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25.07.2023 01:36 PM
US premarket on July 25: Chinese leaders advocate further economic stimulation

Futures on US stock indices have risen slightly from yesterday's closing level, indicating a relatively calm situation. The Fed's two-day meeting begins today, and the outcome will determine the course of monetary policy. S&P500 futures gained 0.3%, while NASDAQ added 0.4%. Stoxx Europe 600 bounced back after a shaky start to the week.

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Investors seem hesitant to make big bets due to uncertainty about signals from the US Federal Reserve and the European Central Bank. This week, reports from Microsoft Corp., LVMH, and Google Alphabet Inc.'s parent company are expected, which may bring some surprises.

As a result, investors do not feel secure enough to re-enter the stock market ahead of such an eventful week. Considering the recent data from the US is somewhat tolerable, a continuation of the bullish rally can be expected if the Fed announces the end of its rate-hiking cycle to combat inflation.

On Tuesday, the key review of eurozone bank lending revealed a record decline in demand for corporate loans. Alongside gloomy business forecasts from Germany and yesterday's data, many questions arise about the ECB's ability to continue raising interest rates aggressively.

Following the Politburo meeting, Chinese leaders stated their readiness to provide additional support to the economy, leading to a rise in technology company stocks listed on the Hong Kong Stock Exchange. The Chinese real estate index also increased. This stimulating signal led to growth in emerging markets stocks and commodity companies. Shares of mining companies Anglo American Plc and Rio Tinto Plc surged by more than 3%. As for currencies, the yuan reached its strongest level in over a week.

Wheat prices rose to a five-month high after Russia suspended grain deals.

Regarding the S&P 500 index, demand for the trading instrument remains. Bulls have a chance to continue the uptrend, but they need to hold the price above $4,557 and $4,582. From these levels, a surge to $4,609 may happen. Another important task for bulls is to control $4,637 to strengthen the bullish market. In case of a downward movement due to decreased risk appetite, bulls should protect $4,539. A breakthrough of this level may quickly push the trading instrument back to $4,515 and $4,488.

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