S&P, FTSE & Fed Focus: Weekly Market Report

Author

Samuel Leach
April 28, 2025

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SUMMARY

As I analyse the markets this weekend, we're witnessing a remarkable shift in sentiment compared to just five days ago. The S&P 500 has staged an impressive recovery, rising 5.5% for the week and exiting correction territory. The FTSE 100 has posted ten consecutive sessions of advances – its longest winning streak in eight years. Meanwhile, the VIX has declined from 32.61 to 26.22, reflecting a significant reduction in market fear.

The catalyst for this dramatic turnaround? Trump has scaled back his threats to fire Fed Chair Powell, with Reuters reporting a "generalised relief" among global policymakers. This de-escalation of tensions between the White House and the Federal Reserve has allowed markets to refocus on economic fundamentals ahead of next week's critical Fed meeting (April 30-May 1) and US jobs report (May 2).

Gold remains elevated at $3,318.95 but has pulled back from recent all-time highs, while oil continues to face pressure with WTI at $63.18, down nearly 12% year-to-date. In the currency markets, EUR/USD is hovering around 1.1360. At the same time, GBP/USD sits at 1.33262, with potential volatility ahead as Bank of England Governor Bailey signals a likely rate cut next month.

This week presents compelling opportunities across multiple asset classes, particularly in cyclical sectors that benefit from reduced political risk. Additionally, volatility strategies can exploit the VIX term structure, and tactical positioning is recommended ahead of the Fed meeting and the jobs report.

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POLITICAL LANDSCAPE & MARKET CONTEXT

The political environment has improved dramatically since my previous outlook. According to Reuters, Trump has scaled back his threats to fire Fed Chair Powell, with conversations among global policymakers revealing "generalised relief" at this development. This represents a significant de-escalation from last Monday's rhetoric when Trump called Powell a "major loser" and demanded immediate rate cuts.

Powell has continued to emphasise central bank independence in his communications, stating that the Fed's independence "is a matter of law" and that Fed officials are "not removable except for cause." Economists see ongoing risks for the next Fed chair's credibility, but the immediate threat to Fed independence appears to have receded.

On the trade policy front, there have been no significant new developments regarding tariffs this week. The previous electronics exemptions remain in place, and markets appear to have adjusted to the current tariff environment. However, the UK export agency's warning about "erratic tariffs" being harder to navigate than the pandemic remains relevant for businesses with global supply chains.

The combination of reduced threats to Fed independence and a pause in escalating trade tensions has created a much more favourable environment for risk assets, allowing markets to refocus on economic fundamentals ahead of next week's critical data releases and central bank meeting.

UK & US STOCK MARKET ANALYSIS

US markets have staged an impressive recovery since Monday's selloff. The S&P 500 closed at 5,525.21 on Friday, up 0.7% for the day and approximately 5.5% for the week, officially exiting correction territory. The Nasdaq Composite rose 1.3% on Friday, exhibiting a robust recovery in the tech sector, while the Dow Jones Industrial Average gained a slight 0.1%.

This recovery reflects a significant repricing of political risk as tensions between Trump and Powell eased. The technology sector has led the rebound, suggesting investors are becoming more comfortable with growth-oriented positions as uncertainty diminishes. Financial stocks have also stabilised as concerns about Fed independence have moderated.

The FTSE 100 has demonstrated remarkable resilience, closing at 8,415.25 on Friday, up 0.09% for the day. More impressively, the index has posted ten consecutive sessions of advances – its longest winning streak in eight years – with a weekly gain of nearly 1.7%. The FTSE 250 gained 0.5% on Friday, closing at 19,609.69.

The UK market's outperformance can be attributed to several factors: its relative insulation from US-China trade tensions, attractive dividend yields providing a buffer against volatility, and growing expectations for a Bank of England rate cut following Governor Bailey's recent comments.

Looking ahead, I see continued upside potential for both US and UK equities, with a particular emphasis on cyclical sectors that were most impacted by the previous week's selloff. The FTSE 100's strong momentum suggests that further gains are possible, especially if rate cut expectations continue to solidify.

VIX, GOLD & OIL MARKET DYNAMICS

The VIX has declined significantly from last week's elevated levels, closing at 26.22 on April 25, down from 32.61 on April 22 – a decline of approximately 19.6%. While still elevated compared to historical norms, this clear downward trend in volatility reflects diminishing market fear as political risks subside.

The VIX futures curve is now in steep contango, meaning future months are trading at significantly lower levels than the current spot VIX. This term structure creates potential opportunities for volatility strategies, which I'll discuss in the trading opportunities section.

