Description:
Nick Batsford, CEO of Tip TV, was joined by Richard Hunter, Head of Equities at Hargreaves Lansdown, on the Tip TV Finance Show to discuss the outlook for the S&P 500, as well as brief views on the Dollar Index and Gold, plus the week ahead in terms of UK and US reporting season and future events.
S&P 500 regains the 2050 level
Batsford highlighted that the S&P 500 rallied over 30pts on Thursday, pulling away from the 200-day exponential moving average and also regaining the psychological 2050. The market was shorted on the downside breaks through those levels and now those trades will need to be covered. That need-to-buy should fuel a rise back towards the May record high and likely just above it. Internals continue to firm and momentum is not overbought.
Higher trough on the Dollar Index
Batsford continued and noted that the Dollar Index rallied of support at 93, with a higher trough indicating buying pressure, and a breakout above 98 would suggest another advance.
Gold demand to weaken?
In terms of Gold, Batsford commented that a strong dollar and low inflation would weaken the demand for gold. He added that spot gold is testing medium term support at $1150/oz, whilst a breach would warn of a test primary level at $1100. Hunter commented that a traditional portfolio would have 5% exposure to gold, however, he believed that proliferation of derivative trades and trading mining stocks has meant gold isn’t left alone as much and is more volatile as a result.
Momentum to be continued from last week
Hunter outlined that he hopes the earnings season will continue last week’s momentum, with the strong performance from US technology stocks. He added that the UK has banks and oil reporting this week and he hoped both the UK and US can build towards a better earnings season. Hunter also noted that there is a BoJ policy review and FOMC meeting, and he believed by the end of the week we will have a clearer view of the direction which the market is moving.
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