S&P 500, DAX 30, FTSE 100 Analysis and News
Source: DailyFX
S&P 500 | Irrational Exuberance Faces a Reality Check
In a week that saw bankrupt companies spiking to pre-COVID 19 levels, and an unrelenting bid in tech stocks that saw a new record high despite the economic uncertainty, the term ‘irrational exuberance’ coined by former Fed Chair Alan Greenspan springs to mind. However, this exuberance faced a reality check amid Thursday’s sell-off in which the global equities posted their largest one day drop since mid-March. As we closed out the week, the equity market has posted a modest bounce back, which isn’t unusual following a 5% drop. That said,Thursday’s session will provide a stark reminder to market participants that downside risks remain, particularly as second wave concerns mount. As we look to next week, eyes will on Fed Chair Powell’s Testimony (Tues 16th).
| Change in | Longs | Shorts | OI |
| Daily | 5% | -3% | 1% |
| Weekly | 21% | -19% | -2% |
S&P 500 Price Chart: Daily Time Frame
Source: IG Charts
FTSE 100 | BoE to Top Up QE
Brexit is once again on the agenda with high-level talks scheduled between UK PM Johnson and EC President Von Der Leyen on June 15th. Given that the UK have reiterated that they do not plan on asking for a transition period extension before the July 1st deadline, no deal fears will continue to pick up in the run-up to October 31st, in the absence of notable progress. Elsewhere, the BoE is expected to increase its asset purchase facility by £100bln, however, risks are skewed towards more QE purchases.
| Change in | Longs | Shorts | OI |
| Daily | 24% | -1% | 3% |
| Weekly | -46% | 57% | 14% |
FTSE 100 Price Chart: Daily Time Frame
Source: IG Charts
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--- Written by Justin McQueen, Market Analyst
Follow Justin on Twitter @JMcQueenFX
