US futures retreated in early trading as investors braced for more equities weakness in the coming months. The Dow Jones futures added to the 270 points losses it made on Friday. The Nasdaq 100 and S&P 500 futures were also in the red. Analysts at several leading Wall Street banks expect that equities will retreat in the coming months. Some of the most bearish analysts are from Morgan Stanley, Citigroup, Deutsche Bank, and Bank of America. They cited potential slowdown of earnings, a relatively hawkish Federal Reserve, and higher costs as the supply logjam continue.
The US dollar held steady in early trading as investors refocus on the upcoming American inflation data that will come out on Tuesday. Analysts expect these numbers to show that the headline consumer price index (CPI) declined slightly to 5.3% in August. They also see the core CPI coming in at around 4.2%, which is above the Fed’s target of 2.0%. These numbers will come a few days after the US published the latest Producer Price Index (PPI) data. While the PPI dropped on an MoM basis, it rose to the highest level in years on an annualized basis.
The Japanese yen remained muted in early trading after the latest Producer Price Index (PPI) data. The numbers showed that Japanese producers were still facing significant cost increase. Still, this action is not translating to higher consumer inflation, which remains below 1%. At the same time, with the country reportedly seeing substantial covid cases, there is a likelihood that Japan’s recovery will flatten soon. Later today, Turkey will publish its retail sales data while the US will publish its August Federal budget deficit figures.
EURUSD
The EURUSD pair declined to 1.1810 as the US dollar held steady. As it did this, the pair managed to move below the Ichimoku cloud. It also moved below the 25-day moving average while the Relative Strength Index (RSI) has turned lower. Therefore, the pair will likely maintain the bearish trend later today as bears target the key support at 1.1750.
NDX100
The Nasdaq 100 index futures remained under pressure as the fear and greed index turned negative. The index declined to $15,445, which was the lowest level since August 30. On the four-hour chart, the index has found significant resistance at $15,708. It has also moved below the 25-day moving average while the MACD has moved below the neutral line. Therefore, the index will likely remain under pressure as bears target the key support at $15,000.
SPX500
The S&P 500 index declined to $4,462, which was the lowest level since August 24. Like the Nasdaq 100 index, it has found a strong resistance level at $4,550. It has already moved below the 25-day and 15-day moving averages. It has also moved below the key support level at $4,465 while the Relative Strength Index (RSI) has dropped. Therefore, the index will likely maintain a bearish trend as bears target the key support at $4,400.
