US Market Technicals Ahead (28 June – 2 July 2021)

The second quarter is ending. Global stocks are on track to post their second strongest H1 gains since the turn of the century, but the second half looks harder to predict.

All eyes turn to the US employment report on Friday, with investors hopeful for signs of improvement in the labor market after two months of slower than expected jobs growth. Meanwhile, the ISM Manufacturing PMI survey should point to a strong pace of expansion in factory activity, not far from March's 37-year high and despite the ongoing supply constraints. President Joe Biden’s $1.2 trillion infrastructure deal will continue to boost U.S. markets, but other concerns remain.

Elsewhere, OPEC+ meets on Thursday with expectation to offer guidance into the coalition's production plan. Energy traders are anticipating another production increase as the demand outlook continues to recover.

Here’s what you need to know to start your week.

S&P500 (US Market)

The benchmark index $SPX rallies to all time high, posting a weekly gain of +3.17% (+131.8 points), closing at 4,285 level. It is important to remain cautious of last week's rally as volume displayed was lacking, and seasonality is still in play. End of quarter 'window dressing' by portfolio managers could be a reason for the 'mark-up'.

$SPX have now rebounded off the breach of its 20D and 50DMA (key levels highlighted last week), remaining within the trend channel established since early November 2020. The immediate support to watch for $SPX this week is at 4,135 level; a pivot low confluence with trendline support break.

Jobs report

The June nonfarm payrolls report is expected to show that the economy added 675,000 new jobs, pushing the unemployment rate down to 5.7% from 5.8%.

With concerns over rising inflation and the strength of the recovery to the fore of investors’ minds, markets will also be looking at other labor market statistics, including wage growth and labor force participation.

Last week Federal Reserve Chairman Jerome Powell reiterated the central bank’s commitment to encouraging a "broad and inclusive" recovery in the labor market, adding that there is still a long way to go, and that support is still needed.

Economic data

Ahead of Friday’s jobs report, markets will get updates on pending home sales, ADP private sector payrolls, jobless claims and ISM manufacturing activity.

The ISM data is likely to underline strains on the supply chain that are pushing up costs, boosting the chances that inflation will remain at higher levels for longer.

OPEC+ meeting

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+ will hold a series of meeting in the coming week to review the situation in the global oil market ahead of an official meeting on Thursday.

Thursday’s meeting is expected to result in another boost in output as the demand outlook continues to recover.

Oil prices climbed to their highest since October 2018 on Friday, putting both benchmarks up for a fifth week in a row.