S&P 500 Fundamental Forecast – June 20, 2016

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Published: Jun 17, 2016, 10:10 GMT+00:00

The S&P 500 is trading in the green overnight as markets seem to ease a bit from its risk off mode. Sentiment seems to be turning more positive while

S&P 500 Fundamental Forecast – June 20, 2016

The S&P 500 is trading in the green overnight as markets seem to ease a bit from its risk off mode. Sentiment seems to be turning more positive while oil prices rebounded and the US dollar remained lower. US stocks ended higher in volatile trading Thursday, as markets weighed central bank policies amid growing concerns about Britain’s upcoming referendum on European Union membership.

The Standard and Poor’s 500 Index reversed sharp declines to snap a five-day losing streak. The large-cap index rose 6.49 points or 0.3% to close at 2,077.99. The S&P 500 is approaching bearish levels after failing to set new highs last week. Relative strength is declining toward the 40 level while the MACD shows the formation of a clear downward trend. (Economic Calendar)

The Fed held off on raising interest rates Wednesday, as expected by the vast majority of market participants. The US central bank will hold its next policy meeting in July.

Meanwhile, the Bank of Japan (BoJ) kept monetary policy steady Thursday, several weeks after Prime Minister Shinzo Abe confirmed that additional stimulus would be introduced in the autumn. Economists are becoming weary of BoJ policy, with many concerned that the piecemeal approach to monetary easing was having a minimal impact on the economy.

Mr. Abe also announced earlier this month his government would delay an expected tax hike by two-and-a-half years to avoid triggering bigger shocks in the economy.

The Bank of England (BoE) also kept monetary policy steady Thursday and cited the so-called Brexit as the biggest risk facing the financial markets. BoE officials were especially concerned about the performance of the pound following a Brexit vote.

“On the evidence of the recent behavior of the foreign exchange market, it appears increasingly likely that, we’re the UK to leave the EU, sterling’s exchange rate would fall further, perhaps sharply,” the Bank’s Monetary Policy Committee said.

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