Gold has pulled back from recent all-time highs but remains elevated at $3,318.95 per ounce as of April 26. Despite the improved risk sentiment, gold is still up 26.50% year-to-date, reflecting continued safe-haven demand amid broader macroeconomic uncertainties. The precious metal appears to be consolidating within a range of $3,250 to $3,400, creating potential for both support-based buying and resistance-based selling opportunities.

Oil continues to face pressure, with WTI crude at $63.18 per barrel, down 0.95% on Friday, and Brent crude at $66.91 per barrel. Since the beginning of 2025, oil prices have decreased by 11.92% (WTI) and 10.24% (Brent), reflecting ongoing concerns about global demand despite ongoing supply constraints. The Brent-WTI spread currently stands at $3.73, narrower than in previous weeks.

I expect gold to remain range-bound in the near term as reduced political uncertainty balances against broader macroeconomic concerns. Oil may find support around the $60-$61 level for WTI, creating potential value opportunities in select energy stocks with strong balance sheets and attractive dividend yields.

KEY ECONOMIC RELEASES THIS WEEK

This week's economic calendar features several critical releases that will shape market direction:

Federal Reserve Meeting (April 30-May 1)

  • This will be the first FOMC meeting since Trump scaled back threats to Fed independence.

  • The Fed is expected to maintain its current rate of 4.5%

  • Market focus will be on forward guidance language, any comments on recent political developments, and potential signals about the timing of future rate cuts

  • Powell's press conference will be scrutinised for any shift in tone regarding inflation and the growth outlook

US Labour Market Data (Friday, May 2)

  • US Nonfarm Payrolls and Unemployment Rate for April will be released

  • This key indicator of economic health will influence Fed policy expectations

  • Focus areas include job creation momentum, wage growth as an inflation indicator, and labour force participation trends

  • Strong jobs data could further reduce expectations for Fed rate cuts, while weakness could reignite recession concerns

US Auto Sales (Date TBA)

  • April Auto Sales figures will provide insights into consumer spending and the impact of auto tariffs

  • The 25% tariff on vehicles implemented on April 3 makes this release particularly significant

  • Market participants will be watching for signs of weakening demand or pricing pressures

UK Economic Indicators

  • Bank of England Governor Andrew Bailey has signalled a likely interest rate cut next month.

  • UK inflation slowed to 2.6% in March, from 2.8% in February, supporting the case for monetary easing.

  • Any additional comments from BoE officials ahead of next month's meeting will be closely monitored.

  • UK Money and Credit data will provide insights into lending and consumer behaviour

US Housing Vacancies and Homeownership (Monday, April 28)

  • This report will be released at 10:00 AM ET

  • Housing sector performance is closely tied to interest rate expectations

  • Will provide insights into the health of the real estate market

I'll be paying particular attention to the Fed meeting and subsequent press conference, as Powell's tone will be crucial for market direction. The jobs report on Friday will also be significant, potentially confirming or challenging the narrative established by the Fed earlier in the week.

SIMPLIFIED TRADING OPPORTUNITIES FOR THE COMING WEEK

Based on my analysis of current market conditions, here are straightforward opportunities that everyday investors should consider:

1. US Tech Stocks Poised for Recovery

With political tensions easing and the market rebounding, technology stocks offer attractive entry points. Consider adding quality tech names that were hit hardest in the recent selloff but have strong fundamentals:

  • Apple (AAPL): Consider buying around $175-$180, with a target price of $195. The company's strong cash position and consistent revenue make it a resilient entity.

  • Microsoft (MSFT): Consider entry points around $410-415, with a target of $440. Their cloud business continues to show strong growth.

  • Simple ETF Alternative: For those who prefer not to select individual stocks, the Technology Select Sector SPDR (XLK) provides broad exposure to the technology sector. Look to buy below $195 if we're lucky enough to see it.

If you're concerned about potential volatility, consider a simple dollar-cost averaging approach – invest a fixed amount each week rather than all at once.

2. UK Dividend Stocks for Rate Cut Benefits

With the Bank of England likely to cut rates soon, UK dividend stocks offer both income and potential capital appreciation:

  • National Grid (NG.L): This utility offers a solid dividend yield and should benefit from lower rates. Look to buy below 1050p.

  • British American Tobacco (BATS.L): With a high dividend yield and defensive characteristics, it's worth considering below 2500p.

  • Simple ETF Alternative: The iShares UK Dividend UCITS ETF (IUKD.L) provides exposure to high-yielding UK stocks in a single investment.

These investments are particularly suitable for income-focused investors looking for stability with the potential for modest capital appreciation.

