- Improving sentiment on hopes for a diplomatic solution to the Russia-Ukraine conflict drives the S&P 500 higher.
- The VIX, Wall Street’s gauge of fear, is down more than 4% before the open.
- All attention will be on the Fed projections and President Powell’s speech.
index futures S&P 500 extend their recovery of the previous day from the level of 4,137, the lowest level since last February 24. At the time of writing, the S&P 500 trades at 4,315, up 1.34% on the dayamid an improvement in market risk sentiment.
Reflecting the improvement in investor sentiment, it can be seen as the VIX index, known as the fear indicator of Wall Street, falls to 28.58 and loses -4.19% on the day at the time of writing.
The improvement in sentiment comes after positive news regarding the conflict between Russia and Ukraine and the hopes of a possible diplomatic solution. Russian Foreign Minister Sergey Lavrov said on Wednesday that “peace talks with Ukraine are not easy, but there is some hope of compromise“. Earlier in the day, the Sputnik media outlet reported that a Russian diplomat had said that “Moscow is ready for any format of dialogue on the crisis in Ukraine if the latter seeks diplomatic solutions”.
To this optimistic news is added the news reported by the Chinese media Xinhua, that the country’s government has said that measures will be taken to boost the economy during the first quarter and that will work to keep stock markets stable.
At the time of writing, the S&P 500 is close to the highs of the previous week, an area that could offer resistance and limit the advance. Everything will depend on the next catalyst, which will arrive during the American session today in the decision of the US Federal Reserve.
It is widely expected that The Fed makes its first rate hike of 25 basis points since the pandemic began. Since this move is already priced in, all attention will be on the updated growth and inflation projections and Fed Chairman Jerome Powell’s subsequent speech.
See: Federal Reserve Interest Rate Decision Preview: Is History a Guide?
See: Fed Preview: Powell will send the dollar lower with a moderate rise and a message of uncertainty
S&P 500 technical levels
Source: Fx Street
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