Wednesday, September 27, 2023

Europe will remain in no man’s land until the Fed speaks

After the daily losses on Monday, futures this Tuesday point to a flat, indecisive session between bulls and bears the day before the Federal Reserve meeting, where the market does not expect any changes to its monetary policy.

From a technical point of view, “the EuroStoxx 50 is currently in a kind of no-man’s land, as it is as far away from the short-term resistance at 4,340 points as it is from the important support at 4,170 points,” explains Joan Cabrero , Ecotrader advisor.

“Only crossing 4,340 points would confirm an uptrend pattern in the form of a double bottom, which would allow us to think about increases towards 4,500/4,600 points and remove the risk of a loss of 4,170 points, which would open the door to a likely loss towards 3,900/4,000 points, where I continue to recommend medium-term positions on the European stock market,” adds the expert. “If it continues to rise without reaching this support then that is perfect, we will be happy with the purchases that we already have in our portfolio,” he concludes.

The market will focus on the Fed’s dot plot tomorrow

With a Federal Reserve rate hike tomorrow virtually out of the question, the market will be analyzing the roadmap that emerges from the release of the dot plot. This is the graph where each member of the committee places the points where you see the interest rates over a given period of time.

From there, the interpretation must be made, on the one hand, that we have definitely seen the end of the increases, and, on the other hand, how quickly the declines will be next year. It’s worth remembering that the last dot plot showed another increase this year and a full percentage point less next year.

Oil is already trading at $95 a barrel

Only two of the last 15 sessions resulted in a fall in oil prices, which are already trading at around $95 a barrel of Brent crude, a level not seen since November last year.

The market deficit following OPEC’s supply cut is noticeable and Chevron already expects the barrel to reach $100 again. Since the aforementioned June cut, prices have already risen by more than 30%.

Nation World News Desk
Nation World News Desk
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