Weekly Market Outlook: Start of Tapering, Brent Barrel and Apple
As we expected last week, the market's attention was mainly focused on the annual Jackson Hole symposium, with the main protagonist being the president of the Federal Reserve. During his speech last Friday, Jerome Powell not only managed to attract all the attention of the markets to his words, but also managed to send a message of tranquility despite the fact that he admitted the possibility that the tapering would begin at the end of this year.
Specifically, Jerome Powell insisted on his reassuring message in relation to inflation, since as he indicated, he expects it to be controlled during the next year. Therefore, although he considers that it may be the right time to start reducing the pace of purchase of debt assets, he does not consider that the current interest rate hike schedule should be altered, so the first interest rate hike could take place in 2023.
This message from the president of the Fed was very well received by the market, since the main fear was the possibility that a premature rise in interest rates could cause strong corrections in the stock markets due to the increase in the financing costs of companies. On Friday, Wall Street closed up on the SP500, Nasdaq and Dow Jones of 0.88%, 1.23% and 0.69% respectively, leading the SP500 and NQ100 to close at all-time highs.
In any case, we must be very attentive to the next meetings of the Federal Reserve to obtain more information regarding the progressive reduction of purchases and to know the exact moment of the start since some analysts comment that the tapering could begin around next November.
Among the macroeconomic data of this week, with respect to the United States, we will have to pay special attention to the important employment data that will be known next Friday and the confirmation of the manufacturing PMI data next Wednesday.
In Europe, today we have known the data of the preliminary CPI in Spain which has exceeded market expectations by settling at 3.3% due to the sharp increase in energy costs produced by oil and electricity prices. Tomorrow, Tuesday, we will know the CPI data in France and in the euro zone and the German employment data. In addition, on Wednesday we will know the definitive PMI data so we will have to be very attentive after the bad preliminary data of last week.
With regard to China, tomorrow we will know the PMI data for the month of August.
Source: MetaTrader 5 macroeconomic calendar.
Trader's Radar: Brent Bounces Strongly in Its Support Zone
During the last weeks, we have been observing that after marking annual highs on July 6 around $78.44 per barrel, the price of a barrel of Brent has experienced a notable decrease due to the growing fear caused by the Delta variant of the coronavirus and its rapid expansion, which can slow economic growth and therefore oil consumption. This decline caused that at the beginning of last week the price of a barrel of Brent faced its important level of support where it made a strong rebound of 11.54% during the past week.
As we discussed in previous analyses, OPEC and its allies reached an agreement at the beginning of last July by which production would be progressively increased at the rate of 400,000 barrels per day to reach 2 million barrels in the month of December, although as commented by the Minister of Oil of Kuwait, this could be reconsidered at the next meeting of the group on September 1 since as we have been observing, the irruption of the delta variant is causing a slowdown in the economy, so the increase in supply and the possible reduction in demand could put downward pressure on the price of a barrel of crude.
If we look at the daily chart, we can see that currently the barrel of Brent after the strong rise last week has recovered the level of $72 per barrel near the green resistance band. If the reversal of the agreement reached last July is finally confirmed, the price of crude oil could be reinforced.
Even so, we must be very attentive to a new possible correction if the price does not manage to overcome its current resistance level since the loss of the important support level indicated in the lower band of the bullish channel could open the doors to a greater correction.
Evolution in the last 5 years:
- 2020: -21.52%
- 2019: 22.68%
- 2018: -19.55%
- 2017: 17.69%
- 2016: 52.41%
Corporate news and stock indices
The month of September is practically here and September is the month of the Apple event in which the new devices are presented for the coming months. Specifically, this meeting will be held on September 13 and it is expected that, during this event, the company chaired by Tim Cook, will present the new iPhone 13 and the new Apple Watch Series 7, although new models and designs of the MacBook air or the well-known iPad could also be unveiled.
In recent weeks, we can observe that the share price is within a side channel between the green and red bands that led to break momentarily to mark all-time highs, although quickly the price returned within this structure.
This month of September can be key to the evolution of the price since this expected event can be a catalyst for the price.
The definitive upward break of this channel would open the doors to mark new historical highs and that the price objective would be the breadth of this channel. At the moment, the price has several levels of important supports, with the low band of the side channel being the main one. The loss of these levels could open the door to a further correction in search of $135 per share.
Evolution of the last 5 years:
- 2020: 80.75%
- 2019: 86.13%
- 2018: -6.78%
- 2017: 46.15%
- 2016: 9.99%
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