Weekly Market Outlook: FOMC, European & US earnings in focus

April 26, 2021 11:30

This week’s highlight is likely to be Wednesday’s 7.30 pm FOMC Statement and Press Conference. While no changes are expected, the Fed’s tone and messaging on the economic recovery will be closely watched, especially considering the US dollar index has erased nearly all of its gains from March. 

Global stock market indices are also likely to be in focus after the sell-off last week on the back of comments from President Joe Biden on a potential doubling of the capital gains tax rate which will hit stock market investments the most. 

European earnings season also gets underway this week with big companies reporting from the US and Europe. This includes Tesla, Google, Microsoft, Facebook, Apple, BP, Shell, HSBC and many others.  

You can learn more about some of the global themes affecting the markets in this selection of education articles:

Weekly Forex Calendar

Source: MetaTrader 5 trading platform provided by Admirals

 

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Trader’s Radar - FOMC Press Conference

There is a variety of economic data due this week related to the US dollar. This includes Wednesday’s 7.30 pm BST FOMC Press Conference and Thursday’s 1.30 pm BST GDP (Gross Domestic Product) release. 

While no changes are expected in the Federal Reserve’s stance, attention will be paid to the language regarding the economy. Economic data is showing signs of a strong recovery in the US but the Fed has been consistent in their messaging they are staying put. 

At some point, there will be some divergence in play where investors start to realise the Fed will have to act. That may cause a change in the US dollar’s trend which has been going down for the past month. 

Source: Admirals MetaTrader 5, USDX, Monthly - Data range: from Nov 1, 2004, to Apr 23, 2021. Performed on Apr 23, 2021, at 7:00 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

The US dollar index monthly price chart shown above, depicts a long-term trading range between ~$103.00 and ~$90. At the beginning of the year, the price bounced off the lower support level to start a three-month trend higher. 

However, so far this month, the price has nearly erased all of the gains made from last month. If the Fed continues to stick with their message, the trend could continue until a proper retest of the lower horizontal support level so it’s certainly one to watch. 

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Corporate Trading Updates and Stock Indices

A consistent message from the Fed and a positive start to the US earnings season has helped the S&P 500 stock market index surge to record highs. However, last week prices retraced from their elevated levels on the news that President Joe Biden is proposing to double the capital gains tax rate hitting shareholders the hardest. 

For now, however, the market is still focused on the coronavirus vaccine rollout recovery trade and has been enjoying the mostly positive US earnings reports. It’s now time for European earnings which come thick and fast this week. 

Some of the companies reporting this week include:

  • Monday - Tesla
  • Tuesday - HSBC, BP, Google, Microsoft, Visa
  • Wednesday - Ford, Ebay, Boeing, Apple, Facebook
  • Thursday - Shell, Airbus, Twitter, NIO Inc, Amazon

Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from Aug 4, 2020, to Apr 23, 2021, performed on Apr 23, 2021, at 6:30 pm GMT. Please note: Past performance is not a reliable indicator of future results. 

 

Past five-year performance of the S&P 500: 2020 = +16.17%, 2019 = +29.09%, 2018 = -5.96%, 2017 = +19.08%, 2016 = +8.80%, 2015 = -0.82%.

The S&P 500 stock market index is currently trading quite far away from its 20-period (blue) exponential moving average. Momentum has waned this far away from its average price over the last twenty candles. 

So far, it has remained resilient even in the face of negative news announcements. This highlights the strength of the market and the fact there are not that many alternatives with interest rates at record lows. If the price can pullback, then the 20-period moving average will be the first area to keep an eye on.

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