Stocks rose on Monday and continue to grow during this morning's Asian session, forming its third consecutive bullish candlestick. However, from today onwards, investors will also focus on the upcoming economic events and earnings data. Analysts are advising this is partially the reason for investors purchasing stocks. The move indicates investors believe the employment sector will start to show signs of cracks after immense pressure from inflation and interest rates. Market participants will primarily focus on the JOLTS Job Openings, ADP Non-Farm Payroll, but more than anything, the NFP and Unemployment Rate on Friday.
However, traders should note there are also fundamental elements that can continue to pressure the stock market throughout September. On Monday's bond market auction, the 2-year and 5-year bond yields drew the highest yields since 2006, when we were approaching the 2007 financial crisis. In addition, economists downgraded economic growth expectations for China, the world's second-largest economy, and Japan's Unemployment Rate rose for the first time in four months.
However, it is essential investors also concentrate on the price action and not solely on Fundamental elements. Fundamentals can take time to influence the market and is normally used for medium to longer-term analysis. This morning, all European Indices, including the CAC40, DAX and FTSE100, are trading higher, as are US equities in the futures session.
XAU/USD
Gold rose on Monday by 0.36% to a 19-day high as the Dollar retreated during the US trading session. However, the price movement during this morning's session is experiencing swings in both directions, confirming the resistance level at $1,925.91. Even though the price of Gold performed well on Monday, investors are concerned that the rise in the Dollar this morning will likely pressure the price of Gold. The US Dollar Index over the past three hours has risen from 103.83 to 104.03. If the Dollar continues to grow, the price of Gold will become more pressured.
However, the price movement of the Gold throughout the week will depend mainly on economic data. Investors will look at the employment data to determine if the Federal Reserve will likely continue hiking interest rates. Further hikes will be a doubt if the employment data shows signs of cracks, such as the unemployment rate rising higher. The market expects the JOLTS Job Openings to read 9.49 million, the Unemployment rate to remain at 3.5%, and the NFP to read 169,000. Deteriorating employment data and the upcoming Gross Domestic Product tomorrow afternoon can support the price of Gold. However, if the GDP figure reads higher than 2.4% and the employment sector remains resilient, the price of Gold can fall. This is due to interest rate hikes, which make the Dollar and other investments more attractive.
The price of Gold has now retraced back to the daily market open price and a minor support level. If the price continues to decline below the current level ($1,921.14), the wave pattern will form a correction signal. A correction signal indicates a potential decline to $1,912.66, which previously included a "head and shoulder" indication. To obtain a stronger signal for a longer-term decline, the price will need to decline below $1,918.00. This will indicate bearish Moving Average crossovers and trade below trend lines.
SNP500
The SNP500 experienced a reverting pattern, meaning each impulse wave was followed by a correction. However, the index continued to end the day higher. The reverting market indicates buyers are uncomfortable holding onto trades and do not continue to purchase at the upper daily band. Nonetheless, this morning's price has risen to a "higher high" as investors bet on the disappointing employment data. However, if the JOLTS Job data and the Gross Domestic Product read higher than expected, the SNP500 may retrace.
One of the latest quarterly earnings releases for the SNP500 was Cisco. After the publication of the fourth quarter's earnings report, it became known that analysts at Bank of America kept their forecast at the "neutral" level with a target price of $56. Experts advise the company's calculation for the growth in 2024 due to the demand for AI needs to be justified. At the same time, it is becoming clear that many analysts are cautious about purchasing technology stocks at such high prices. The same opinion is shared by representatives of financial holding KeyBanc Capital Markets, who maintained their assessment at the " neutral " level.
Lastly, the Bond yields decline during this morning's Asian market, which is a positive factor for the stock market. The 10-year Treasury has declined 0.028%. In addition, HP Inc will release its earnings per share figure and Revenue. HP's earnings are expected to read $0.86 per share, and Revenue to rise from $13.04 billion to $13.40 billion. If the figure reads higher, the stock can experience bullish volatility, as may the SNP500.
Summary:
- The stock market rises as investors wait for the release of the upcoming economic and employment data. Investors focus on if the data will further support interest rate hikes or make them less likely.
- The market expects the JOLTS Job Openings to read 9.49 million, the Unemployment rate to remain at 3.5%, and the NFP to read 169,000.
- HP Inc. will release its earnings per share figure and Revenue. HP's earnings are expected to read $0.86 per share, and Revenue to rise from $13.04 billion to $13.40 billion.
- Economists downgrade economic growth expectations for China, the world's second-largest economy.
