CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

SP500 eyeing an 8 percent gain for August

August 31, 2020 2:15 AM

Just eight days later, the dovish hit the market was craving was delivered by Fed Chair Powell at the Jackson Hole Symposium. The Chairs speech confirmed that while the Fed remained of the view that the benefits of YCC implementation in the current environment were limited and costly, the Fed would formally adopt an Average Inflation Targeting (AIT) framework.

Essentially an AIT framework allows the Fed to keep rates at zero for a longer period and without having to raise rates to counter the re-emergence of inflation. There had been some speculation that the Fed would adopt this framework and the actual confirmation now has the S&P500 eyeing a remarkable 8% gain for August.

Elsewhere, the Feds tolerance towards higher inflation prompted a rally in both U.S 10-year nominal and real yields, although the moves were not significant enough to disrupt the low yield regime in which markets currently thrive. Should U.S 10 year nominal yields break above technical resistance at 0.80%, it might be another story and something to keep an eye on.

Until then, the S&P500 appears well placed to benefit from the latest instalment of accommodative central bank policy, the effects of which are likely to last until a few weeks before the U.S. election.

Technically, last week's acceleration higher was a positive development and opens the way for the rally to extend above 3600. The preference is to buy dips towards the short term support 3420/00 area that comes from the February high and the uptrend support from the March 2174 low.  Keeping in mind, a sustained break below 3490/80 would suggest a deeper pullback is underway towards 3300.

Source Tradingview. The figures stated areas of the 31st of August 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024