S&P 500, FTSE 100 Analysis and News
- Standard & Poor’s 500 | Recording the best month since November 2020
- FTSE 100 |25 or 50 basis points for the Bank of England
Standard & Poor’s 500 | Recording the best month since November 2020
The S&P 500 is on track for its biggest monthly rise since November 2020, up more than 8%. Reminder that inside Q3 stock guide We highlighted that in the 10 worst performing performances in the first half, the third quarter tended to post an average rebound of more than 7%. The best month was July.
Source: Refinitiv, DailyFX
The move came despite the fact that inflation had not peaked in the core CPI and weak activity survey data had indicated a worrying growth outlook. However, the market interpreted Fed Chairman Powell’s pressure as dovish, after the Fed chief removed forward guidance and indicated that the Fed would rely on data. Thus, with the data slipping, markets priced the large rate hikes in favor of a 50 basis point rise at the September meeting. However, the upcoming data in the coming weeks will determine the size of the next price increase and therefore the market’s sensitivity to economic data will increase. As such, traders will be keeping a close eye on upcoming PMI data as well as the latest NFP report.
Markets rule out aggressive rate hikes
On the technical front, a break above the 100DMA opens the door towards resistance at 4180-4200. Meanwhile, support is at 4015 and 3930.
S&P 500 chart: daily time frame
FTSE 100 | 25 or 50 basis points for the Bank of England
The Bank of England will release its latest monetary policy report, and the question heading into the decision is whether to raise 25 basis points or 50 basis points. While money markets are fully convinced that a move will be 50 basis points with a probability of 86%, the economists surveyed are 50/50 more on this. Thus, we can prepare for another optimistic disappointment from the BoE, which should boost the FTSE 100 index in such an event. Base case scenario, holding on to a 25bp rate hike.
However, with the FTSE 100 surpassing the 100 and 200 DMA indices, there is not much in the way until 7500. However, it is worth noting that we are approaching overbought territory, so the gains from now on may start to slow.
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