The latest readings from the flash PMIs across Europe, Asia, and the US reveal a diverging trend in economic performance. Manufacturing sectors are showing faster-than-expected contraction, while services continue to expand at a robust pace. Notably, the US services flash PMI surged to a remarkable 58.5, marking a 38-month high. This uptick is accompanied by increased optimism among firms regarding output expectations for the coming year, buoyed by a sense of growth potential as the new Trump administration settles in. As the final Federal Open Market Committee (FOMC) meeting of the year approaches, it serves as a reminder of the enduring strength of the US economy, suggestive of potential inflationary pressures and a shift towards a less dovish stance from the Federal Reserve.
However, the performance of the three major US indices suggests mixed signals. The Nasdaq 100 recently achieved a new record high, with the front-month futures contract reaching an unprecedented 22,000 points. This demonstrates a clear acceleration in prices, moving significantly away from the 10 and 20-day exponential moving averages (EMAs), reflecting a strong confidence in the tech-driven rally.
In contrast, while the S&P 500 posted gains, it remains entrenched in a sideways consolidation pattern just below its record highs. The bullish trend persists, yet it appears hesitant to fully regain traction ahead of this week’s FOMC meeting. Still, it is maintaining support above the 20-day EMA and closed above the 10-day EMA.
On the other hand, Dow Jones futures have dipped for eight consecutive sessions, marking its longest daily losing streak since August 2011. Currently, it sits at a three-week low, and there are no clear signs of a reversal on the horizon. This trend is particularly concerning for ASX bulls, as the ASX 200 is currently correlating more closely with the Dow than with the S&P 500.
ASX 200 Futures (SPI 200) Technical Analysis
The daily chart indicates a strong correlation between the Dow Jones and the ASX 200 at this time. It appears that the ASX may be targeting a retest of its 100-day EMA, currently positioned at 8192. Given the prevailing bearish trend evident in the hourly chart, traders may look to fade any upward movements towards the 10 or 20-hour EMAs, anticipating a potential decline toward the 8200 level.
Economic Events in Focus (AEDT)
- 10:30 – AU consumer sentiment (Westpac)
- 11:00 – NZ economic forecast, budget balance, debt forecast (NZ Treasury)
- 11:30 – SG non-oil exports
- 18:00 – UK earnings, claimant count, employment change, unemployment rate
- 20:00 – DE Ifo business sentiment
- 21:00 – EU and DE ZEW economic sentiment
- 00:30 – US retail sales
- 00:30 – CA CPI
- 01:15 – US industrial production, manufacturing production, capacity utilization
