Stocks Gap Lower on Trump's Iran Ultimatum
Stocks Lower on Monday
US stocks are on watch today as the escalating Iran war and shifting Fed outlook continue to dominate markets. S&P futures gapped lower at the open today, hitting their lowest levels since September last year. While price has since bounced back into the green on the day, the market remains vulnerable to fresh downside here on the back of heavy selling last week. So far, no end to the conflict is in sight and with Trump vowing total destruction of Iran unless it reopens the Strait of Hormuz by tonight, fears of a further escalation in the conflict should drive stock prices lower early in the week unless we see some surprise compromise on shipping routes.
Hawkish Fed Outlook
The upside impact on energy prices as the war continues is further adding to bearish sentiment among stock traders. As well as creating higher costs for businesses and consumers, the inflationary risks from elevated energy prices is shifting the market’s Fed outlook. The bank itself now only projects one rate cut this year, down from two prior, and traders are sceptical that the bank will be able to cut at all if energy price stay high. As such, stock prices look poised for fresh downside and USD continue to push higher on a more hawkish Fed outlook. Looking ahead this week, a quiet US data calenda should keep the fuller focus on Oran war developments and general risk flows.
Technical Views
ES (Mini S&P Futures)
The sell off in the index has seen price probing below the 6,505.25 level, extending the decline from the bearish trend line break at the start of the month. With momentum studies bearish, focus is on a fresh push lower with 6,243.25 the deeper level for bears to target.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.