S&P 500, FTSE 100, DAX 40 Analysis and News
S&P 500 | All Eyes on Powell
The S&P 500 is on course to close its worst monthly performance since the Q1 2020 Covid Crash, down 6%. As we highlighted in our quarterly guide Fed policy remains the key driver for risk sentiment. In turn, equity markets have repriced lower with aggressive Fed rate hiking and QT just around the corner. Next week, the Federal Reserve are expected to raise the Fed Funds Rate by 50bps and announce quantitative tightening. Subsequently, the key focus will be on Fed Chair Powell’s press conference. That said, in light of recent Fed Officials stating that a 75bps rate hike could be plausible, any hawkish dissent will be important, while Powell’s view on a hike larger than 50 will also be critical to the short term direction.
Elsewhere, the Chinese Yuan has garnered attention following its rapid decline in recent sessions. Therefore, equity stability will also need USD/Yuan to peak or at least show signs of stability to keep the S&P 500 above the Feb 24th panic low at 4100. Much of the factors that have plagued risk sentiment do still remain, however, given the drop from 4600 to 4150, I am less bearish than I had been a few weeks back.
Support at 4160 and 4100, a close below the latter risks a drop to 3800. On the topside, resistance is situated at 4370-85.
S&P 500 Chart: Daily Time Frame
FTSE 100 | BoE Vote Split and Asset Sales Details In Focus
Despite the sell-off across the equity space, the FTSE 100 has largely been shielded from the weakness in the Pound. Keep in mind, 2/3 of the revenue generated among FTSE 100 companies are from overseas, thus repatriated profits are worth more when the Pound falls. As we look ahead to next week, the BoE will grab the attention for UK exposed traders. In terms of expectations, the Bank will likely raise rates by 25bps, however, the bigger focus will be on the vote split, which last time round was 8-1 in favour of 25bps (one dissenter voted for unchanged). Additionally, with the Bank rate set to hit 1% the BoE will also hit the threshold at which point they have the option of asset sales. Therefore, further details on asset sales will likely be provided and should a date be given for summer, this could spark a hawkish reaction with the FTSE under pressure. Support resides at 7330-50, while resistance sits at the YTD highs of 7670.
FTSE100 Chart: Daily Time
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