The S&P500 has dropped as much as 2% since Monday.
WHY:
- Geopolitical risk: The Iran conflict has sparked a wave of risk aversion, souring appetite for riskier assets as investors rush to safe-haven destinations.
- Fears of rising inflation: Surging oil prices from the Middle East conflict have re-ignited global inflation fears – prompting investors to pare bets for Fed rate cuts.
Traders are pricing a less than 15% chance of a Fed cut by April with this jumping to 43% by June.
Note: Before the devastating events over the weekend, the odds of a Fed by June were around 65%.
WHAT COULD MOVE US500 THIS WEEK?
Friday 6th March: US February NFP report – 13:30 PM GMT
- The US economy is expected to have created 58,000 jobs in February compared to 130,000 in the previous month while the unemployment rate unchanged at 4.3%.
US500 is forecasted to move 0.9% up or 1.6% down in a 6-hour window after the US NFP report.
POTENTIAL SCENARIOS –
BULLISH – A move back above 6800 may open a path toward the 100-day SMA, 50-day SMA and 6950.
BEARISH – Weakness below 6800 could see a decline toward 6715 and 6700.
