Daily summary: End of the week brings hope for market bulls

8:54 PM May 27, 2022

  • On Wall Street today we are seeing strong gains, led by the recently oversold US100 index which is currently trading near a 2.5% jump. The industrial US30 is gaining (+1.3%) and the US500 is up almost 1.8%

  • European indices also ended the session at higher levels and are positioning themselves well for next week. The DE30 led the gains, gaining 1.6%, while the UK100 was slightly weaker (+0.27%). Very weak was the W20, which lost (-1.04%).

  • The second estimate of GDP in the US for the first quarter came out worse than the initial one. It recorded a decline to -1.5% against expectations of 1.3%. The reading did not prevent the indices from rising.

  • The published data for April confirmed the strength of American consumers, spending increased. At the same time, the investor sentiment reading was weak, the Michigan index indicated the lowest levels since 2021.

  • The technology sector is doing very well today. There are gains in Intel, Nvidia and Adobe shares. Nearly 3% are added by Apple shares, around which a strong improvement in sentiment was described by some Wall Street analysts as a potential signal of a trend reversal.

  • Shares of companies from the defense sector gain slightly. The stocks of Palantir and Kratos, which provide critical infrastructure as part of IT systems, rebounded.

  • Positive consumer sentiment boosted stocks of recently losing Walmart and Costco, which reported a strong quarterly report above analysts' forecasts.

  • On the commodity market we observe declines in the prices of crude oil, which lost in the face of information about the delayed embargo on Russian oil in the EU. However, the prospects for growth still exist, Saudi Arabia in Davos indicated that it will not increase production and defend global economies from rising fuel prices, OPEC meets next week.

  • Natural gas erases some of yesterday's gains that came after the publication of a limited increase in inventories.

  • Gold gains little and lags the indices, but remains above $1850. Silver is performing poorly, unable to recover from declines that began in mid-April.

  • The market for cryptocurrencies is weakening and losing the lingering correlation with indices, which until recently allowed to expect a rebound if positive sentiment returns to the exchanges. Bitcoin is losing nearly 3% against a 2.5% gain in the US100 index. Ethereum is also falling, slipping below $1,800, levels not seen since March 2021.

Sellers have been dominated by buyers. The demand hit after seven consecutive down weeks on the S&P500 should come as no surprise. The NASDAQ is definitely the best performer today, but it is still close to 27% below historical highs which gives plenty of room for a potential rebound. Today's improvement in sentiment could herald an upward start to next week, which could confirm a broader upward move and give confidence to the bulls. On a negative note, the cryptocurrency market has been surprisingly losing correlation with the indices, with bitcoin retreating below $29,000. For digital currencies, the weekend could prove to be a nervous one, with Bitcoin struggling to maintain its current short-term key level near $28,500.

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Bticoin chart, H4 interval. Despite the bullish sentiment in the equity markets, Bitcoin and other cryptocurrencies are dominated by the supply side, which is once again dropping BTC below the $29,000 support. Source: xStation 5

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