World stock indices took a slight dip in Monday’s trading, showing caution following last week’s cooling of the robust rally in the US stock market. The chemical and construction sectors suffered significant losses, while banking sector stocks showed strength. Among major market participants, Sartorius AG plummeted by 15% after projecting lower profits.
In Asia, the stock market also slightly weakened after a reassessment of further expectations for economic stimulation in China. The end-of-week State Council meeting in China, chaired by Prime Minister Li Keqiang, offered little detail about any potential stimuli or timelines. The lack of tangible evidence of support amplifies fears of a slowdown in China’s economy, unsettling investors.
Looking at the chart, the latest Wall Street rally managed to offset losses triggered by the Federal Reserve’s interest rate tightening. However, as the future monetary policy course becomes increasingly uncertain, many traders are caught between the allure of continuing the upward rally and fears that it has run its course and the market is overbought.
According to data, the expiry of $4.2 trillion worth of options at the end of last week did not put significant pressure on the S&P 500 index, which marked its fifth consecutive week of growth. While the chances of maintaining this trend remain, there are also substantial risks of a technical correction, which has not been seen since May 24.
In its meeting last week, the Fed kept interest rates unchanged but signaled further tightening. In the past, a three-month rate hike pause following a series of increases led to stock price growth. However, in the current situation, the pause is already priced into the market, and predicting the Fed’s next move is difficult. Meanwhile, the hype around AI-related stocks is gradually subsiding, which may apply momentary pressure on the market.
Fed Chair Jerome Powell will present his report to Congress on Wednesday. Federal Reserve Bank of St. Louis President James Bullard and his counterparts in New York and Chicago are also scheduled to speak.
The S&P 500 index has shown a relatively restrained reaction to FOMC meetings over the last two years. This was the first of 11 meetings where policymakers maintained interest rates. Meanwhile, FOMC members revised borrowing cost forecasts to 5.6% in 2023, implying two additional quarter-point rate hikes.
As for the S&P 500 index, the demand remains quite high. Bulls have a chance to continue the uptrend, but they need to defend $4,410, from where they may reach $4,447. Bulls also should settle the price above $4,488, which will strengthen the bull market. If the index declines due to the falling risk appetite of gold, bulls have to protect $4,410 and $4,380. Breaking through these levels, the trading instrument may return to $4,350 and $4,320.
The material has been provided by InstaForex Company – www.instaforex.com
In Asia, the stock market also slightly weakened after a reassessment of further expectations for economic stimulation in China. The end-of-week State Council meeting in China, chaired by Prime Minister Li Keqiang, offered little detail about any potential stimuli or timelines. The lack of tangible evidence of support amplifies fears of a slowdown in China’s economy, unsettling investors.
Looking at the chart, the latest Wall Street rally managed to offset losses triggered by the Federal Reserve’s interest rate tightening. However, as the future monetary policy course becomes increasingly uncertain, many traders are caught between the allure of continuing the upward rally and fears that it has run its course and the market is overbought.
According to data, the expiry of $4.2 trillion worth of options at the end of last week did not put significant pressure on the S&P 500 index, which marked its fifth consecutive week of growth. While the chances of maintaining this trend remain, there are also substantial risks of a technical correction, which has not been seen since May 24.
In its meeting last week, the Fed kept interest rates unchanged but signaled further tightening. In the past, a three-month rate hike pause following a series of increases led to stock price growth. However, in the current situation, the pause is already priced into the market, and predicting the Fed’s next move is difficult. Meanwhile, the hype around AI-related stocks is gradually subsiding, which may apply momentary pressure on the market.
Fed Chair Jerome Powell will present his report to Congress on Wednesday. Federal Reserve Bank of St. Louis President James Bullard and his counterparts in New York and Chicago are also scheduled to speak.
The S&P 500 index has shown a relatively restrained reaction to FOMC meetings over the last two years. This was the first of 11 meetings where policymakers maintained interest rates. Meanwhile, FOMC members revised borrowing cost forecasts to 5.6% in 2023, implying two additional quarter-point rate hikes.
As for the S&P 500 index, the demand remains quite high. Bulls have a chance to continue the uptrend, but they need to defend $4,410, from where they may reach $4,447. Bulls also should settle the price above $4,488, which will strengthen the bull market. If the index declines due to the falling risk appetite of gold, bulls have to protect $4,410 and $4,380. Breaking through these levels, the trading instrument may return to $4,350 and $4,320.
The material has been provided by InstaForex Company – www.instaforex.com
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