Key Points
- S&P 500 at 6515.40, up 0.15% as rally extends
- Markets now price in 25bps Fed cut, with 11% odds of 50bps
- Bond yields near 5-month lows; Nasdaq hits record
The S&P 500 edged higher to 6515.40, marking a fresh high for the year as expectations for a Fed rate cut next week fuelled broad risk-on sentiment across global markets. With U.S. labour data softening and inflation figures due this week, traders now overwhelmingly expect the Federal Reserve to ease monetary policy on September 18.
More notably, the odds of a larger 50-basis-point cut have jumped to 11%, from 0% just a week ago, following Friday’s disappointing jobs data. Any downside surprise in this week’s CPI and PPI readings could tip the scales further.
Political Risk Widens Globally
Markets are currently navigating a wave of political uncertainty that is shaking investor confidence across several major economies. In Japan, the sudden resignation of Prime Minister Shigeru Ishiba has triggered speculation about the direction of future economic policy.
His departure, paired with the upcoming LDP leadership election in October, opens the door for a more dovish successor, which has contributed to the Nikkei surging past the 44,000 mark.
Across the globe in Europe, French Prime Minister Francois Bayrou is expected to lose a crucial confidence vote, potentially forcing President Macron to appoint his fifth prime minister in under two years.
Meanwhile, Argentina’s President Javier Milei suffered a sharp defeat in local elections, casting doubts over his reform agenda and spooking emerging market investors.
In Asia, Indonesia shocked markets by abruptly replacing its finance minister, fuelling concern over policy continuity and fiscal direction in one of the region’s largest economies.
Despite these political flashpoints, global markets have largely held steady, buoyed by the broader risk-on sentiment driven by anticipated U.S. monetary easing.
Currency reactions have been relatively muted due to persistent dollar weakness, and bond markets, while initially rattled, have since stabilised. Still, with so many variables in play, the cross-border landscape remains a key wildcard for traders to monitor.
Technical Overview
The S&P 500 is trading at 6515.40, up +0.15%, holding firm near record territory after months of steady gains. Since bottoming at 4802 in April, the index has staged a strong and orderly rally, with prices consistently riding the 30-day moving average higher.
Momentum indicators remain constructive. The MACD is flat but still above the zero line, reflecting consolidation rather than weakness.
Price action suggests that buyers are defending the 6450–6480 zone as near-term support, while resistance lies at 6520–6550, where the index has struggled to break higher.
If bullish momentum resumes, a clean breakout above 6550 could open the way toward 6600+. Conversely, failure to hold above 6450 may trigger a short-term correction back toward the 6300 area.
For now, the bias remains cautiously bullish, with dips continuing to attract buyers.
Cautious Forecast
While the S&P 500 remains buoyant and technically strong, caution is warranted in the sessions ahead. Much of the current rally is predicated on expectations of a Federal Reserve rate cut possibly as early as next week.
The Consumer Price Index (CPI) and Producer Price Index (PPI) reports due this week will be pivotal. A significant downside surprise could solidify the case for a larger rate cut, but an upside shock might force the Fed to hold steady.
While the path of least resistance appears upward for equities, traders should stay alert for rapid sentiment shifts and potential profit-taking near the 6520–6600 zone.
