US inflation data spooks investors – Episode 107 of Damien’s Midweek Markets

1 min Read Published: 12 May 2021

The 107th episode of my weekly YouTube show where I discuss what is happening in investment markets and what to look out for. This week I explain how US inflation data and a UK election has impacted investment markets.

Each show lasts between 5-10 minutes and is aimed at DIY investors (including novices) seeking contemporary analysis to help them understand how investment markets work.

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  1. Hi Damien,

    Quick question about ‘Resistance Lines’ for example this week you talk about 4200 for the S&P and 7000 for the FTSE. Presumably most investors are focussing on individual companies, rather than the index and I could understand resistance lines in individual companies but it just seems too coincidental that thousands/ millions of individual decisions about whether to buy or sell individual companies, could result in such pronounced ‘cut off levels’ for the market in general.

    They obviously do, so in an attempt to answer my own question I’ve got to assume that investors pay more attention to the market in general, ie the index, than they actually do to the performance of the individual stocks they’re investing in.

    Thanks

    1. Hi Mark,

      The truth is somewhere in the middle. A lot of investors simply buy and sell the headline index which explains why you get these resistance lines. But it is also because the indices are made up from stocks that often respond to these lines of support and resistance. Therefore the index will be a reflection of that. If lots of stocks in the index start to struggle then the wider index will too eventually.

      But also remember that huge hedge funds and institutional investors are responsible for a lot of the buying and selling we see, even at an index level.

      Best wishes

      Damien

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