Written by: Chris Beauchamp
Source: IG – S&P 500 comes off record high, silver price off 13-year peak while USD/JPY rises
The global financial markets saw notable movements across major U.S. indices, commodities, and forex pairs in today’s session, reflecting a landscape shaped by investor caution, economic data releases, and evolving monetary policy expectations. The S&P 500 gave back some gains after reaching a new record high last week, while silver fell from long-standing highs. The USD/JPY currency pair advanced as U.S. Treasury yields rose, supported by hawkish undertones in Federal Reserve commentary.
This comprehensive market wrap explores the key developments across these areas, providing technical context, market sentiment, and forward-looking perspectives.
S&P 500 Pulls Back After Record Highs
The S&P 500 cooled off slightly following its strong upward momentum, driven largely by diminishing expectations of aggressive Federal Reserve rate cuts and rotation within key equity sectors.
Key details:
– After reaching a fresh record high, the index experienced profit-taking amidst mixed corporate earnings.
– Investors showed caution ahead of critical inflation data due later in the week, including the U.S. Personal Consumption Expenditures (PCE) index.
– Despite the pullback, the technical outlook remains constructive, with dip-buyers possibly returning near short-term support levels.
From a technical standpoint:
– Early June’s rally was supported by strength in key tech stocks such as Nvidia and Microsoft, lifting the index to historical highs.
– Short-term momentum indicators (such as RSI and MACD) showed signs of potential overextension, suggesting consolidation or minor correction might occur before a continuation higher.
– Immediate support levels to watch include the 5300 zone, while resistance remains near the recent all-time high around 5360.
Market Focus:
– Investors remain engaged with corporate earnings, particularly in tech and consumer discretionary sectors, which continue to drive much of the market’s gains in 2024.
– Economic data, including inflation and employment figures, will act as critical catalysts for risk sentiment in the near term.
– Anticipation of a September Fed rate cut has faded slightly, with futures markets now pricing in a smaller chance, reinforcing the idea of a sustained higher-rate environment.
Silver Slides from 13-Year High
The commodities market saw a sharp retreat in silver prices following a stellar run that recently pushed the metal to its highest level in over a decade. The drop appears to reflect both technical profit-taking and reassessments of market fundamentals.
Key takeaways:
– Silver recently surged above $32 per ounce, levels last seen in 2011, driven by strong demand and investor interest in metals as inflation hedges.
– However, the commodity fell sharply, breaking below $30 and extending losses, trading near $29.50 in the latest session.
– Analysts attributed the decline to a strengthening U.S. dollar and rising real yields, which typically dampen non-yielding asset appeal.
Technical Snapshot:
– The rapid price ascent created overbought conditions in several momentum indicators, including RSI, leading to a natural correction phase.
– A major reversal pattern formed on shorter time frames, suggesting weakening bullish conviction near the top.
– Potential support is located around the $28.50 level, followed by more robust support near the $27 zone.
Factors Driving the Pullback:
– Rising U.S. Treasury yields, particularly at the long end of the curve, lifted the dollar and made precious metals relatively less attractive.
– Central bank policy concerns also impacted the metal’s outlook, especially if the Federal Reserve delays any further interest rate cuts.
– Traders may also be reallocating toward industrial commodities or energy futures, which have shown renewed demand.
In spite of the correction, several analysts remain bullish on silver in the medium term due to the following:
– Continued industrial demand growth, particularly in green energy and electronics sectors.
– Persistent global inflation risks, keeping safe-haven demand intact.
– Central bank gold and silver purchases
Explore this further here: USD/JPY trading.