US Premarket on January 31: Investors continue to sell stocks.
January 31, 2023 4:20 pm
Investors weighed corporate profit forecasts in the hopes that the Federal Reserve would decrease the pace of rate hikes as inflation slowed, which led to a decline in U.S. stock index futures. S&P 500 and Nasdaq 100 futures declined by 0.4% and 0.3%, respectively. By 0.2%, the Dow Jones Industrial Average decreased. The dollar index has increased as Treasury bond yields have decreased.
Investors hoping the Fed will ease its aggressive rate hike cycle will aggravate the situation by anticipating smaller firm profits this year. Risky assets will undoubtedly come into focus as a result of the potential for interest rates to stabilize at 5% following the March meeting, but much will depend on the first quarter economic data. If we don’t go too far ahead of ourselves, the Fed’s actions in the near future will keep markets volatile, so investors will not rush to acquire cheaper assets even under current conditions. As a result, the stock market’s potential for growth is constrained.
Even though the data suggested that the eurozone could avoid a recession following an unexpected GDP rise at the end of 2022, the Stoxx Europe 600 index kept falling. However, it also led traders to boost their predictions on the European Central Bank tightening its monetary policy, which is terrible for the stock market. In contrast to economists’ forecasts of a 0.1% decline, Eurostat reports that the eurozone’s gross domestic product increased by 0.1% in the fourth quarter of this year. While France and Spain showed growth, production fell in Germany and Italy.
Following the filing of fraud allegations by American firm Hindenburg Research last week, the market value of ten conglomerate companies in Asia fell by nearly $75 billion as the sale of Adani Group shares continued.
Regarding intraday movements, it’s expected that the market will continue to be under pressure because the Fed’s decision, which won’t be made public until tomorrow, looms over it. Rate increases of 0.25 percentage points are anticipated by the US central bank. Investors will be paying close attention to the tone that officials adopt after Fed Chairman Jerome Powell repeatedly tried to dissuade speculators who were anticipating a rate decrease later this year. However, the increase in stock prices this month suggests that the market has thus far ignored Powell’s caution about continuing with strict regulations.
Oil fell further in other markets after hitting a three-week low on Monday. Traders are anticipating additional details regarding Chinese demand, the Fed’s decision, and the most recent OPEC+ forecasts.
Regarding the S&P 500’s technical picture, despite the correction, the odds are still in favor of buyers. The index may rise further, but this requires recovery to the level of $4,010. Controlling $4,038 will be just as important to the bulls. We can therefore anticipate a more assured upward movement to support the trading instrument at $4,064 just after that. The level of $4,091 is a little higher and will be challenging to surpass. In the event of a downward movement and a lack of demand, buyers should declare themselves in the area of $3,980. When it breaks down, the trading instrument will move quickly to $3,960 and provide a path to $3,923.
The material has been provided by InstaForex Company – www.instaforex.com
Investors weighed corporate profit forecasts in the hopes that the Federal Reserve would decrease the pace of rate hikes as inflation slowed, which led to a decline in U.S. stock index futures. S&P 500 and Nasdaq 100 futures declined by 0.4% and 0.3%, respectively. By 0.2%, the Dow Jones Industrial Average decreased. The dollar index has increased as Treasury bond yields have decreased.
Investors hoping the Fed will ease its aggressive rate hike cycle will aggravate the situation by anticipating smaller firm profits this year. Risky assets will undoubtedly come into focus as a result of the potential for interest rates to stabilize at 5% following the March meeting, but much will depend on the first quarter economic data. If we don’t go too far ahead of ourselves, the Fed’s actions in the near future will keep markets volatile, so investors will not rush to acquire cheaper assets even under current conditions. As a result, the stock market’s potential for growth is constrained.
Even though the data suggested that the eurozone could avoid a recession following an unexpected GDP rise at the end of 2022, the Stoxx Europe 600 index kept falling. However, it also led traders to boost their predictions on the European Central Bank tightening its monetary policy, which is terrible for the stock market. In contrast to economists’ forecasts of a 0.1% decline, Eurostat reports that the eurozone’s gross domestic product increased by 0.1% in the fourth quarter of this year. While France and Spain showed growth, production fell in Germany and Italy.
Following the filing of fraud allegations by American firm Hindenburg Research last week, the market value of ten conglomerate companies in Asia fell by nearly $75 billion as the sale of Adani Group shares continued.
Regarding intraday movements, it’s expected that the market will continue to be under pressure because the Fed’s decision, which won’t be made public until tomorrow, looms over it. Rate increases of 0.25 percentage points are anticipated by the US central bank. Investors will be paying close attention to the tone that officials adopt after Fed Chairman Jerome Powell repeatedly tried to dissuade speculators who were anticipating a rate decrease later this year. However, the increase in stock prices this month suggests that the market has thus far ignored Powell’s caution about continuing with strict regulations.
Oil fell further in other markets after hitting a three-week low on Monday. Traders are anticipating additional details regarding Chinese demand, the Fed’s decision, and the most recent OPEC+ forecasts.
Regarding the S&P 500’s technical picture, despite the correction, the odds are still in favor of buyers. The index may rise further, but this requires recovery to the level of $4,010. Controlling $4,038 will be just as important to the bulls. We can therefore anticipate a more assured upward movement to support the trading instrument at $4,064 just after that. The level of $4,091 is a little higher and will be challenging to surpass. In the event of a downward movement and a lack of demand, buyers should declare themselves in the area of $3,980. When it breaks down, the trading instrument will move quickly to $3,960 and provide a path to $3,923.
The material has been provided by InstaForex Company – www.instaforex.com
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