Wall Street Bullish as Market Confidence on Earnings Performance

• Wall Street gained as the U.S. equity market entered the 3rd quarter earnings report season.

• Oil prices plunged as the Israeli Prime Minister assured not to attack Irans oil facilities.

• The U.S. dollar remains strong, with the DXY poised above the $103 mark.

Market Summary

Wall Street extended its gains, with the Dow Jones and S&P 500 both continuing to reach all-time highs as the U.S. equity market enters the Q3 earnings season. Investors remain optimistic about corporate performance, fueling the ongoing rally. 

In the commodity market, oil prices plummeted during the last session, falling nearly 5% after reports surfaced that the Israeli Prime Minister is unlikely to target Iranian crude oil facilities. This relieved some market concerns over potential supply disruptions from the Middle East, leading to the sharp decline. 

In the forex market, the U.S. dollar maintained its bullish momentum, trading above the $103 mark, as traders anticipate a smaller Fed rate cut in the near term. The USD/JPY pairing is drawing attention, as it approaches the critical 150 level, a threshold that could prompt action from the Bank of Japan (BoJ) to stabilise the yen. Traders should monitor this level closely, as it could be pivotal for yen intervention or other policy shifts.

Current rate hike bets on 7th November Fed interest rate decision:

Source: CME Fedwatch Tool

-50 bps (7%) VS -25 bps (93%)

Market Movements

DOLLAR_INDX, H4

Due to a lack of market catalysts from the U.S. region, investors are revisiting previous economic news. The Dollar Index, which trades against a basket of six major currencies, has extended its gains while testing strong resistance levels. Investors continue to digest better-than-expected economic data, including the U.S. CPI and previous jobs report, leading to a waning of expectations for aggressive rate cuts. Moving forward, careful monitoring of Federal Reserve monetary policy and further economic data will be crucial to assessing potential movements in the dollar.

The Dollar Index is trading higher while currently testing the resistance level. However, MACD has illustrated increasing bearish momentum, while RSI is at 70, suggesting the index might enter overbought territory.

Resistance level: 103.30, 104.05

Support level: 102.60, 101.70

XAU/USD, H4

Gold prices retreated slightly, primarily due to the appreciation of the U.S. dollar and stronger-than-expected overall U.S. economic performance. This dip can also be attributed to profit-taking and technical corrections after recent record highs. Despite mixed market catalysts, better-than-expected U.S. economic data may weigh on gold demand. However, rising tensions in the Middle East are shifting sentiment toward safe-haven gold. Investors should continue to monitor market developments, U.S. data, and geopolitical tensions in the region to gauge future movements in gold prices.

Gold prices are trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 48, suggesting the commodity might experience technical correction since the RSI rebounded from oversold territory.

Resistance level: 2670.00, 2690.00

Support level: 2645.00, 2630.00

Dow Jones, H4

U.S. stock index futures steadied in evening trades on Monday after a rally in technology shares pushed Wall Street to record highs. Key technology stocks, such as NVIDIA Corporation (NASDAQ: NVDA), surged by 2.4% to reach a record high. Aftermarket trading showed stability for NVIDIA, along with other tech giants like Apple Inc (NASDAQ: AAPL), Alphabet Inc (NASDAQ: GOOGL), and Microsoft Corporation (NASDAQ: MSFT), which also experienced gains during the session. Market attention will now shift to a series of upcoming earnings reports and economic readings that could influence market trends.

The Dow is trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum. However, RSI is at 70, suggesting the index might enter overbought territory.

Resistance level: 43440.00, 44900.00

Support level: 42420.00, 41400.00