S&P 500 and FTSE 100 Forecasts for the Week Ahead

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&P 500 | ALL EYES ON POWELL

The S&P 500 is on course to close its worst monthly performance since the Q1 2020 Covid Crash, down 6%. As we highlighted in our quarterly guide Fed policy remains the key driver for risk sentiment. In turn, equity markets have repriced lower with aggressive Fed rate hiking and QT just around the corner. Next week, the Federal Reserve are expected to raise the Fed Funds Rate by 50bps and announce quantitative tightening. Subsequently, the key focus will be on Fed Chair Powell’s press conference. That said, in light of recent Fed Officials stating that a 75bps rate hike could be plausible, any hawkish dissent will be important, while Powell’s view on a hike larger than 50 will also be critical to the short term direction.

Elsewhere, the Chinese Yuan has garnered attention following its rapid decline in recent sessions. Therefore, equity stability will also need USD/Yuan to peak or at least show signs of stability to keep the S&P 500 above the Feb 24th panic low at 4100. Much of the factors that have plagued risk sentiment do still remain, however, given the drop from 4600 to 4150, I am less bearish than I had been a few weeks back.

Support at 4160 and 4100, a close below the latter risks a drop to 3800. On the topside, resistance is situated at 4370-85.

S&P 500 posts worst month since 2020 Covid crash. All eyes on Powell for direction.
Read more at : https://www.dailyfx.com/forex/fundamental/forecast/weekly/title/2022/05/01/SP-500-FTSE-100-Forecast-For-The-Week-Ahead.html

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