News en

The S&P 500 index extended its Friday’s decline yesterday, but it remained within a week-long volatile consolidation. Is this a medium-term bottoming pattern? The broad stock market index lost 0.74% on Monday, Mar. 14, after its Friday’s decline of 1.3%. The market bounced from the short-term resistance level of 4,300 and it extended a volatile consolidation following the early March sell-off from the 4,400 level. Last week on Tuesday it reached the local low of 4,157.87 and then we’ve seen a rebound to the 4,300 level. Yesterday the S&P 500 came back below the 4,200 level again. The market is closer to the Feb. 24 local low of 4,114.65. It was 704 points or 14.6% below the January 4 record high of 4,818.62 then. There’s still a lot of uncertainty concerning the ongoing Ukraine conflict. This morning the S&P 500 index is expected to open 0.5% higher following lower than expected Producer Price Index release. The market will be waiting for the important tomorrow’s FOMC Statement release, and we may see some further consolidation. The nearest important resistance level is now at around 4,200. On the other hand, the support level is at 4,100-4,150. The S&P 500 index continues to… Read More »Have stocks reached the bottom?

Fed rate decision – 16/03 – in essence this week’s Federal Reserve rate decision is probably the easiest one it will have to make this year. With US headline inflation at 7.9%, and likely to go higher it’s pretty much certain that we will see an interest rate rise this week of 0.25%. There are some on the FOMC who are probably in the camp that want to see a 50bps rate rise, however in light of the Russian invasion of Ukraine and the resultant surge in global commodity prices we could well see a bit of caution. The most recent payrolls numbers showed that wages growth slowed from 5.5% to 5.1% in February, which while still quite strong doesn’t suggest that wages are about to explode higher yet. The Fed’s bigger problem is how it manages its messaging for future rate rises against a backdrop of surging input prices which are likely to slow the US economy over the course of the rest of the year. St. Louis Fed President James Bullard has been particularly vocal about the need for a 1% rise in interest rates by 1st July, and with the Fed’s unemployment mandate more or less met,… Read More »The week ahead: Fed and BoE rate decisions, UK wages, Cineworld and Deliveroo

Global markets descended into turmoil after Russian forces rolled into Ukraine. Commodity prices have gone through the roof and traders are betting this shock will keep the inflationary fire burning for some time. The Fed and the Bank of England are set to raise interest rates next week to combat spiraling prices, although the most crucial variable for their respective currencies may be whether there’s a ceasefire in the war. 

Summary United States: Intensifying War Pours Some Gas on Price Growth Russia's invasion of Ukraine continues to loom large as the war has intensified. Most data released this week, however, do not capture the market volatility felt since the invasion has taken center stage. The U.S. trade deficit widened to a record $89.7B in January, while job openings remained elevated and consumer prices continued their string of white-hot gains in February. Next week: Retail Sales (Thu), Industrial Production (Thu), Existing Home Sales (Fri) International: European Central Bank Signals a Faster Tapering of Bond Purchases The European Central Bank (ECB) sprung something of a surprise at this week's monetary policy announcement, announcing an accelerated tapering of its bond purchases despite uncertainty surrounding the Ukraine conflict. While the ECB took a more hawkish stance on tapering, it did not make significant changes regarding the timing of interest rate increases, in our view. We still believe the ECB is on pace to lift its Deposit Rate 25 bps at its December 2022 meeting. Next week: China Activity (Wed), Australia Employment (Thu), BoE Policy Announcement (Thu) Interest Rate Watch: Let the Tightening Cycle Commence Despite the uncertainty arising from the Russian invasion of Ukraine,… Read More »Weekly economic and financial commentary