Trading Insights: Happy days, US GDP growth beats the street

Market Talk:

Latest US gross domestic product (GDP) indicates a healthy economy

• GDP growth is viewed by investors as a key indicator to measure the overall health and performance of an economy
• Higher GDP increases the standard of living eg. happy people
• Higher GDP creates employment opportunities
• Higher GDP means more money for governments since they collect more taxes
• Higher GDP growth boosts investor confidence

US GDP growth saw an increase in consumer spending and business investment

United States Real gross domestic product (GDP) increased at an annual rate of 2.4 percent in the second quarter of 2023, according to the "advance" estimate. Which is above the 1.8% market forecast.

In the first quarter, real GDP increased 2.0 percent.

The increase in the second quarter primarily reflected increases in consumer spending and business investment that were partly offset by a decrease in exports. Imports, which are a subtraction in the calculation of GDP, decreased.

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The Bulls are in a strong position

S&P 500 index faces challenge at the 52 week highs

Technical commentary:

US S&P 500 Index current price $4,561 seems to be holding onto the bullish cycle, higher tops and higher bottoms on price can support the prevailing bullish conditions (see chart). Current price is above its 20 day and 50 day moving averages (bullish), despite the above bullish observations the failure for price to break above the 52 week highs near $4,607 could add some downside pressure in the very short term. Below the $4,500 key support could expose the lower support near $4,370s, otherwise a clean break above the 52 week high opens the door for the resumption of the prevailing longer term uptrend with the $4,750s as a possible extension.

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Today’s economic calendar

German and US inflation data due

• 12 pm UTC German inflation month on month expected to increase slightly, year on year expected to decrease slightly
• US personal consumption and expenditures, (“PCE” / “Core”) inflation is expected to fall slightly

Expect increased volatility on EUR and USD assets

Last Five days % moves: EUR/USD -1%, Germany 40 +1.3%, USD/JPY -1.4%, gold -0.4%, US100 +0.3%.

Source: TradingView / J. Knobel July 28 2023 7:05 AM UTC

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