Summary:
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US indices bounce after earlier declines
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This morning US500 fell around 55 pts (1.8%)
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ISM manufacturing PMI (3PM GMT) a key release
It’s been a pretty wild ride for US indices at the start of the year, with a strong ramp into Thursday’s close seeing the major benchmarks end at their highest ever levels. However, there was some weakness noted in the small caps (US2000 on xStation) and an unexpected increase in geopolitical tensions between Washington and Tehran caused some sizable selling overnight and during the first half of the European session.
US Stocks tumbled after the US-Iran news hit the wires with the US500 falling from its highest ever level of 3263 to a low of 3207 - a 56 point decline! Source: xStation
Looking ahead the forthcoming cash session on Wall Street could well prove key with any further news on US-Iranian tensions having the potential to cause large moves. Indices traders will also likely have an eye on the price of crude, with Oil and Oil.WTI both just pulling back from their daily highs but still up by around 3%. On the data front we get the first ISM manufacturing release of the year, with the data for December due out at 3PM (GMT).
This will be keenly watched as investors will be hoping for a pick-up in activity in the sector to support the stock market rally in the final quarter of last year. A print of 49.0 is expected after 48.1 prior. For crude oil watchers the EIA inventory release at 4PM could be market moving, although domestic supply side dynamics in the US have very much taken a back seat to geopolitics after the recent events.
The US500 is on track for a bearish outside day with a close below 3235 confirming needed to confirm this. Price is back below the 8 EMA (blue line) but remains above the 21 EMA (yellow line) with these two metrics still in a bullish orientation. There have only been a handful of daily closes below the 8 EMA since early October, and on only one occasion has price ended below the 21 EMA - currently at 3198. The all-time high of 3263 is the main level to be aware of above, with 3232 potential short-term resistance ahead of that. Source: xStation
