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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Stock markets enjoy gains following Fed meeting

Equity markets have made headway following the Fed’s rate hike, as Powell moves to rule out 75 bps hikes.

​FTSE 100 pushes towards 7600

The fall in this index during the course of April was much less dramatic than that for US markets, and so the bounce here in the wake of the Federal Reserve (Fed) is much more modest.

However, the index recovered from yesterday’s losses and pushed back to unchanged overnight, and now looks to move on towards the previous highs in April at 7670 and 7690.

A break above 7700 puts the index on course for 7730, last seen in 2019, and then on to the 2018 highs at 7903.

A reversal below 7500 might suggest some further short-term weakness down towards 7400 and then 7300.

DAX moves above 50-day SMA

The Fed’s move bolstered stocks around the globe, with this index no exception.

Having made small gains before the decision, the index was able to push higher in the wake of it, and closed above its 50-day simple moving average (SMA). From here the next target is the 14,500 peak from late April, which saw the index spike higher and then retreat.

Before this, trendline resistance from the late March high at 14,900 comes into view. A breakout above this would mark a bullish development, although we still need to see a higher high to finally put an end to the March/April downtrend.

If the index fails to break trendline resistance and turns lower, then the late April low at 13,600 comes back into view, with a drop below this bringing the possibility of further losses in the direction of the March low.

Dow soars back to 34,000

Fed chair, Jerome Powell’s comment ruling out 75 basis point hikes by the Fed appeared to provide the spark for a major rally in US stocks, including the Dow, which went from near 33,000 to 34,000 in the space of a couple of hours.

Crucially this means that the wide area of support around the February and March lows once again provided the foundation for an equity bounce. If the price can push on above the 50-day SMA (34,094) then the 34,500 and 200-day SMA at 34,976 come into view.

A reversal back below 33,500 could signal that sellers are regaining control, but a bigger move to the downside would need to push below April’s low at 32,500, and then on below February’s low at 32,200.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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