What Happened
Research firm TS Lombard has warned that U.S. inflation is likely to remain stubbornly close to 3% through the near term, significantly dimming hopes for Federal Reserve interest rate cuts in 2025. Markets had been pricing in up to two cuts this year, but sticky inflation data is forcing a rapid repricing. The S&P 500 slipped 0.6% to approximately 5,570, while the Nasdaq fell 0.8% to around 17,350 on the back of the cautious outlook. Locally, the ASX 200 dropped 0.5% to 7,810, dragged lower by rate-sensitive financials including CBA, ANZ, and NAB.
Key Levels
S&P 500: Support at 5,500 and 5,400. Resistance at 5,650 and 5,720.
Nasdaq: Support at 17,000 and 16,600. Resistance at 17,700 and 18,000.
ASX 200: Support at 7,750 and 7,680. Resistance at 7,880 and 7,950.
Technical Picture
The S&P 500 is trading below its 20-day moving average (around 5,610), a short-term bearish signal. The Nasdaq is also under pressure, sitting beneath its 50-day moving average of approximately 17,500. The ASX 200 remains in a broader uptrend on the weekly chart, but the daily trend has turned neutral-to-bearish. RSI on the S&P 500 has pulled back to around 45 — not yet oversold, meaning further downside is possible before buyers step in.
What Traders Are Watching
All eyes are on the upcoming U.S. CPI print. A reading at or above 3.0% would likely confirm the TS Lombard view, potentially pushing the S&P 500 below the key 5,500 support level. On the ASX, CBA near $155 and NAB near $38 are levels where buyers have previously emerged. A break below ASX 200 support at 7,750 could open a run toward 7,680.
Bias
Bearish (short-term). With inflation refusing to fall and rate cuts being pushed further out, equities face a headwind from higher-for-longer borrowing costs. Until the CPI trend clearly breaks lower, selling rallies is the higher-probability trade.