Nick Batsford, CEO of Tip TV, was joined by Richard Hunter, Head of Equities for Hargreaves Lansdown, on the Tip TV Finance Show to discuss the S&P 500, the EURUSD and EURGBP, as well as Q3 reporting season in the US and the situation surrounding QE in Europe.
S&P 500 stocks re-establishing their long-term up trends
Batsford outlined that the S&P 500 staged a healthy recovery the past week, backed by expanding breadth. The percentage of S&P 500 stocks above their 30-week moving average has confirmed a bottom, leading the price with its break higher and indicating that stocks are re-establishing their long-term up trends.
Bullish break in EUR/USD, hinting at bullish break in EUR/GBP
Batsford highlighted FX Street, who noted that in the EUR/USD, the recovery from the March low of 1.0469 may have resumed, but faces immediate resistance at 1.1460 and they remain bearish below 1.1324. In terms of the EURGBP, they commented that the inverted head and shoulders breakout worked nicely, with the neckline resistance at 0.7438 and an upside target of 0.78-0.79.
Q3 earnings picture not clear yet
Hunter believed that Q3 earnings in the US are low, with it being estimated that earnings are down around 4%. However, he noted the need to wait a week or two so that we can get a clearer picture of US performance.
Stronger argument for continued QE
Batsford continued to Elliott, who noted the IMF final communique: ‘In many advanced economies, the main risk remains a decline of already low growth’ which must be supported with ‘continued accommodative monetary policies, and improved financial stability’. MD Christine Lagrade also urged extra QE – despite a G30 group of experts warning that another financial crisis might be caused by keeping interest rated too low for too long. Hunter commented that there is a stronger argument for continued QE following disappointing data out of Germany and limited growth across Europe.
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