Equities report: US Employment data due out tomorrow

There has been an upwards movement on behalf of US stock markets since the start of the week, with the S&P500 reaching new all time highs. In today’s report, we are to have a look at the upcoming US employment data Google’s recent fine and the recent falling out between Elon and Trump. The report is to be concluded with a technical analysis of S&P 500’s daily chart.

US Employment data due out tomorrow

The US Employment data for June is set to be released on Thursday. The Non-Farm Payrolls figure is expected to come in at 120k which would be lower than last months figure of 139k. Moreover, the unemployment rate is expected to increase from 4.2% to 4.3% which may be of some concern for market participants, considering that the unemployment rate has remained steady since March. Overall, the US Employment data is expected by economists to showcase a loosening labour market, which may increase pressure on the bank to resume on their rate-cutting path in the near future. As a result, the possibility of the Fed cutting rates earlier than expected, could alleviate some of the tight financial conditions which surround the US economy and may thus aid the US Equities markets. However, should the US Employment data showcase a resilient labour market, it may have the opposite effect and could thus weigh on the US Equities markets. On a monetary policy level, Fed Chair Powell’s comments yesterday where he stated that “In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs”, which may be perceived as a willingness by the Fed to cut rates once the tariff picture clears. Thus, the comments by the Fed Chair may have aided the US Equities markets. In our view, the potential uptick in the unemployment rate is a greater concern rather than the expected NFP figure and thus may raise concerns over the current state of the US labour market. Lastly, as a reminder, the US markets will be closed on Friday as it is a public holiday.

Google gets slapped with a $314mn fine

According to a report by Reuters, Google has been hit with a $314 million fine following a Judge’s verdict in a cellular data class action. Per the report, “ a jury in San Jose, California, said on Tuesday that Google misused customers’ cell phone data and must pay more than $314.6 million to Android smartphone users in the state”. It should be noted that the company plans to appeal the verdict, which could bring the lawsuit back into the court system once again. Nonetheless, the verdict could temporarily weigh on Google’s share price. Yet the fine may not result in a sufficient debt in the company’s annual revenue, and thus the negative sentiment which could emerge from the fine may be glossed over fairly quickly.

Trump-Elon row escalates

President Trump and Elon Musk’s falling out has intensified over the past few day’s. Specifically, the President stated that “DOGE is the monster that might have to go back and eat Elon,” and that Elon “may get more subsidy than any human being in history, by far”. Moreover, the President even stated that Musk was lashing out because he was upset “that the EV mandate is going to be terminated”. Overall, it appears that the relationship between the two has soured and with the President’s comments, it may appear that Tesla’s subsidies may be reduced and that the current administration may no longer support Tesla, as was the case when a Tesla was shown off in the White House lawn. In turn the falling out between the President and Elon Musk could negatively impact Tesla’s (#TSLA) stock price and thus we would not be surprised to see the company’s stock price potentially moving lower should the administration actively move against Electric vehicles in general.

تجزیه و تحلیل فنی

US500 Daily Chart

• Support: 6135 (S1), 5775 (S2), 5485 (S3)
• Resistance: 6425 (R1), 6715 (R2), 7000 (R3)

S&P 500 appears to be moving in an upwards fashion with the index having hit new all-time highs. We opt for a predominantly bullish outlook for the index and supporting our case is the RSI indicator below our chart which currently registers a figure near 70 implying a strong bullish market sentiment, in addition to the MACD indicator below our chart. For our bullish outlook to continue we would require the index to remain above the S1 support level and possibly clearing our 6425 (R1) hypothetical resistance level with the next possible target for the bulls being the possible 6715 (R2) resistance line. On the other hand for a bearish outlook we would require a clear break below our 6135 (S1) support level with the next possible target for the bears being the 5775 (S2) support line. Lastly, for a sideways bias we would require the index to remain confined between our 6135 (S1) support level and our hypothetical 6425 (R1) resistance line.

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