Dow Jones, DAX 30, FTSE 100 Fundamental Forecast:
Dow Jones, DAX 30, FTSE 100 Forecasts
Equity markets have been dominated by the conflicting themes of trade wars and monetary policy as of late, and that trend looks poised to continue in the week ahead. While there is little scheduled event risk for either theme next week, CPI data from the United States and the United Kingdom will weigh in on the balancing act of monetary policy while the German DAX 30 is due for GDP data.
Dow Jones Forecast
After President Trump unexpectedly escalated the ongoing trade war with China, stocks sank, and the odds of another rate cut at the September FOMC[2] meeting have surged. Many analysts hold that those odds are largely to blame for the stock market’s recovery last week and will likely remain as the dominant tailwind for the foreseeable future. While a prolonged trade war with China threatens to weigh on growth, Fed officials can point to that weaker growth as evidence for monetary easing while simultaneously stoking inflation which has drawn the Fed’s ire as it languishes beneath the central bank’s 2% target. [1]
Dow Jones Price Chart: Daily Time Frame (November 2018 – August 2019) (Chart 1)
With that in mind, Tuesday’s scheduled release of CPI data could threaten the need for rate cuts under the guise of stoking inflation - should a significant beat of expectations occur. Such a development would likely rattle equity markets as traders weigh the consequences higher inflation will have on expected hikes.
FTSE 100 Forecast
Shifting focus to Europe, the FTSE 100 will also await CPI data. While the Bank of England is quite distant from the Fed in terms of expected rate cuts, any influence on the path
