On Friday, major US stock indices took back all of last week's gains, with a large number of options expiring (estimated at $3.4 trillion - the largest September expiration option on record) triggering fluctuations triggered by the Triple Wizardry Day. VIX rebounded 7.6% from its bottom in June 2023, while large technology stocks failed to provide any much-needed flexibility. Nvidia and Meta both fell 3.7%, Amazon -3% and Microsoft -2.5%.
The further rise in the yield of US treasury bond bonds may also be the reason for some risk reduction. Before the meeting of the Federal Open Market Committee (FOMC) this week, the yield is expected to exceed the high point so far this year. As market participants continued to adjust their expectations to adapt to the prospect of long-term high interest rates, the yield of US two-year treasury bond bonds returned to a level above 5%.
The economic data is mixed, with industrial production in the United States performing well in August, with a month on month growth of 0.4% compared to the expected 0.1%. But more attention seems to be focused on weaker than expected consumer confidence data (consensus 67.7, consensus 69.1), marking the second consecutive month of poor performance. The highlight is that consumer inflation expectations continue to be moderate, which may provide some space for the Federal Reserve to temporarily maintain interest rates unchanged.
Since March of this year, the Dow Jones Industrial Average has been trading at high lows, but has currently encountered some resistance at the critical 35000 point. On the downside, the upward trend line support, along with the 100 day moving average (MA) and Ichimoku cloud on the daily chart, will become a key support convergence point at the 34400 point level, which is a key level for defending bulls. On the other hand, any trend that breaks through 35000 points may pave the way for the next retest of the year to date high of 35600 points.
The Asian stock market is expected to open pessimistically, with ASX -0.58%, NZX -0.53%, and KOSPI -0.47% as of the time of writing. The Japanese market is closed for a day of respect for the elderly. Before the central bank made a series of important decisions in real time this week, market sentiment seemed to be in the "pre storm calm". Last week, China's economic data unexpectedly rose, but this did not trigger a significant rise in the Chinese stock market, and investors are still looking for more opportunities for subsequent recovery.
In terms of economic data, Singapore's non oil exports in August contracted year-on-year for the 11th consecutive month this morning, a significant downward surprise proving that global demand remains weak (-20.1% vs. -15.8% forecast). The electronic products (-21.1%) and non electronic products (-19.9%) sectors have both experienced a decline, and the double-digit trade slowdown of our main trading partners (the United States -32.4%, the European Union -28.9%, and China -16.4%) may indicate weak growth for the rest of this year.
The Singapore Straits Times Index (STI) has rebounded nearly 4.4% since reaching its bottom in August 2023, confirming its rebound in the lower limit of its long-term consolidation model. Its relative strength index (RSI) has broken back above the 50 level for the first time in over a month, which may indicate some upward momentum in the short term. Next, we may focus on 3350 points, which marks the direct resistance that needs to be overcome in the future.
