Monday, July 1, 2019

DOWJONES - 01 July 2019


Fundamental Highlights

US indices traded higher on Friday as market participants were cautiously optimistic about the G-20 summit that awaited over the weekend. Market expectations were met in that no deal was agreed to however the two nations pledged to resume trade negotiations with no plans to impose new tariffs on one another. Moreover, a concession was made as President Trump indefinitely allowed Huawei to conduct business with US companies. Given that existing tariffs are weighing on the global economy and a deal remains a burdensome process due to tensioned US-China relations, the prevention of a breakdown at the US-China meeting was taken as a positive sign. However, to sustain the upside bias, markets would need further positive trade developments in the near-term. Separately on US economic data, Personal income and spending rose modestly while PCE data shows inflation remains subdued. Today, the US publishes ISM manufacturing PMI data which is estimated to decline, however its impact on price action may be subdued by trade optimism that followed this weekend’s updates.

Technical Analysis

The Dow remained within range-bound on Friday as markets awaited the outcome of the G-20 summit however managed to end 0.28% higher. The price fluctuated between the resistance at 26660 and support at 26500 before ending at 26599. Dow futures are pointing higher this morning as the bulls drove the price past the resistance at 26660 in response to the US-China trade truce and are attempting to reach the record high of 26940 with a break above 26850. Look for a sustained move above 26750 to maintain bullish momentum and a decline below this level to find immediate support at 26660.

Support: 26750/ 26660
Resistance: 26850/26940

Chart (H4)