The proximity of the presidential elections in the main economic power of the planet – the United States – and the decision on interest rates of its central bank (the Federal Reserve) have been two of the factors which, in recent sessions, favored prevailing caution. on the American stock markets.
In fact, the impact of the two events is seen as one of those catalysts that could ultimately lead the market to consolidate deeper than the stock markets have done in recent sessions after the strong upward movement of markets.
“This calm will end sooner or laterand we will once again see one of those wonderful corrections that will move the indices 10% away from their last peak,” warns Joan Cabrero, technical analyst and strategist at eco-retailerwhich guarantees that this drop “could lead indices to seek support at September lows which, I remind you, represents the yellow support line, which I consider to be the first level to cross to confirm a worrying exhaustion of buyers.
This is not surprising given that overheating Wall Street’s major indexes are trading at record highs. Nasdaq, S&P 500 and Dow Jones Industrial They have already managed to return to the levels reached in 2021 -what has it been called since eco-retailer A ace poker– and the lagging Russell 2000 will be able to join them when it hits the 7% potential it has left at these 2021 all-time highs.
“In my opinion, the year could be practically over once the Russell 2000 reaches these levels, which could coincide with the end of the presidential elections in the United States,” pointed out the Ecotrader strategist in one of its latest strategic analyses. And the fact is that few investors feel uncomfortable investing when the stock market is at its highest.
A high rating
It’s not for less. Although the trend is undoubtedly upward, the focus is on the earnings multiplier achieved on average by companies listed in the United States. He The Nasdaq sports a PER (number of times profit is reflected in the stock price) by 35 times for the current year according to expert estimates collected since Bloombergbut this figure would be reduced to 28 times by 2025 if expectations are met and if the 7 big technology companies on the planet par excellence (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla) keep their logbook, In 2026, this ratio would be reduced to 26 times, an acceptable figure for the technology sector.
In this sense, Nvidia’s results until November, later than those of the rest of the large American technology companies, are also another of the great catalysts monitored by the market.
The average investment firm expects profits greater than 65 billion of euros which would mean that the signing of Jen-Hsun Huang would increase by 127% of its net profit.
Seasonality, in focus
Anyway, the truth is that as the United States elections approach, many comments or predictions are made about the behavior of the stock market and interest rates, but this does not seem to be the right time to take a stand, of course. the opposite.
This is what Albert Parés, manager of the Annual Cycle Strategies fund of Gesiuris AM, says, who after analyzing with data how the last 11 election periods (since the inauguration of the modern American electoral system in 1977, which has remained unchanged until now) assures that ““It is not surprising that we are going through a period of pre-election nervousness and even more listening to the speeches of both candidates.”
“If we extend the last three months, we observe that if we take into account the seasonal period, The best time to invest in the S&P 500 would be November 20“, explains the expert who emphasizes that he does not intend to guess the future, “but investing with a seasonal criterion helps you to be right more than investing without any temporal criterion.
Against this backdrop, investors have shown signs in recent weeks that they are looking for a way to protect themselves against the uncertainty that has threatened markets in recent weeks. Hence the sharp rise in the price of gold, which in 2024 will record its most bullish year since 1979, and which will gain in whole figures as diversification asset facing a scenario of greater volatility in the future given the doubts that now exist about the dollar.
And the presidential elections in the United States “are encouraging unnoticed gold buying by large investors who believe that whoever takes the White House, the U.S. dollar will come under pressure from rising prices.” budget deficits”, underlines Carsten Menke, of Julius Baer. .
“We are faced with two opposing fiscal policies which could cause uncertain market reactions in a tense global geopolitical environment,” warns François Rimeu, senior strategist at Crédit Mutuel AM.
Support Levels to Watch on European Stock Exchanges
After 24 sessions laterally consolidating its positions between 11,560/11,600 and 12,000 whole, the Ibex has cryptically approached the lower part of this range during the last few sessions. In fact, “during the week this support has been hammered, which reinforces the importance of the level”, affirms Cabrero, who emphasizes that “there will be no technical evidence that warns of the possibility of a decline which could be lasting over time so do not lose this rank.
The EuroStoxx lost the support it had at 4,900/4,870 for part of the day on Friday, and finally closed wobbly on them, at 4,877 points. “His mission opens the door to a broader phase of consolidation, which is what I thought might happen a few weeks ago, which would be more like the last phase of consolidation before the fall of August,” says – he. The good news, he adds, is that if this broader consolidation finally comes to fruition, it could take the EuroStoxx to the September low zone of 4,730 points and in the worst case 4,675/4,700.
