Dow resumes ascent as GBP/USD rises further, US natural gas prices drop

Macro update

Semiconductor stocks drive Asian markets higher: Equities in Japan and South Korea advanced on Friday as gains in AI and chip-related companies outweighed concerns over escalating US-Iran tensions, with the KOSPI rising more than 5% and the Nikkei adding 1.8% ahead of SK Hynix's US market debut.

Micron's investment plans lift the technology sector: The Nasdaq gained 1.3% overnight after Micron announced plans to invest more than $250 billion in the US by 2035, helping propel the Philadelphia Semiconductor Index 3% higher.

SK Hynix prepares for landmark US listing: The South Korean memory chipmaker priced its American Depositary Receipts at $149, raising approximately $26.5 billion in what is expected to become the world's second-largest initial public offering after SpaceX's record-breaking flotation last month.

Yen firms on hopes of increased domestic investment: The Japanese currency strengthened to ¥161.69 per dollar after Finance Minister Satsuki Katayama said the government would encourage pension funds, including the GPIF, to increase allocations to domestic assets, supporting Japanese government bonds.

Oil prices remain supported by Middle East tensions: Brent crude traded around $76.73 a barrel and remained on track for a weekly gain of around 5% to 6%, as renewed hostilities near the Strait of Hormuz kept a geopolitical risk premium embedded in prices.

Gold edges lower as rate-hike expectations strengthen: Spot gold slipped to $4,115.79 an ounce and was on course for a weekly decline of around 1.5%, as escalating tensions in the Gulf reinforced expectations that the Federal Reserve will raise interest rates later this year.

Dow Jones recovers from minor sell-off

The Dow Jones Industrial Average retraced lower from yet another record high - this time at 53,294 - but found support at this week's 52,075 low. Provided it continues to hold, the 25 June high at 52,661 is expected to be revisited. Further up lies Tuesday's all-time high at 53,294, above which beckons the 55,000 region.

Were support at 52,075-to-52,032 to give way, the March-to-July uptrend line at 51,722 may be revisited. Below it support may be found between the early June highs and 26 June low at 51,665-to-51,620.

Short-term outlook: bullish while above the 52,075-to-52,032 region

Medium-term outlook: bullish while above the 10 June 49,914 low 

Dow Jones daily candlestick chart

GBP/USD's recovery continues

GBP/USD's rally off its late June $1.3140 seven-month low is ongoing with the mid-June high at $1.3461 about to be hit. If overcome, the late May-to-June highs at $1.3483-to-$1.3485 will be in focus, followed by the 25 May high at $1.3509.

Potential support comes in along the 200-day simple moving average (SMA) at $1.3396, ahead of the 2 July high at $1.3385.

Short-term outlook: bullish while above the 8 July low at $1.3322

Medium-term outlook: neutral with a bullish stance while trading within its $1.3140-to-$1.3658 March-to-June boundaries

GBP/USD daily candlestick chart

US natural gas futures prices fall out of bed

US natural gas futures dropped significantly on Thursday but are trying to find support around their 15 June low at 286.2. If slipped through on a daily chart closing basis, the 12 May high at 281.7 and the 4 May peak at 276.1 may be reached next, followed by the 25 May low at 267.4.

Minor resistance now stands between the 295.1-to-297.2 17-to-24 June lows. Further potential resistance sits between the 30 June-to-6 July lows at 300.0-to-301.6.

Short-term outlook: bearish while below the 9 July high at 309.9

Medium-term outlook: bullish while remaining above the 15 June low at 286.2 on a daily chart closing basis; if not, the outlook would need to be neutralised with a slip towards the late May low at 267.4 becoming a possibility

US natural gas daily candlestick chart