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Highlights
- Wall Street's pre-Thanksgiving dip impacts ASX 200 sentiment.
- Strong inflation data adds pressure on global markets.
- ASX 200 struggles near record highs amid bearish indicators.
Global markets saw unexpected turbulence as Wall Street indices experienced a rare drop ahead of Thanksgiving, breaking a historically positive trend. Weak corporate earnings and rising inflation metrics drove this deviation, casting a shadow on the Australian Securities Exchange (ASX). Typically, Thanksgiving 'eve' sees positive returns on the S&P 500, which also tends to perform well during the days surrounding the holiday. However, this year, the Nasdaq 100 and S&P 500 futures marked significant declines, leading to concerns about broader market trends.
The Nasdaq 100 futures experienced their steepest drop in weeks, while the S&P 500 futures displayed a bearish reversal pattern, commonly referred to as a "dark cloud cover." Similarly, the Dow Jones futures witnessed a minor bearish engulfing pattern, adding further caution to market sentiment. These movements underscore hesitation among market participants as indices approach all-time highs.
Inflation remains a central concern, with the US super core personal consumption expenditures (PCE) rising at its fastest monthly pace in several months. October's increase of 0.4% highlighted a consecutive monthly rise, surpassing its long-term average. Personal consumption also surged by 0.6%, marking the most significant jump in several months. These indicators suggest inflationary pressures may persist, fueled by rising consumer sentiment data from the US Conference Board and the University of Michigan.
In Australia, the ASX 200 (ASX:XJO) faces similar headwinds. The index struggled to breach the 8500 mark, a critical resistance level, and technical indicators suggest further challenges ahead. A bearish divergence on the daily Relative Strength Index (RSI) points to waning momentum. Additionally, a minor overnight rally on ASX 200 futures appears corrective, with prices moving within a bullish channel. However, analysts caution that the rally may be short-lived, as the broader trend remains vulnerable to downside risks.
The hourly chart of the ASX 200 futures reveals similar bearish divergences. The potential for a final upward move within the current channel exists, but sentiment could turn sharply negative if key support levels, such as the weekly pivot point at 8389, are breached. Further downside targets include the weekly volume point of control at 8348 and support near the 8300 level.
With global markets navigating inflationary pressures and mixed sentiment, the ASX 200 remains at a critical juncture. Traders will closely monitor technical signals and economic data to gauge the index's near-term trajectory.
