S&P 500, FTSE 100 Analysis and News

  • S&P 500 | State-Wide Restrictions to Damage Risk Appetite
  • FTSE 100 | UK Assets Remain Unloved Amid Political Uncertainty

Equity market performance

Source: DailyFX

S&P 500 | State-Wide Restrictions to Damage Risk Appetite

COVID Cases Rising Sharply in the US

Coronavirus cases in the US reached a record daily high as concerns mount over a potential second wave in a number of states across the US. This has been most evident in Florida and Texas, in which the latter has halted plans of further reopening and thus raises concerns over the trajectory of the economic recovery, particularly if an escalation prompts state-wide lockdowns. That said, this is not just a US-centric story as other countries have also seen a pick up in COVID cases, including Germany, Japan, and China. As such, market participants will continue to assess the rising number of virus cases, whereby a continued pick up can keep risk appetite pressured. Notable economic data points to watch include the US ISM Manufacturing PMI and Non-Farm Payrolls

Portfolio Rebalancing Flows

In other news, with the end of the month and quarter nearing, attention will be placed on potential rebalancing, in which investment banks have signaled a possible sizeable outflow from equities into fixed income in light of the outperformance across the equity space.

Change in Longs Shorts OI

S&P 500 Price Chart: Daily Time Frame

S&P 500 Price Chart

Source: IG Charts

Softer Equities is Dollar Supportive

Cross asset correlation matrix

Source: Refinitiv, DailyFX

FTSE 100 | UK Assets Remain Unloved Amid Political Uncertainty

UK-EU trade talks intensify as both parties look to head for a showdown throughout the Summer and Autumn months. The current impasse and continued political uncertainty sees UK assets remain unloved among investors. As such, with both the EU and UK unlikely to reach a breakthrough next week as the deadline for a transition period extension passes, upside in the FTSE appears to be limited.

Elsewhere, focus will also be on the Bank of England with several speeches scheduled for next week. Perhaps the most intriguing will be the speech of Chief Economist Andy Haldane who dissented at the prior meeting, by voting against boosting QE. That said, continued rhetoric over negative interest rates being adopted in the UK will also be of note.

BoE Speakers in Full Force

BOE speaker schedule

Source: Bank of England

Change in Longs Shorts OI

FTSE 100 Price Chart: Daily Time Frame

FTSE 100 Charts

Source: IG Charts


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— Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

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