Amidst Wednesday’s trading session events, all eyes were on the S&P500 Futures (CME: ES) as market participants eagerly awaited pivotal labour market data alongside the much-anticipated testimony from Federal Reserve Chair Jerome Powell.
However, the outcome of these events revealed a nuanced narrative. Both the ADP Employment Change and JOLTs Job Openings figures fell short of projections, signalling a potential deceleration in the labour market—a critical component influencing inflation dynamics. This revelation helped catalyse a resurgence in the S&P500 Futures, snapping a two-day losing streak and surging by 51 basis points during the session.
Yet, amidst the backdrop of market speculation regarding an impending rate cut in June, Fed Chair Powell’s remarks injected a dose of caution. Expressing the Fed’s reluctance to cut rates hurriedly, Fed Chair Powell emphasised the necessity of sustained inflation progress towards the 2% target before considering any policy shifts.
Technical
The S&P500 Futures have been showcasing a clear uptrend, characterised by its movement within an ascending channel pattern and its position above the 100-day moving average.
Notably, at the 4959.00 level, a strong support zone emerged, marked by heightened buying activity that propelled the index futures to new highs. However, as the futures reached the peak at 5157.75, coinciding with the upper boundary of the channel, selling pressure intensified amid overbought RSI conditions, leading to a subsequent downturn.
If this downside momentum persists, the 100-day moving average, closely aligned with the channel’s lower boundary, could act as a significant level of interest to the downside. Conversely, a resurgence in upside momentum could pave the way for a retest of the 5157.75 resistance level. A breakthrough above this resistance level may signal further potential gains, with the 23.60% Fibonacci Extension level likely attracting attention as a point of interest for traders looking for bullish continuation signals.
Summary
Amidst market anticipation of labour data and Powell’s testimony, the S&P500 Futures surged, halting a losing streak. Fed Chair Powell’s cautious stance on rate adjustments adds uncertainty. Technically, an uptrend prevails, with 4959.00 as a robust support and 5157.75 as resistance. Continued downside momentum may target the 100-day moving average, while an upside resurgence could retest 5157.75.
Sources: Automatic Data Processing Inc., U.S. Bureau of Labor Statistics, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
