The last week of May is full of uncertainties that complicate defining where the indexes will move. Beyond “unpredictable” issues such as the evolution of the coronavirus and the trade relationship between China and the US, Bankinter’s director of analysis, Ramón Forcada, explains that “the market wants to go up and drag the S&P 500”.
In this line, Forcada stresses that “We can start the week with a little rebound” based on the record provided by the German Ifo confidence index. The expert expects him to be positive as was his ‘brother’ Zew a few days ago.
Be that as it may, the Bankinter director of analysis considers that “the most important is consolidation, because advances are never linearSo we will have to combine good days with not so good ones in the short term ”. Here he underlines how volatility has been reduced to “much more sustained levels”, as indicated by the moderation of the VIX index.
Bankinter weekly strategy: April 6 to 10
Despite all this, the expert warns that what will determine the market direction will actually be the flow of news. Especially, advises to pay attention to news on international trade, the negotiation of the European reconstruction program, progress towards a vaccine or medicine against Covid-19 and the reopening of economies.
As for the first and last point, Forcada does not rule out startles. “It is unpredictable when Trump will launch a tweet or if China is going to announce that Baidu is withdrawing from Nasdaq” As for Europe’s joint response to the health and economic crisis, the expert continues to be “skeptical about the delivery of funds without conditionality or supervision.”