SPDR S&P 500 ETF Trust SPY Stock News and Forecast: Oil collapse sees equities soar, but can it hold?
- S&P 500 (SPY) soars nearly 3% on Wednesday as Europe soars.
- SPY was outbid by the Nasdaq (QQQ) which closed Wednesday just under 4% higher.
- Oil and commodity prices fall sharply on lessening tensions and hopes for increased oil supply.
An incredible day on Wednesday saw European markets surge higher by up to 8% for the Dax, while the benchmark EuroStoxx closed 6% higher. The move was set in motion by the spectacular collapse of energy and commodity prices with oil down nearly 10% and the Bloomberg Commodity Index falling 5%. Dutch Natural Gas prices fell nearly 30%. All this meant a correction for the euro, which spiked sharply having been hammered recently against the dollar. Bonds too saw safe haven flows diminish, all of which sent yields higher with the Bund registering a gain of nearly 0.2%.
S&P 500 News
The main macro and geopolitical news flow on Wednesday both combined to aid these moves. First, we had slightly more positive noises from both Russian and Ukrainian spokespeople. In particular, Ukraine said it was open to talks on Russian demands on neutrality. This was then helped along by comments from various OPEC nations who said they may look to increase supply. The oil then moved sharply lower. Hopes for Iranian oil rejoining the market also raised interest as comments from officials seemed to indicate a deal was imminent. This morning sees a more somber tone. Ukraine's Presidential Advisor has been quoted as saying Ukraine will retake Crimea and Donbas, hardly conducive to more negotiations. Meanwhile, also on Thursday, Reuters reports that "Iran's Supreme Leader Ayatollah Ali Khamenei said on Thursday that Tehran will not bow to pressure to reduce its defensive power, regional presence and progress in nuclear technology." This means a deal does not appear as imminent as hoped for Iranian oil returning to the market.
S&P 500 Forecast
We already identified the $428 level, and Wednesday saw a failure to break above despite the strong up move. This maintains the bearish stance and should see a retracement lower on Thursday. $415 and then $410 will be the two recent lows to target before a test of $400. This was a weak rally that failed to even break the 9-day moving average.
SPY chart, daily
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Author
Ivan Brian
FXStreet
Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.
