The US unemployment claims showed that 9000 people less than the forecast of 239,000, filed for welfare in the latest release on Thursday. The previous was 240,000, with the consensus gathered from analysts showed they were expecting a stronger US economy.
The higher than expected number caused a strong reaction on the dollar on the day and this led to a sell off in the Majors, with the Looney (AUD) and Cable (GBP) leading the losses.
The equity markets were not left out of the melee. The Nasdaq futures ($NQ1!) closed -2.19% on the day, the S&P500 ($ES1!) and the DOW Jones ($YM1!) both closed lower -1.37% and -1.11% respectively.
The so called “good news is bad news” phase of the market seems to be back again as the dollar and the $VIX both recorded strong gains,+0.61% and +4.15% respectively.
Oil ($WTI, $BRENT) recorded its first green day this week today closing 0.2% in the green, having bottomed on Wednesday. The calendar spreads, German spread and crack spread were all in the green as at Wednesday’s close, adding confluence to the demand in oil.
The US 10 year treasury yield closed higher by +1.02%, spurring further strength in $DXY on the day.
Microsoft ($MSFT), Alphabet ($GOOG) and Nvidia ($NVDA) all shed some gains. $NVDA has had an extended run and its lasts earning’s report was a massive blow out with a surprise of over 20% on both earnings and revenue.
The AI giant may have rallied too quickly for it to keep going up quickly in the near-term, a red month is due. The dotted lines show the possible pull back levels that could continue the rally, possible toward the $580 mark.
The tech sector’s index $NDAQ has struggled to stay above last week’s high, Friday’s close will be key especially if price remains above the weekly open. This scenario would leave the possibility of the price dropping to test the lows set in the 39 weeks of Q1-Q3 of this year.
“We may need additional increments, and we may be very near a place where we can hold for a substantial amount of time,” Boston Fed President Susan Collins said Thursday during an interview with Yahoo! Finance ahead of the Kansas City Fed’s annual economic policy symposium in Jackson Hole, Wyoming.
Investors will be watching for any clues they can garner as C=central bankers from around the world gather in Jackson Hole for the Federal Reserve Bank of Kansas City’s annual two-day gathering.
The interest rates outlook, which the Fed in July lifted to a range of 5.25% to 5.5%, the highest level in 22 years, will be foremost on the mind of investors.
Economic projections released in June show the median official expected to raise rates at least once more this year. But investors largely expect the Fed to keep rates steady through year end, according to pricing in futures contracts.
An uptick on the utilities and staples sectors against tech and discretionaries is also a confluence to watch for the bearish side of the narrative.