Global macro overview for 13/07/2018

Thursday’s session overseas ended with a significant increase in major indices — the SP500 rose by + 0.9% to reach its highest level since March, while Nasdaq saw an increase of + 1.3%, setting a new record as well. Good sentiment has spilled over to Asia — most of the indexes in the Asian part of the world gained about + 0.5%, with the exception of Japanese Nikkei, which increased its value by over + 1.9%.

Today in the US, the second-quarter results seasons will start. As the first, traditionally their results will be published by American banks, namely Citigroup, JP Morgan Chase and Wells Fargo. Current forecasts for the annual growth of profits of companies belonging to the SP500 index oscillate around 20%. However, based on the experience from the previous result season, it can be expected that investors will particularly focus on the projections of future performance presented by companies. However, it can not be ruled out that these projections will no longer be as impressive as the current dynamics of profits and revenues presented. Undoubtedly, risk factors that in the following months could well thwart the ambitious plans of American enterprises are not lacking. Among them, it is natural to mention the effects of a trade war, which sooner or later may hit US companies, including the technology sector. It is also worth noting that the fiscal stimulus, which, incidentally, prolonged the expansionary phase of the business cycle in the US, according to some calculations, may positively affect the presented dynamics of corporate profits for the third and fourth quarters — after this period, additional fuel disperasing the American economy will most likely be depleted.

Let’s now take a look at the SP500 technical picture at the H4 time frame. The market is about to break out higher towards the level of 28062 resistance. If this level is broken, then the bulls might extend the rally towards the level of 286.58, which is an all-time high. The strong and positive momentum supports the bullish outlook and market conditions are currently neutral, so there is a room for more upside in the nearest future. The immediate support is seen at the level of 277.51.

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