3. Gold as a Simple Hedge

Gold has pulled back from recent highs but remains in a strong uptrend. For everyday investors looking to add some protection to their portfolios:

  • Physical Gold ETFs: Consider SPDR Gold Shares (GLD) or iShares Gold Trust (IAU) for straightforward exposure to gold prices. Look to buy if gold dips toward the $3,250-3,280 range.

  • Gold Miners for Amplified Returns: For those comfortable with more volatility, Newmont (NEM) or Barrick Gold (GOLD) offer leveraged exposure to gold prices. These miners have strong balance sheets and established operations.

A simple approach is to allocate 5-10% of your portfolio to gold-related investments as a hedge against uncertainty.

4. Energy Stocks at Value Prices

Oil prices have fallen significantly this year, creating potential value in select energy stocks with strong dividends:

  • Exxon Mobil (XOM): With its dividend yield above 3.5% and strong balance sheet, consider buying below $110.

  • Chevron (CVX): Another integrated major with a solid dividend, look for entry below $155.

  • Simple ETF Alternative: Energy Select Sector SPDR (XLE) provides broad exposure to the energy sector in a single investment.

These energy investments are suitable for value-oriented investors who can tolerate some volatility while collecting dividends.

5. Simple Fed Meeting Strategy

The Fed meeting this week (April 30-May 1) will likely move markets. Here's a straightforward approach:

  • Before the Meeting: Consider reducing exposure to interest-rate sensitive stocks (like real estate and utilities) by about 10-15% if you're overweight these sectors.

  • If Fed Sounds Optimistic: Add to economically sensitive sectors like financials, consumer discretionary, and industrials. JPMorgan Chase (JPM) and Home Depot (HD) are quality names to consider.

  • If Fed Sounds Cautious: Add to defensive sectors like consumer staples and healthcare. Procter & Gamble (PG) and Johnson & Johnson (JNJ) are solid options.

This approach allows everyday investors to respond to the Fed's tone without complex trading strategies.

6. US Jobs Report Reaction Plan

Friday's jobs report (May 2) will provide crucial insights into the economy's health. Here's a simple plan:

  • Strong Jobs Report: If we see over 200,000 jobs added and low unemployment, this supports economically sensitive sectors. Consider adding to financial stocks like Bank of America (BAC) or industrial names like Caterpillar (CAT).

  • Weak Jobs Report: If job growth disappoints (under 150,000), this would support defensive sectors. Consider adding to utilities via the Utilities Select Sector SPDR (XLU) or consumer staples via the Consumer Staples Select Sector SPDR (XLP).

The key is not to overreact – make modest adjustments rather than wholesale portfolio changes based on a single data point.

7. UK-US Currency Opportunity

With the Bank of England signalling rate cuts while the Fed holds steady, there's a potential opportunity in the GBP/USD currency pair:

  • Simple Approach: If you're planning to travel to the UK or have upcoming GBP expenses, consider converting some USD to GBP if the pound rallies toward 1.34-1.35, as it may weaken if rate cut expectations firm up.

  • For More Active Investors: Currency ETFs like Invesco CurrencyShares British Pound Sterling Trust (FXB) offer a way to express views on the pound without forex accounts.

This is particularly relevant for investors with international exposure or upcoming travel plans.

CONCLUSION & OUTLOOK

As we enter the new trading week, markets stand at a much more favourable juncture than just five days ago. Trump's scaling back of threats to fire Fed Chair Powell has significantly reduced political risk, allowing markets to refocus on economic fundamentals ahead of critical data releases and central bank meetings.

The S&P 500's exit from correction territory and the FTSE 100's impressive winning streak reflect growing investor confidence, while the declining VIX indicates a reduction in fear and uncertainty. Gold's pullback from all-time highs and oil's continued weakness suggest a more nuanced outlook for commodities.

I expect the week to begin with continued momentum in equity markets, particularly in cyclical sectors that were most impacted by the previous week's selloff. The Fed meeting on Wednesday and Thursday will be crucial in determining market direction, with Powell's tone regarding inflation and the growth outlook being the key focus.

For UK investors, the FTSE 100's strong momentum and expectations for a Bank of England rate cut create compelling opportunities in rate-sensitive sectors. The pound may face pressure as rate cut expectations firm up, potentially benefiting UK exporters.

In this environment of reduced political uncertainty but ongoing economic challenges, I'm emphasising a balanced approach with a slight cyclical tilt, straightforward investment ideas, and simple strategies for responding to key economic events. The coming week promises to be eventful, with the Fed meeting and jobs report likely to set the tone for markets in the months ahead.

Samuel Leach
Founder of www.samuelandcotrading.com