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Stock analysis and news
- Focus on negotiations at the Jackson Hole Symposium
- Equities remain sensitive, although expectations are almost certain
- The main levels to look at DAX 30 and S&P 500
TAPER TALKS AND JACKSON OPEN
Global equities are licking their wounds this week as various external shocks have made the sentiment a little sour after the equities have been impressive over the past few months. There is so much going on in the world right now that investors may be a little confused, which has led to market sentiment in recent sessions.
One of the main obstacles is the continued spread of the Delta strain around the world, where significant increases have been observed in places such as the United States, China and Australia. It seems that even at high vaccination rates, the virus is still highly contagious, which calls into question the speed with which it can return to normal and will lead to a full economic recovery.
However, the shares had held up remarkably well until the week the Federal Reserve published minutes of its last meeting in July, signaling that a reduction in asset purchases was now being considered. It is no real surprise that since economists had been predicting this move for several months now, I think the official confirmation from the Federation makes it a little more frightening, or that is what economists may have obtained as the main reason for selling shares. But looking at bond markets, yields have continued to fall this week, contrary to the response you might expect after the Fed acknowledges the downgrade, which is the first step in easing ultra-monetary policy.
So this reaction leads me to believe that it is little more than just a concern about less flexible financing conditions, which are likely to be about shrinking, growth and viral problems, but also about a market that was overstretched after months of overtaking.
Looking to the future, the Jackson Hole Symposium is likely to be one of the main equity risk events next week as investors closely monitor central bankers’ statements. Jerome Powell is the man of the hour, as many analysts expect a formal announcement of a reduction in asset purchases to be made at this meeting, starting in September or November this year.
If this is confirmed, I expect the shares to carry out a new redemption, although its follow-up is likely to be limited, unless other external factors worsen in the light of the announcement. Alternatively, if Powell now abandons the tightening of talks, we will see stocks gain some momentum and improve on last week’s losses.
DAX 30 KEY LEVELS
If the withdrawal of the DAX 30 continues next week, traders should seek around 15,500 areas for help. This is where the 100-day SMA is approaching and previous withdrawals have run out of steam. In addition, the 127.2% Fibonacci extension (15,424) is a good support area if stops are launched below 15,500. Any further bear pressure is likely to be a clear path to 15,000 before new buyers are likely to jump in. There are 16,000 marks above the main resistance.
DAX 30 daily schedule
S&P 500 KEY LEVEL
The S&P 500 is from 2020. Therefore, I would not say that the bullish run is in trouble until it breaks below 4280, which means that there is enough room to pull back to offer new buyers a good entry level. Due to this relocation, we may see some sideways activity in the coming days, so 4380-4440 is currently a good target range.
S&P 500 daily schedule
– Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin