Equities report: US Employment data ahead

Since the start of the week the NASDAQ 100, S&P500 and the Dow Jones 30 have moved lower. We are to review the upcoming release of the US Employment data on Friday, the recent development’s in regards to Google’s court case, the recently announced license restrictions on TSMC and are to conclude the report with a technical analysis of S&P 500’s daily chart.

US Employment data out on Friday

The US Employment data for August are due to be released this Friday. The current expectations by economists are for the Non-Farm-Payrolls figure to come in at 74k marking a minimal and possibly an irrelevant improvement from last month’s figure of 73k and for the unemployment rate to increase from 4.2% to 4.3%. In turn the grander picture of the US Employment data, tends to imply a loosening labour market which may aggravate calls for the Fed to cut rates in their next meeting and potentially increasing the market’s expectations of a rate cut in the Fed’s next meeting as implied by the Fed Funds Futures. Such a scenario could provide support for the US Equities markets, whereas should the data tend to imply a stronger than expected labour market, it could have the opposite effect and could thus weigh on the US stock markets.

Alphabet’s stock finds some reprieve after Google is spared.

A court ruling last year had sparked concerns that Google could be forced to be split up, after a court found that the company had created an “illegal monopoly”. The US Department of Justice had argued that Google (#GOOG) should have to sell its Chrome browser and possibly its Android operating system, yet that will not be the case with the FT reporting that the Judge’s sentence took into account the threat to Google’s search engine posed by artificial intelligence chatbots. Nonetheless, the overall narrative is that Google has apparently been spared the worst possible scenario and thus shares in the company may have found some support following the announcement.

US imposes limits on TSMC

The US Government has revoked TSMC’s (#TSMC) authorisation to ship US chipmaking tools to China without requiring a license, according to the FT. The issue stems from TSMC’s facility in Nanjing China, which mass produces chips that are used in consumer electronics and other industrial applications and thus worries from the US Government may be that China could have access to those tools. Although not an outright ban, the requirement of a license to export US chipmaking tools to China showcases the concern emerging from the US in regards to China’s chip manufacturing capabilities and its rapid technological developments. Overall, should the Trump Administration impose further limitations on chipmakers, which may hinder their business practices, it could weigh on their stock prices. On the other hand, should no further restrictions be implemented, there may not be a longer-term bearish impact on the company’s stock price.

기술적 분석

US500 Daily Chart

• Support: 6135 (S1), 5850 (S2), 5580 (S3)
• Resistance: 6467 (R1), 6715 (R2), 7000 (R3)

The US500 appears to be moving in a sideways fashion after failing to remain above our 6467 (R1) resistance level. We cautiously opt for a sideways bias for the index and supporting our case is the RSI indicator below our chart which currently registers a figure near 50, implying a neutral market sentiment. However, for our sideways bias to be maintained our upwards moving trendline must be invalidated. Moreover, in our sideways bias scenario, we would require the index to remain confined between our 6135 (S1) support level and our 6476 (R1) resistance line. On the other hand, we would immediately opt for a bullish outlook in the event that our upwards moving trendline continues to be respected in addition to a clear break above our 6467 (R1) resistance line with the next possible target for the bulls being our 6715 (R2) hypothetical resistance level. Lastly, for a bearish outlook, we would require a break below our 6135 (S1) support line with the next possible target for the bears being our 5850 (S2) support level.

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