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SPX500 Price Chart

US Equity Fundamental Forecast: Bullish

  • A strong set of FAANG earnings helped to drive US indices higher, the final report from Alphabet could do the same
  • The FTSE 100 looks to the Bank of England and continued Brexit turmoil
  • A trade-war breakthrough remains a possibility with US and Chinese officials citing progress in Washington

Looking for a technical perspective on the Equities? Check out the Weekly Equities Technical Forecast.

Earnings and Trade Wars: Themes for the Dow Jones

US stock markets have enjoyed an incredible run in January as strong earnings, positive progress in US-China trade negotiations and a dovish Fed work in conjunction to push the S&P 500 above 2,700 once again. Apple,Amazon,Microsoft and Facebook were some of the headline earnings last week and the positive sentiment they garnered could provide some buoyancy moving forward. Similarly, the firmly dovish Federal Reserve helped to spark a rally on Wednesday. As February progresses, these themes should provide a consistent tailwind for US indices.

Think the stock market is headed for a crash? Learn some bear market trading strategies and techniques.

In the week ahead, Alphabet’s Google on Monday and British Petroleum on Tuesday will be the most notable earnings. Given their size, a large move either direction could drag an entire index lower. Caterpillar was guilty of the last week and the Dow was subsequently outpaced by the S&P 500. That said, a miss may be more readily accepted by the broader market given the Fed’s stance and weakening Dollar.

Dow Jones Price Chart Daily: (January 2018 – February 2019) (Chart 1)

Doe Jones Price Chart

Learn about the differences between the Dow, Nasdaq, and S&P 500.

Should the US Dollar continue to weaken, it will provide a lasting tailwind for US equities as exports become more affordable to other nations and corporations reap the rewards. With that in mind, the US Dollar’s performance in the weeks ahead may command increased control over US indices as market participants digest the Fed’s comfortably dovish stance and what it means for the Dollar.

FTSE 100 and the Bank of England

Forecast: Mixed

The FTSE 100 will look to something other than Brexit for a change, as the Bank of England is scheduled to announce its decision on the bank’s central interest rate Thursday. The announcement will also be accompanied by the institution’s inflation report which is likely to include the different Brexit-scenario’s impact on the bank’s outlook. Thus, the UK-EU divorce proceedings will once again make their way to the forefront of fundamental themes for the FTSE 100.

FTSE 100 Price Chart: Daily Timeframe (March 2018 – February 2019) (Chart 2)

FTSE100 Price Chart

Read more: Will the Stock Market Crash in 2019?

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact Peter on Twitter at @PeterHanksFX

DailyFX forecasts on a variety of currencies such as the US Dollar or the Yen are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introduction to the Forex market, check out our New to FX Guide.

Other Weekly Fundamental Forecasts:

Australian Dollar Forecast - Australian Dollar Could Wilt If Focus Returns To Interest Rates

Canadian Dollar Forecast - Canadian Dollar May Be Torn Between Upbeat Local and US Econ Data

Oil Forecast – Crude Oil Prices Risk Larger Recovery on Stagnant Non-OPEC Supply

British Pound Forecast – Sterling Stable After Retrace

US dollar Forecast – US Dollar May Rise on Haven Demand as Market Sentiment Sours

Gold Forecast – Gold Looks to Catch Breath After Prices Rally

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