The beginning of this week is quite calm, although at the end of last week there was a very positive event on the Korean Peninsula where leaders of both North and South Korea decided to denuclearize their countries, vowing the formal end of the Korean War. While these are definitely promising declarations, Fitch remained skeptical in the report that the process of normalizing the relationship will probably be long and unpredictable, and the forthcoming meeting between Kim Jong Un and Donald Trump does not eliminate the risk of a military stalemate.
As far as macroeconomic readings are concerned, first of all, it is necessary to mention PMI publications from China. Industrial PMI in April showed a slight decline from 51.5 to 51.4 pts (expected 51.3), while PMI for services improved from 54.5 to 54.8 pts. Such readings look quite encouraging for stock market investors, who are still cautious due to the trade prospects between the US and China, as well as limiting lending in the second largest economy in the world. Moreover, the global investors should remember that the PMI reports that were released today were published by the government, while the private PMI from Caixin appears on Wednesday and Friday - both are expected to have lower values than those we saw today.
Let's now take a look at the SP500 technical picture on the H4 time frame. The market is still in a consolidation between the levels of 267.28 - 265.47, but the market conditions are now overbought. Any breakout below the level of 265.47 will likely result in a slide towards the level of 264.12 and even 263.00.
