China disappoints investors
China disappoints investors – China expressed confidence in achieving its economic targets for the year and pledged to continue supporting growth. However, the country refrained from implementing significant stimulus measures, leaving investors disappointed as they were anticipating more support to fuel the already-impressive stock rally.
Officials from the National Development and Reform Commission, China’s economic planning agency, announced on Tuesday that they would expedite spending. They reiterated plans to increase investment and provide direct support for low-income groups and recent graduates. Additionally, China revealed its intention to issue ultra-long sovereign bonds next year to fund major projects and to bring forward a 100-billion-yuan ($14 billion) investment in key strategic areas that was originally planned for 2025 to this year.
“We are fully confident in achieving the annual economic and social development targets,” stated Zheng Shanjie, the chairman of the NDRC, during the government’s first briefing following a week-long national holiday. He acknowledged that China is facing a more complex environment domestically and internationally.
US stocks hit by teck rout
The US stock market was negatively impacted by a sell-off in some of the largest technology companies, leading to a decline in stock prices. This drop was also influenced by geopolitical concerns and expectations that the Federal Reserve may implement a smaller rate cut next month. The S&P 500 fell by 1% after experiencing four weeks of consecutive gains. Alphabet Inc. saw a 2.4% decrease as a judge ruled that it must remove restrictions preventing developers from establishing competing marketplaces to its Google Play Store. Additionally, Brent crude oil prices surged above $80 a barrel due to escalating tensions in the Middle East. Following the release of strong job data on Friday, Treasury Yields continued to rise, with the 10-year yield surpassing 4%.
DXY holding above 102.0
The US Dollar Index traded in a narrow range on the first trading day of the week after increasing for five consecutive sessions. This led the technical indicators to become strongly bullish. However, the upward movement is considered a short-term retracement before the downward trend resumes. The retracement is driven by the expectations of a less aggressive approach by the Federal Reserve in cutting rates after the latest jobs report.
For now, remaining above 102.0 opens the possibility for further gains, while the next resistance level is at 102.90. On the downside, the next support level currently stands at 102.0, and a break below that support would pave the way for further declines towards 101.80.
GBP remains under pressure
The British pound (GBP) continues to face downward pressure. The GBPUSD pair has seen a sharp decline over the past few days, dropping for six consecutive sessions and hitting a low of 1.3070, the lowest level since mid-September. Technical indicators have turned strongly bearish.
Investors are closely watching for the announcement of the new budget later this month. Historically, GBP has tended to weaken under Labour governments.
The next key support level is at 1.30, and a break below that level could lead to further declines, possibly towards 1.2970 for now. On the upside, the first immediate resistance level is at 1.3140.
Silver failed once again
Silver attempted to surpass its key resistance level of $32.50 at the end of last week’s trading, but it was unsuccessful and dropped to $31.15 earlier this morning, despite ongoing tensions in the Middle East. However, when examining the daily, weekly, and monthly charts, the overall outlook remains positive as long as Silver stays above $29.0. The current decline is seen as a short-term retracement before the upward trend resumes. To confirm another upward movement, a sustainable breakout above $32.50 is needed, requiring a weekly close above that resistance. This could potentially lead to a target of $34.0 in the coming weeks.
Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.
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