The SP500 index rose sharply on Monday and was 0.8% higher during the London session, trading around 2,625 USD, with volatility continuing to be elevated.
Friday’s US payrolls deteriorated sharply and the US economy created only 103,000 new jobs in March, which was way below the February’s 326,000. Analysts had expected 188,000 new jobs. In addition, the unemployment rate failed to improve as expected and stayed at 4.1%. However, wage growth accelerated, which could add to inflation pressure.
From other news, the Fed chair Jerome Powell had an important speech, and he confirmed the current hawkish bias – The Fed simply needs to continue hiking rates to fight rising inflation and to stop the overheating economy. This was another negative impetus for stocks on Friday.
Furthermore, Donald Trump announced another wave of tariffs on Chinese imports, this time it will be around 100 billion USD. Chinese authorities have already replied and from the market thinks China can devalue the yuan to strengthen the US dollar and hence weaken the US exports.
Nevertheless, equity bulls were in charge on Monday, despite all the bad news. The support is still at the 200 day moving average, seen around 2,600 USD. If broken, the price might deteriorate to Friday’s lows at 2,585 USD.
On the other hand, the resistance is located at 2,640 USD and if bulls will be stronger, we could see further rise toward last week’s highs around 2,670 USD. In all cases we strongly recommend to have rigorous money and risk management.
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