Tech rally exhaustion

Giles Coghlan LLB, Lth, MA Financial Source

We are now in the Fed’s blackout period ahead of next week’s rate decision, and the US ISM Services print this week sends a message that the US economy is slowing. Does this data confirm that the Fed will skip a rate hike for June’s meeting? Swiss inflation came in at market expectations, relieving the pressure on the SNB, and Apple finally announced the release of their VR headset, but to a mixed market response. The recent artificial intelligence hype has kept tech stocks buoyed, but watch out for any potential dip buyers for Apple, if prices further decline to major support levels.

Other key events from the past week

CHF: Inflation peak? June 5: Swiss inflation came in at 2.2% this week, which was right on the forecast level. The month-on-month reading was also as expected at 0.3%, so this could take some pressure off the SNB in terms of their rate hiking cycle. Will we see the USDCHF gain next week if the Fed hikes?

USD: US ISM service miss, June 5: US ISM services PMIs came in well below market expectations this week at 50.3, showing that the US services sector is now slowing. Will this impact the Fed’s next rate decision on June 14?

Apple Vision Pro release, June 6: Apple announced the release of its long-awaited Vision Pro headset this week, which is going to retail initially, for a hefty $3,499 price tag. Apple shares initially sold off on the announcement, but will investors step back in, pursuing further tech rally gains?

Key events for the coming week

USD: US Inflation data, June 13: US inflation data is out next week, and it will be crucial in shaping the Fed’s rate decision. So, if the inflation print on Tuesday comes in higher than expected, that will increase the chances of a Fed rate hike the following day.

Seasonal Insights: June is seasonally a weak month for the S&P500. For a free trial with Seasonax to find seasonal patterns in commodities, currencies, and stocks, contact your account manager and get started right away.

USD: Fed interest rate decision, June 14: At the time of writing, short-term interest rate markets price a 29% chance of a 25 bps rate hike from the Fed and a 71% chance of no change. Will the Fed surprise us with another 25 bps hike?

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Author

Giles Coghlan LLB, Lth, MA

Financial Source

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

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