The AEX price ended on a negative note last week. After the US central bank came up with a relatively strict narrative surrounding its interest rate meeting on Wednesday, just about all markets started to crash. What happened last week?
Painful blow for the AEX
While the AEX briefly stood above 890 points last week, and some investors hoped to break the 900 point barrier, the market was in for a rude awakening.
After Wednesday, that hope was completely extinguished, because the American central bank suddenly turned out to be a lot stricter than expected. Due to rising inflation, they expect to implement only two interest rate cuts in 2025, compared to three previously.
Just like the AEX, the American S&P 500 also fell as a result of that information. In the end, only just over 7% of all S&P 500 stocks were trading above their 20-day average.
That turned out to be an interesting signal for the time being, because it usually points to a local bottom. That percentage has now risen again to 11.35% of all S&P 500 companies, see middle panel.
At the same time, credit spreads have increased considerably, and it is important for the bull market that we see them decrease again. Rising credit spreads basically indicate an economy that has less confidence in the future.
The advantage? The credit spreads are also still very low at 2.91 (lower panel). But it is quite possible that we will see a period of weakness for a while.
Period of weakness for the market
There is a chance that the market will already find a bottom this week. In principle, the reaction last week was quite strong, and Bitcoin also continues to hold remarkably well at $95,000.
We will soon see the reaction of the AEX. And therefore there is a chance that we will still have a green Christmas, but there is of course also a scenario in which we will fall again. We simply cannot rule that out at this time.
In any case, the tension is back in the market.
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Source: https://newsbit.nl/kan-de-aex-herstellen-van-afgelopen-week/
