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Weekly Outlook | Potential Market Shift In The Making
Updated Updated Tue, 2025 February 25 05:32
Important events this week:
Despite the rather weak Dollar equity markets from the US have lost some steam. The S&P 500 index as well as the Nasdaq both ended lower, potentially causing further profit taking this week. Technology and AI related stocks from the US are showing negatives signs based on long-term charts. Investors might rethink their current positioning and shift money towards China, where the market has been growing recently. The undervaluation for a long period of time might now attract investors, who favor fresh growth momentum. The China A50 index as well as the Hang Seng index from Hong Kong might hence offer new opportunities.
Market participants should focus on geopolitical tensions and in particular on the situation around the war in the Ukraine. The election in Germany from Sunday might also cause some volatility for the EUR as well as the DAX in the coming days.
– AU consumer price index– Australia’s consumer price index is expected to rise again. Recent data from January also showed a growth in inflation, which might continue to help the Aussi to rise against other currencies if the news will remain the same this month. The forecast shows that the annual number will rise from 2.5% to 2.6%. A sharper increase might support the AUD even further.
A look at the AUDUSD currency pair reveals, that the market remains in a positive trend. As previously examined, the upside seems still intact and might hence continue.
The weekly chart above shows, that a break of the technical resistance zone at 0.6400 might ignite fresh upside potential. The index from Australia will be released on the 26rd of February, 2025, at 01:30 CET.
– DE preliminary consumer price index– after the decline in consumer prices last month, the momentum seems to turn positive again. This might be reason again to help the EUR to rise, similarly to the AUD as examined above. Yet, we now like to focus on the German equity index, the DAX. The market has been rising sharply in recent months, despite the negative sentiment in the German economy.
This, however, might also be a reason for positivity. Stocks remain undervalued with a low price to earnings ratio and hence found attraction by investors. Should now the sentiment change, the upside momentum might continue.
Though, currently the market might be ripe for a correction and lower entry prices might offer cheaper opportunities. The preliminary index from the EU will be released on the 28rd of February, 2025.
– US core PCE index– thePCE data is considered important as guidance for the Federal Reserve central bank. It measures only prices for goods and services used by consumers. As the number is expected to rise again, this could be reason for the FED to remain on their rather hawkish stand.
Since the S&P 500 index already lost some steam last week a further slide in prices might be expected should data come out strong. A slide towards the 50- moving average trendline might hence be on the cards. The price index from the US will be released on the 28th of February, 2025, at 14:30 CET.
