Major Indices Analysis: A Comprehensive Look at SPX, NDX, and FTSE
Introduction
I’m Lewis William, Senior Financial Analyst at Triangle Profits, and I’m here to provide a detailed analysis of major global indices, including the S&P 500, Nasdaq, and FTSE 100, as of November 2023. This analysis offers insights into their recent performance and the broader economic context influencing these movements.
S&P 500: Bullish Outlook Amid Economic Shifts
The S&P 500 has been in a tug-of-war between a neutral and bullish stance. The index has seen consolidation and is close to oversold territory on the RSI. Recent CPI data indicating progress in inflation has reduced the strength of the US dollar, contributing to a risk-on sentiment in equities. The index is testing resistance levels around 4540, with the yearly high of 4607 as the next target. There is potential for profit-taking, which could lead to a calmer trading week, particularly if the RSI enters overbought territory.
Nasdaq 100: Riding the Wave of Bullish Momentum
The Nasdaq has been buoyed by easing financial conditions as US bond yields have declined. The index has consecutively made gains over the past weeks, surpassing prior resistance and aiming for the yearly high of 15,932. The Nasdaq has responded positively to lower US yields, indicating an optimistic outlook for tech stocks. However, with the RSI nearing overbought territory, there could be a pause in this bullish momentum.
FTSE 100: A Slower Climb Amid Global Challenges
The FTSE 100’s rise has been more modest compared to its US counterparts. Factors such as lower oil prices and a lack of tech stocks, which are sensitive to easing interest rate expectations, have contributed to this lag. The index closed the week stronger, overcoming resistance at 7504 and eyeing the 200-day SMA and 7640. The upcoming UK Autumn Statement and forecasts from the Office for Budget Responsibility may introduce volatility to the index and the pound sterling.
Global Economic Context: Geopolitical Tensions and Fiscal Policies
November 2023 is marked by limited monetary policy actions and heightened geopolitical tensions. Fiscal policies, including a Japanese supplemental budget and measures from China, are in focus. The US faces a potential partial government shutdown if spending authorization is not extended. Geopolitical developments, such as the rising tensions in global politics and the fluctuating dollar, are influencing market dynamics.
US Economic Performance and Federal Reserve Actions
The US economy outperformed in Q3, expanding at a faster pace than China. There’s a consensus for a ‘soft landing’ with no recession and a ‘higher for longer’ stance on interest rates. However, the risk of a December Fed hike remains, especially if long-term rates retract.
Conclusion
The global indices in November 2023 reflect a complex interplay of economic indicators, fiscal policies, and geopolitical tensions. The S&P 500 and Nasdaq show bullish trends, while the FTSE 100 progresses at a slower pace due to sector-specific challenges. Investors should closely monitor these developments, as they offer both risks and opportunities in the evolving market landscape.