VIX Breaks August Highs; beware of resistance by Investing.com

Investing.com – European markets were flat almost mid-session on Wednesday – {Ibex 35, CAC 40, DAX… – in a tough few days in light of key macroeconomic inflation data and as we await the effects of future rate hikes .

“The turnaround in interest rate expectations continued to hurt equity markets yesterday. The S&P 500 reverses all the summer’s gains and returns to early June prices, while the Euro Stoxx 50 returns to March prices. Investors are beginning to balance the relative valuation between bonds and stocks. equities, which are more favorable to the former, and with expected real interest rates, as measured by the IRR of inflation-linked bonds, at their highest level since 2008. In this sense, pressure on equity markets will continue until equilibrium reaches equilibrium is.” , says Banca March.

“Uncertainty continues to creep into financial markets after central banks made their respective interest rate decisions, leaving the door open for further rate hikes before the end of the year on both sides of the Atlantic. Moreover, the words of some central bankers did not go down well with investors, as they dropped the option to keep interest rates high for longer,” warns Diego Morin, analyst at IG.

“All of the above translated into a rise in the Volatility Index (CBOE Volatility Index) in recent days, but we should not forget that the VIX has accumulated a gain of almost 40% since the September low, surpassing yesterday’s highs has broken through. last August ($18.90) and left new resistance at $19.50 in September. However, the VIX has settled on a medium-term downtrend line, connecting the declining highs since September 2022,” Morin explained.

“With the current economic outlook, we cannot rule out further moves in the VIX, especially if it manages to consolidate the above-mentioned levels, with the next resistance at $22, last May’s highs, and the year’s highs ($30 ) to leave. ) somewhat ‘far away’ but not impossible after the problems of the regional banks, again a situation that we should not forget,” said this expert.

Translated from Spanish using DeepL.