Weekly Market Outlook: FOMC, PMI figures and earnings have the market’s attention
This week all eyes turn to the commodity markets as investment banks from JP Morgan and Goldman Sachs state that commodities may have begun a new supercycle. Oil prices are likely to be the key focus as prices have surged nearly 80% from November lows.
Key economic data points will also be widely watched by currency traders this week with US retail sales figures and the latest FOMC meeting minutes released on Wednesday. This is followed by Australian employment figures on Wednesday and European Services and Manufacturing PMI numbers on Friday.
There is also a range of different earnings announcements due from European and US companies, from the likes of Glencore, Twilio, Shopify, Rio Tinto, Baidu, Nestle, Dropbox, Wal-Market, Airbus and Barclays, among others.
You can learn more about some of the global themes affecting the markets in this selection of education articles:
- Chinese Stock Market - Investing in Chinese Stocks
- Understanding the Difference Between Common Stock vs Preferred Stock
- What is Bull Market? Definition, Trading & Investing Strategies
- What is a Short Squeeze? Definition, Markets & Strategies
Weekly Forex Calendar
Source: MetaTrader 5 trading platform provided by Admiral Markets
Did you know that three times a week, three professional traders talk through the markets live and show you how to identify potential trading opportunities? Reserve your complimentary spot in the Admiral Markets Spotlight webinar now by clicking the banner below!
Trader’s Radar - The Commodity Supercycle
The commodity market has experienced some huge moves in recent months with agriculture, metal and energy prices rallying higher. This has led many investment banks such as Goldman Sachs, JP Morgan and Bank of America to call for a new commodity supercycle.
Analysts believe that Wall Street is likely to bet on a strong economic recovery from the coronavirus pandemic while using the commodity market has a hedge against inflation. One of the reasons for this is the fact government stimulus measures are likely to fuel aggressive growth over the coming years.
According to research from JP Morgan, commodities have seen four supercycles in the last 100 years. The last commodity supercycle peaked in 2008 after lasting for 12 years. However, while the last supercycle was fuelled by economic growth from China, this supercycle will most likely be attributed to ultra-loose fiscal and monetary policies.
Source: Admiral Markets MetaTrader 5, CRUDOIL, Monthly - Data range: from Jan 1, 2007, to Feb 12, 2021. Performed on Feb 12, 2021, at 7:00 pm GMT. Please note: Past performance is not a reliable indicator of future results.
In the long-term, monthly price chart of West Texas Intermediate (WTI) Crude Oil above, it is clear to see the descending triangle pattern that has formed between a horizontal support level and a descending trend line resistance.
The horizontal support level at ~$38.00 has acted as support in early 2009 and early in 2016 before breaking lower in early 2020. However, towards the end of 2020, price came back above the ~$38.00 price level and bounced off once again.
Historically, there have been some long term trends that have developed from this price level. While there is overhead resistance, traders may look for price to break through and run higher in what could be the beginning of a new commodity supercycle.
If you’re feeling inspired and ready to trade live in the market, you can open a live trading account by clicking on the banner below and accessing an impressive range of trading features to support you in your journey.
Corporate trading updates and stock indices
Global stock market indices have remained positive and have, so far, held on to their gains from rallies earlier in the month. For much of last week, however, gains were muted as momentum dried up.
While some investment banks are sounding the alarm bell for a correction, buyers have been eager to buy the dips. With interest rates at historic lows, cheap credit is still moving its way into the stock market in the search for yield.
However, divergences still remain across geographical indices with US indices leading the way, followed by Asia indices and lastly European indices which have been rising but not at the same degree and pace with the other regions.
Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from May 19, 2020, to Feb 12, 2021, performed on Feb 12, 2021, at 6:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
Past five-year performance of the S&P 500 circa: 2020 = +16.17%, 2019 = +29.09%, 2018 = -5.96%, 2017 = +19.08%, 2016 = +8.80%, 2015 = -0.82%.
In the daily chart of the S&P 500 stock market index above, it’s clear to see the uptrend is still intact. The 50-period (red), 100-period (green) exponential moving average sare still moving higher confirming the upward bias. While the price is overextended from these moving averages and trend line, buyers may look for dip-buying levels.
Sentiment in global stock markets may also be impacted by the range of earnings announcements due this week from European and US companies. Some of these include:
- Wednesday 17 February - Shopify, Rio Tinto, Baidu
- Thursday 18 February - Nestle, Dropbox, Wal-Mart, Airbus, Barclays
Did you know that you can use the Trading Central Technical Ideas Lookup indicator to find actionable trading ideas on this index and thousands of other instruments across Forex, stocks, indices, commodities and more?
You can get this indicator completely FREE by upgrading your MetaTrader 5 trading platform provided by Admiral Markets UK Ltd to the exclusive Admiral Markets Supreme Edition!
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst, Jitan Solanki (analyst), (hereinafter “Author”) based on their personal estimations.
- Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
- Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.