Global stock markets paused as investors waited for the Federal Reserve’s decision, with the FTSE 100, DAX 40, and S&P 500 consolidating positions.
Major global indices, including the FTSE 100, DAX 40, and S&P 500, paused their recent upward trajectory as investors exercised caution ahead of the upcoming Federal Reserve meeting. Here’s a closer look at the current status of these indices:
FTSE 100’s Gradual Ascent Amid Risk-On Sentiment
The FTSE 100 experienced a notable surge on Friday, propelled by solid performances in luxury goods stocks and prevailing risk-on sentiment. While the pace has slowed, the index remains buoyant as traders brace themselves for Thursday’s Bank of England monetary policy meeting. Analysts suggest that surpassing Tuesday’s high of 7,685 could lead to further gains, targeting the 11 January high at 7,694 and the mid-October high at 7,702. Trader sentiment data indicates a potential upward continuation, identifying minor support levels between 7,653 and 7,642.
Retail trader data reveals that 42.07% of traders are currently net-long, with a short-to-long ratio of 1.38 to 1. Contrarian analysis, which often considers crowd sentiment, suggests that the FTSE 100 may continue its upward trajectory. However, mixed client positions, with 56% of clients being net short, indicate a degree of uncertainty.
Global Stock Markets: DAX 40 Nears New Heights
DAX 40 Nears Record High Despite Economic Challenges
In the Eurozone, the DAX 40 index has traded marginally below a new record high despite economic headwinds. The mid-January surge propelled the index above its December record high, reaching 17,016 on Tuesday. Economic challenges, including zero GDP growth in the Eurozone’s fourth quarter and a downward revision of Germany’s 2024 growth forecast by the IMF, have not deterred the DAX 40’s upward momentum. Analysts caution that it may trigger a potential correction if the index weakens below Tuesday’s low at 16,913. Additionally, they have identified key resistance levels between 17,003 and 17,016.
S&P 500 Takes a Pause Ahead of Federal Reserve Meeting
In the United States, the S&P 500 reached a new record high at 4,931 earlier in the week. However, profit-taking ensued as investors awaited the outcome of the US Federal Reserve meeting. Last night, Alphabet, Microsoft, and AMD contributed to a minor pullback in the index despite delivering satisfactory results, marred by a bleak outlook for the latter. Analysts suggest that slipping below Tuesday’s low at 4,899 could trigger a retracement towards the high and low from the previous week, ranging between 4,885 and 4,878. This week’s record high of 4,931 presents strong resistance.
As investors globally remain on edge, the decisions and outlook provided by central banks, particularly the Federal Reserve, are poised to influence market sentiment and direction in the coming days.