S&P Soars On Ceasefire News
Stocks Surge
The rebound in risk assets following news of the two-week ceasefire between the US and Iran, as well as the full reopening of the Strait of Hormuz, has seen US stocks soaring higher. S&P futures are up almost 3% today, now up almost 8% off last week’s lows. With energy prices and USD falling in response to the news, stocks are seeing strong demand with the index now heading back up towards current highs. Stocks should continue to pus higher while the ceasefire holds and any positive news on the negotiations front should see accelerated buying. The caveat to this is that stocks are vulnerable to a fresh drop lower in response to any negative news such as talks stalling, or a return to hostile rhetoric from Trump.
Fed Minutes & US CPI
Away from news on the Iran war, traders will also be monitoring Fed/US data developments this week with the FOMC minutes due tonight and the latest inflation readings due on Friday. Both events are likely to be hawkish with the FOMC expected to detail policymakers concern over the inflationary risks from the war via elevated energy prices. Friday’s data is then expected to show a fresh rise in CPI. Together, they should keep near-term Fed easing projections out of the picture. However, it may be the case that traders are able to look through the FOMC mins somewhat given the chance now that the conflict can be brought to an end.
Technical Views
ES
The reversal higher in the index has seen price breaking firmly back above the 6,587.50 level. Price is now testing the 6,811.25 level, just ahead of the bear trend line from YTD highs. If we see a break above this region, focus will turn to the current YTD and record highs around 7,038.50 with initial resistance coming in just below at 6,949.75.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.