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US equities remained relatively stable since our last report, yet a number of issues tend to tantalise the markets. In today’s report we are to have a look at the Fed’s interest rate decision, the takeover of Warner Bros and its effect on Netflix, NVIDIA’s chip exports and a ban of social media accounts in Australia. We are to conclude the report with a technical analysis of S&P 500’s daily chart.
The Fed’s interest rate decision
We highlight the Fed’s interest rate decision today as the key issue for the week for US equities. The bank is widely expected to cut rates and the market seems to maintain some dovish expectations for the day after, with three more rate cuts expected in 2026. Hence, even should the bank deliver the expected rate cut, it may take more for US equities to gain some ground. Should the bank cut rates as expected, the market’s focus is to shift towards the Fed’s forward guidance. The bank’s forward guidance is to be described in the accompanying statement the new dot plot and Fed Chairman Powell’s press conference. Should the new dot plot actually show that Fed policymakers expect rates to drop less than 75 basis points in 2026, that the market expects it could be perceived as a hawkish signal that may weigh on US stock markets. Also caution should be placed on Fed Chairman Powell’s press conference as he is well known to be able to reverse the market sentiment. Possible hawkish comments by the Fed Chairman, contradicting the markets’ dovish expectations could also force the market to readjust its expectations and thus could weigh on US equities. Overall our base scenario is for a hawkish cut, yet should the bank allow for the scenario for more monetary policy easing to emerge in the coming year, possibly a wider easing than what the market’s expect, we may see US stock markets rallying.
Hollywood drama by Netflix
The market was stunned on Friday as a deal was announced for Netflix to take over Warner Bros. Discovery in exchange for $72 billion. It should be noted that a bidding war was ongoing at which Paramount Skydance and Comcast were involved. Despite an approval for the deal still being pending, given antitrust laws, within three days, Paramount Skydance submitted a rival all-cash bid for the entirety of Warner Bros. Discovery, directly to it’s investors. The move has widely been viewed as a hostile takeover and is reported to have been financed by an array of banks, billionaires and sovereign-wealth funds, while it’s also aided by Jarred Kushner, US President Trump’s son-in-law, providing thus also a political dimension to the issue. Also the US Supreme Court is reported to appear ready to enforce antitrust regulations, members of Congress sharply question the takeover and Netflix is now facing a class lawsuit. Given that the deal seems to be turning south, Netflix’s share price has also taken the same direction and should the news continue to be adverse for the streaming company, we may see its share price losing further ground.
NVIDIA’s chip exports
NVIDIA’s share price got some support on Monday as US President Trump gave his blessing for the company to export its H200 chips to China. The news provided some modest support for NVIDIA’s share price, as such a license could allow for NVIDIA to expand sales substantially. It should be noted that he news at the same time created substantial worries among GOP US Congress members, for national security threats. It should be noted, though, that NVIDIA had built location verification technology that would show at which country the chip is operating in, which could ease somewhat the political worries in Washington. Yet the issue seems to be in China. The Chinese responded positively, yet regulators in Beijing as discussing ways to limit access to NVIDIA’s H200 chips, in an effort to boost its own chip production. For the time being, we view the issue as being on the positive side for NVIDIA, yet strong limitations from China could moderate if not reverse the support for its share price.
Australia’s social media ban
Australia today started enforcing a ban of social media for children under 16 years old. Australia has ordered the owners of key platforms such as TikTok, YouTube, Instagram and Facebook to block children or face the possibility of fines of up to AU$49.5 million, given new legislation. The ban enforcement has been closely watched by regulators around the world and is considered as critical, as should it prove to be successful, other countries may follow. The share prices of mega tech companies that own such platforms, such as Google and Meta, could suffer losses, as a possibly successful ban could limit their users and thus their income.
TECHNISCHE ANALYSE
US500 Daily Chart
Support: 6715 (S1), 6490 (S2), 6190 (S3)
Resistance: 6930 (R1), 7250 (R2), 7500 (R3)
On a technical level, we note that since our last report S&P 500 seems to have stabilised, maintaining a sideways motion just below the 6930 (R1) resistance line. We tend to maintain a bias for the sideways motion to be maintained at the current stage, possibly between the 6930 (R1) resistance line and the 6715 (S1) support level. The RSI indicator remains close to the reading of 50, just above it, implying a relative indecisiveness on behalf of traders about the future direction of the index’s price action. Should the bulls take over, we may see S&P 500 breaking the 6930 (R1) resistance line which marks a record high level for the index and we set as the next possible target for the bulls the 7250 (R2) resistance level. Should the bears take over, we may see the index’s price action breaking the 6715 (S1) support line and start aiming for the 6400 (S2) support level.
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Disclaimer:
This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.
