Dow Jones, Nasdaq 100, S&P 500, DAX 30, FTSE 100 Fundamental Forecast:
Dow Jones, Nasdaq 100, S&P 500, DAX 30, FTSE 100 Fundamental Forecast
The three large-cap US equity markets will roll into the week near record highs following a string of strong earnings from some of the country’s largest companies. Earnings season will continue next week with the final FAANG member,[1] Apple (AAPL) due to report on Tuesday but even the tech-behemoth will take a back seat to Wednesday’s FOMC[2] meeting. To that end, the Federal Reserve is widely expected to issue a 25-basis point rate cut which will mark the first cut to the Federal Funds rate since 2008.
S&P 500 Price Chart: 4 - Hour Time Frame (June – July) (Chart 1)
A reduction to the Federal Funds rate would also signal the inception of another monetary easing cycle, which has historically resulted in two fairly distinct trends in the following months.[3] The Fed will also release an updated outlook on the economy. Any indication that the central bank is unlikely to issue further cuts to the Fed funds rate could result in turbulence for the US indices as traders cling to hopes of looser monetary policy to keep the stocks at current valuations.
DAX 30 Fundamental Forecast
Shifting focus to Europe, the German DAX 30[4] has a relatively quiet week ahead. Last week, an ECB meeting that missed market expectations saw the Index plummet beneath support as the central bank signaled easing would occur not at present, but down the line. Given the corresponding reaction in the S&P 500 and other equity markets after the ECB meeting - and their positive correlation
