Monetary Tightening Outlook Pressures Markets: Market’s Ahead Update

 The U.S output gap fell towards about minus 400, seemingly trending lower and pointing to a potential economic slowdown which may pressure the equities sector as the Nasdaq closed lower with about 1.9% and the Dow Jones Futures contract closed with minus 0.8% on Friday’s New York trading session. Additionally, the markets are pressured by the aggressive monetary tightening outlook as St. Louis Fed President Bullard said that he is leaning towards a third consecutive 75bps rate hike and several other policymakers signaled that a dovish perspective is unlikely for the moment. Technology and high-growth stocks were among the main losers of the session as $2 trillion dollars in options contracts were estimated to expire in the session, giving a bearish bias for the equites sector. 

Both indexes are up on this particular month while testing sellers around the Year’s developing VWAP. The hourly interval of the NASDAQ Futures contract might buy some buying around the current Quarter’s upper value extreme which is confluent with the Month’s developing VWAP while sellers may target the lower month’s DVAL level as next potential buying level. 

Forecasts for the Dow Jones index are pointing to the downside, according to the calculations and analyst estimates after the market found supportive core buyers around the lower standard deviation level of the decade’s price range. To be noted is that the Dow Jones Index may find supportive buyers around the month’s upper value area in the next week as the market took a hold around it on Friday’s closing hours.

In the upcoming week he US with Fed Chair Jerome Powell’s speech at the Jackson Hole will be monitored by investors as well as data such as personal income and spending, durable goods orders, new home sales and the second Q2 GDP estimate. PMIs for several nations will be released in the next week as well while monetary policy meetings in China, South Korea, and Indonesia will be followed. 

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