The most important week of 2024 is finally here. This Tuesday the American presidential elections will take place between Kamala Harris (Democrats) and Donald Trump (Republicans). Two days later, on Thursday the 7th, another event that moves the market will take place: the meeting of the American Federal Reserve. All this as earnings season enters its home stretch, both in the United States and Europe.
In this basic scenario, the futures contracts of the main world exchanges start the day with slight declines in Europe. For the moment, the declines are very moderate and even oscillate between positive and negative. On Wall Street, the tone is also two-tone, with the Dow Jones recording modest declines, while the S&P 500 and the Nasdaq 100 are up around 0.3%.
The EuroStoxx 50 closed last week losing, at the intraday level, the marked support of Ecotrader at 4,900/4,870 points. The portal expert primeJoan Cabrero, underlines that now the continental index can open the door to a potential decline until the lowest of the month of September at 4,720 points, of which currently The selective is at 3%.
In the worst case, the EuroStoxx could fall to 4,675/4,700 points, which would deepen losses on current levels of 4%. However, this setback would be, for Cabrero, “an opportunity to buy the European stock market again with a much more attractive risk/return equation than a few weeks ago.” The situation will not be more dramatic as long as the index does not lose what we call red line: August low at 4,470 points.
“In this sense, I think there will be no weakness nor will I recommend drastically reducing exposure to the European stock market until the EuroStoxx 50 loses the August low of 4,470 points I would consider reducing it a little if this gives the September lows in the 4,730 points and especially the 4,675/4,700 points, i.e. the adjustment. 61.80/66% of the entire latest increase compared to the August lows,” concludes the expert.
Fixed Income Market
As the US elections and the Fed meeting approach, US 10-year bonds are placed in its profitability at the levels of the month of July, at 4.38%. Not only the T-note at these levels, but sales are widespread in the rest of debt securities, both long-term and short-term: 2, 5 and 30 year bonds also reach maximum yields for the month of July.
In Europe, the roadmap is practically similar and the pack German is also recovering to levels four months ago, at 2.4%. Peripheral debts such as those of Italy and Spain return to the maximum levels of September, with yields of 3.68% and 3.11% respectively.
The foreign exchange market will be another hot spot to watch this week due to the elections, as dollar weakness is expected. For now, The dollar begins the week by recording its biggest drop against the euro since the end of September and placing the exchange rate at 0.917 euros per dollar.
