Talking Points:
- FOMC raised rates as expected, S&P 500 at major test of support
- German employment data on Thursday; DAX extremely vulnerable
- BoE held on rates, FTSE at risk of trading sub-6700 soon
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S&P 500
The Fed raised rates by 25-bps on Wednesday, in-line with expectations. This didn’t mean there weren’t any fireworks for the market, though. The S&P 500 initially shot higher, but then sold off aggressively following. Looking ahead to next week, we have Consumer Confidence on Tuesday, Advance Goods and GDP on Wednesday, finished off by Core PCE on Thursday. The market will be closed to end the week in observance of Good Friday. For details of all over scheduled releases, check out the economic calendar.
The S&P start off the week on a sour note and tried to bounce on Wednesday, but that failure led to a big sell-off on Thursday and Friday. The market closed the week right at major confluence of support by way of the Feb 2016 trend-line and 200-day MA. A bounce may develop from this area of support, but don’t look for it to last long. On a break of support the Feb spike-low is likely to offer limited sponsorship. Overall, should support at hand fail, looking for a move to the lower parallel to develop before seeing a sharp bounce.
S&P 500: Daily
DAX
Looking ahead to next week, the economic calendar holds one ‘high’ impact data event by way of German employment figures to be released on Thursday. Risk trends continue to be a dominant theme here for the benchmark, as Europe in general is quite weak relative to the U.S., which are now weakening as well.
The DAX finally made good on the lower-high it formed earlier in the month, selling off aggressively towards the monthly low. The bearish channel is well intact and suggests we should expect rallies to fail from here. Keep an eye on the U.S. markets as risk trends become increasingly more important to the direction of global stock markets. If risk unravels the lower-side of the channel around 11650 is likely to offer little in the way of support.
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DAX: Daily
FTSE
Last week, the BoE held on monetary policy, and the result was more volatility seen in sterling than the FTSE. However, the FTSE sank sharply as risk sentiment continues to erode across the board. Next week doesn’t bring any ‘high’ impact data events. For a list of all scheduled releases, check out the economic calendar.
The FTSE continues to lead on the downside as the weakest of the major global indices. After breaking down out of a descending wedge below 7100, sellers showed up in earnest. The August 2016 trend-line was broken, which has support below 6700 in the cross-hairs. Keep an eye on the aforementioned support in the S&P 500, as should it break then the FTSE may trade down towards 6700 quite rapidly.
FTSE: Daily
—Written by Paul Robinson, Market Analyst
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