Dow Jones, DAX 30, FTSE 100, ASX 200 Weekly Forecast:
- Global stock markets should enjoy a boost from the widespread dovishness of the major central banks
- The Dow Jones will await crucial US-China trade talks scheduled for the weekend
- For a deeper look at the major equity markets, follow @PeterHanksFX on Twitter or sign up for his Weekly Equity Webinar
Dow Jones, DAX 30, FTSE 100, ASX 200 Weekly Forecast
After a week packed with event risk, equity markets now face a relatively calm calendar. Aside from a few data points due from the United States, US-Iran tensions and a meeting between President Trump and Chinese President Xi Jinping will likely be the dominant fundamental themes. That said, the odds of a US-China trade war breakthrough appear slim.
On Friday, Chinese state media announced that “the most important part is the US side must remove all newly imposed tariffs since the trade war.” Further, the outlet said China will not accept a deal in which the United States keeps part of the tariffs intact. President Trump is unlikely to meet these conditions, which will leave the two sides deadlocked once again. Consequently, the Trump-Xi meeting may be doomed to fail before it even begins. Still, renewed discussion between the two adversaries is encouraging nonetheless.
Dow Jones Fundamental Forecast: Neutral
The Dow Jones trades near record levels and a dovish lean from the Federal Reserve should leave the door open for the Industrial Average to reach new heights – but the lean was expected. With that in mind, trend continuation may come under threat as markets attempt to establish whether or not the shift in monetary policy has already been priced in. Coupled with low expectations for US-China trade talks, the Index may take pause around current levels as the new fundamental themes are analyzed.
Dow Jones Price Chart: 4 – Hour Time Frame (October – June) (Chart 1)
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DAX 30 Fundamental Forecast: Bullish
The DAX 30 finds itself in a similar position. A dovish take from the ECB bolstered the Index last week and now trade wars look set to take the reins. With an economic calendar devoid of data – traders should be on high alert for commentary regarding potential tariffs when leaders meet in Japan.
DAX 30 Price Chart: 4 - Hour Time Frame (August – June) (Chart 2)
FTSE 100 Fundamental Forecast: Bullish
After a series of votes, Boris Johnson is poised to take the position of Prime Minister in the United Kingdom. That said, the world will have to wait until July 22 for confirmation. Until then, the FTSE 100 will likely trade in lockstep with its German and American counterparts as they share a statistically significant correlation.
FTSE 100 Price Chart: 4 – Hour Time Frame (January - June) (Chart 3)
ASX 200 Fundamental Forecast: Bullish
Finally, the ASX 200 is amid a rally of its own. After a recent rate cut, commentary from RBA Governor Lowe suggests the bank is open to more. This could provide a healthy tailwind for the Index in the near-term while simultaneously contributing to the continued deterioration of the Australian Dollar. ASX 200 traders should also be cognizant of trade war commentary.
ASX 200 Price Chart: 4 – Hour Time Frame (February – June) (Chart 4)
--Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
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