The ASX200 has to digest two overnight sessions this morning: Friday’s choppy affair after the US’s strong employment data, followed by last night’s recovery with the S&P500 closing up +0.2%, plus last night’s weak session in Europe following Macron’s Surprise call for a “snap election.” On Friday, the local market rallied strongly to close on its daily and weekly highs. We think it’s likely to regain its mojo this morning after a shaky start courtesy of two “wobbly” overseas sessions.
- The SPI Futures are pointing to a drop of ~80 points this morning, and BHP’s 30c fall in the US will not help proceedings.
MM is neutral towards the ASX200 around 7800
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US equities have largely shrugged off Friday’s strong employment data as they continue to adopt a “glass half full” approach to economic news, a sign of a strong market. We’ve recently adopted a neutral view towards US stocks as they approach our initial target area as the news deteriorates, but the trend remains up, and we are certainly not bearish as indices continue to attract buying into any news-driven dips.
We get more insight this week with US inflation due out Wednesday & the highly anticipated Federal Reserve’s decision on interest rates across our screens early on Thursday morning.
- Over the coming weeks/months, our ideal target for the S&P500 is ~5,500, which is now only a meagre 2.7% away.
MM is neutral towards US stocks in the short term
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Over recent weeks, the EURO STOXX 50 has continued to consolidate its impressive gains of 2024. It feels poised to take another leg higher over the coming months after shrugging off last night’s shock announcement by President Macron. We still see no reason to fight this bullish trend at this stage, with new highs looking increasingly likely over the coming weeks/months.
- We are targeting the 5300 area for the EURO STOXX, or 6% higher.
MM remains cautiously bullish toward European equities
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