Stock Rally Stalls: S&P500 Futures Hit 4-Week Low

The S&P500 Futures (CME: ES) faced a tumultuous week as geopolitical tensions and inflation concerns weighed heavily on U.S. stocks. Ending the prior week down by 1.63%, marking the second consecutive week of losses, the index futures hit a four-week low amidst the challenging market landscape.  

Heightened tensions surrounding the Russia-Ukraine conflict and escalating issues in the Middle East prompted investors to seek refuge in safe-haven assets like Gold and the U.S. Dollar, leading to a 70 basis point rise in the Gold Spot Price (XAUUSD) and a significant 1.66% surge in the Dollar Index (DXY) last week.  

Additionally, U.S. inflation accelerated to 3.5%, surpassing previous readings and expectations, consequently postponing expectations of a rate cut from June to September. Amidst this backdrop, the commencement of the first-quarter earnings season, particularly reports from major banks, provided a critical gauge for traders assessing the underlying assets within the S&P500. As market participants navigate through these uncertainties, the performance of the S&P500 Futures remains closely watched, reflecting broader market sentiment and economic fundamentals. 


The S&P500 Futures have been navigating a downtrend recently, trading below the 100-day moving average and exhibiting downside pressures evident in the formation of a descending channel pattern.  

Resistance materialized at the channel’s upper boundary around the 5257.50 level, fueling selling pressure and contributing to the futures’ decline. However, amidst this bearish sentiment, the market found support at the 5150.00 level, particularly notable amid oversold RSI conditions. 

As the new week commenced, the index futures began to rebound, trading 50 basis points higher during the London session. This upward movement initiated a retracement towards the 38.20% Fibonacci Retracement level, indicating a potential shift in momentum. Should this upside momentum persist, traders may look towards the 50% Fibonacci level as a point of interest to the upside. Conversely, a resurgence of downside pressures could prompt a retest of the 5150.00 level, potentially indicating a continuation of the current bearish trend. 


In conclusion, the S&P500 Futures faced challenges amid geopolitical tensions and inflation worries, reflected in a 1.63% weekly decline last week. Technical analysis reveals a potential rebound, with support at 5150.00 and resistance at 5257.50. Market sentiment remains pivotal amidst uncertainties, guiding traders as they navigate key technical levels. 

Sources: U.S. Bureau of Labor Statistics, CME, Reuters, TradingView 

Piece Written By Nkosilathi Dube, Trive Financial Market Analyst 

Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.

Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.

CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.