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S&P 500, FTSE 100, DAX 40 Analysis and News
- S&P 500 | Softness to Persist into FOMC Meeting
- FTSE 100 |Commodities and Softer GBP underpins
- DAX 40 |ECB Signals Patience
S&P 500 | Softness to Persist into FOMC Meeting
Another soft week for the S&P 500 having dropped an additional 2.1%. As I have said previously , equities are likely to come under pressure heading into the Federal Reserve's May policy meeting as markets gear up for an extremely hawkish. What's more, the technical picture for the S&P 500 also looks bleak with the index closing near weekly lows, below 4400. As such, risks are for an extended pullback towards the low 4300s.
S&P 500 Chart: Daily Time Frame
Elsewhere, with earnings season now under way market participants will also be awaiting the financial results of large caps, including Tesla, IBM, Netflix and Bank of America. Now while a strong slew of earnings may provide stability for risk appetite, my view is that the Fed remains the key driver for risk assets.
Figure 1. Earnings Calendar
Source: Refinitiv, BBG, DailyFX
FTSE 100 | Commodities and Softer GBP underpins
The FTSE 100 continues to outperform relative to its counterparts as firmer commodity prices and a softer Pound underpins the index. That being said, while upside momentum has slowed in recent sessions, bearish risks are limited with the FTSE above 7400. The past week saw the release of tier one UK data, which will keep the BoE on track for additional tightening, with another 25bps rate hike at their May meeting.
FTSE100 Chart: Daily Time
Source: Refinitiv
DAX 40 |ECB Signals Patience
The ECB emphasised patience with regard to tightening monetary policy after maintaining their current bond schedule (EUR 40bln in April, EUR 30bln in May and EUR 20bln in June) and thus sticking to the view that net purchases will end in Q3. Now while this slightly disappointed hawkish bets, ECB sources did later open the doors to a July hike. However, with economic activity set to get weaker in the Euro Area amid the fallout of the Russia-Ukraine war, a July hike looks optimistic.
A slight encouragement for bulls is that the DAX 40 has held above 14000. Although, as I mentioned above, risks remain tilted to the downside for risky assets and with the DAX below the 50DMA (14400) the index is technically weak. That said, I would tech a close above 14800 to signal a short term bottom.
Source: Refinitiv
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