S&P 500, DAX 40 Analysis and News
- S&P 500[1] | S&P 500 | Bear Market Bounce to Close the Week
- DAX 40[2] |Russia Gas Flows, ECB Anti-Fragmentation Tool and Italian Politics Take Focus
S&P 500 | Bear Market Bounce to Close the Week
Despite the volatile FX action with the USD[3] breaking out to fresh record highs and US inflation rising to a whopping 9.1%, prompting markets to shift towards a 100bps hike. Equity markets are closing out the week on a firmer note, halving their weekly losses. This is quite noteworthy that equities are taking this in their stride. However, as I have stated previously, the bias remains to fade bear market rallies. What’s more, based on the cumulative monthly performance of the S&P 500 this year, equities may continue to struggle next week. There is also plenty of catalysts that present a big risk for markets, most notably the ECB decision and whether Russia resumes gas flows through Nord Stream 1.
Source: Refinitiv, DailyFX
Elsewhere, US earnings will garner attention with Netflix and Tesla among the high-profile names to report, as shown in the table below.
US Earnings Calendar
Source: Refinitiv, Bloomberg, DailyFX
From a technical perspective, resistance is situated at 3900, with 3945-50 above. While the S&P 500 has eked minor gains so far for the month, the index is still some distance from being out of the woods. This will likely remain the case until we see a day of capitulation such as the VIX soaring to 40-45, or the Fed begins to pivot away from its extremely aggressive hawkish stance. On the downside, support resides at 3740.
S&P 500 Chart: 4-Hour Time Frame
Source: IG Charts
