the prior
month’s figure.
S&P 500 TECHNICAL OUTLOOK
The S&P 500s break above the 4,000 level saw prices rise above the
upper trendline of a Rising Wedge pattern. While technically a bearish
pattern, the break above resistance highlights the underlying strength
in US markets. And now, with a full retracement of the last leg lower,
the 161.8% Fibonacci retracement shifts into view at the 4,064 level.
Alternatively, a move back into the wedge could be viewed as a bearish
development. However, given the broader trend higher, any pullback will
likely be transitory. The Relative Strength Index (RSI) is showing some
bearish divergence, although the MACD oscillator is trending higher,
pointing to healthy momentum.
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