Forex Analysis & Reviews: 20.01.2025 - The Market Finds Shelter

Live Chat

InstaForex - Official partner of Dragon Racing

This section features the most important information about trading with InstaForex. We provide both analysis from leading experts for experienced traders and articles on trading conditions for beginners. Our services will help increase your profit potential.

Become Trader

Account Opening

See also

Trading Conditions

Forex Analytics

Charts

This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.

Start as Beginner

How to start trading

Useful information

Training and recordings

InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.

Become Investor

PAMM System

ForexCopy System

Passive investments

OYS account

Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.

Become Partner

Main Page

Partner Area

Advantages for Affiliates

Registration

This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.

All Promo Campaigns

Bonuses

Contests

Events

Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.

Full details

Forums

We are in social networks

Forex humour

Forex Portal

InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.

Learn More

History

Why Choose Us

InstaSport

Regulation

Company News

Awards

InstaForex Stars

InstaForex Offline

Headquarters

Key documents

Social Responsibility

InstaForex - Official partner of Dragon Racing

20.01.2025 09:02 AM

The Market Finds Shelter

The S&P 500 achieved its best weekly performance since the November U.S. presidential election, just before Donald Trump's inauguration. Initially, investors worried that his protectionist policies could negatively impact the U.S. economy. However, they now believe that the potential benefits from deregulation and fiscal stimulus will outweigh the drawbacks. Is this wishful thinking?

The broad market index surged by 4.7% during the week ending January 17, fueled by a strong start to the corporate earnings season and a 0.2% month-over-month decline in core inflation in the U.S. Major banks such as JP Morgan, Goldman Sachs, and Citigroup reported positive fourth-quarter earnings, alleviating investor concerns. The likelihood of the Federal Reserve refraining from rate cuts in 2025—or even increasing rates—has decreased, boosting confidence in two expected monetary easing actions this year. Federal Open Market Committee (FOMC) official Christopher Waller even suggested the possibility of easing monetary policy in March.

Weekly S&P 500 Performance

Bank of America suggests that U.S. equities could benefit from Donald Trump's return to the White House. During his first term, Trump viewed the performance of U.S. stock indices as a measure of his effectiveness, and it is unlikely that this perspective will change from 2025 to 2028. UBS Global Wealth Management estimates a 9% increase in corporate earnings this year, which could push the S&P 500 to 6,600.

According to Jefferies, since 1929, the S&P 500 has historically followed a zigzag pattern during presidential inaugurations, averaging gains of 8.3% and 9.5% six and twelve months, respectively, after a new president takes office.

In the early days of Trump's second term, investors will consider the impacts of tariffs and anti-immigration policies alongside the potential benefits of fiscal stimulus and deregulation. It appears that the new president may begin by implementing import tariffs, setting this term apart from his previous one.

Market Expectations for Fed Policy

During his term from 2017 to 2020, Trump stimulated the economy through tax cuts but later resorted to tariffs and trade wars, which ultimately slowed down growth. This time, the sequence may be reversed. Import tariffs are likely to accelerate inflation and hinder economic growth, even though the current outlook remains strong. For example, the IMF predicts that U.S. GDP will grow by 2.8% in 2024. Consequently, uncertainty regarding the Federal Reserve's policy stance could increase, with derivatives currently indicating a 25% probability of a federal funds rate hike.

On the daily chart, the market illustrated the principle: "If the market does not move as expected, it is likely to move in the opposite direction." After an unsuccessful attempt to break below the lower boundary of the triangle, the market successfully breached the upper boundary. A strong test of resistance at 6010 could justify expanding long positions that were initiated at 5930.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.