Futures on US market indices kept falling as traders were concerned about the likelihood of keeping interest rates high and the escalation of geopolitical tensions. After yesterday's weekend, futures contracts for the S&P 500 and Nasdaq 100 indices decreased by at least 0.7% each. The Dow Jones industrial average fell around 0.5%. Shares of Chinese technology companies fell in early trading as an e-commerce price war started. Indices of European stocks were trading on a side channel.
It is clear that the stock market surge that was seen at the start of this year was for nothing, and the dollar has started to rise again after central banks reaffirmed their commitment to fighting inflation. Due to this and the price increase that has continued, traders were obliged to project a 75 basis point rate increase by the Federal Reserve before it reaches its peak in July of this year. The swap market is now anticipated to decrease by 20 basis points by the end of the year, compared with a change of 50 basis points earlier this month. They also reduced their forecasts for the first rate cut in the US.
The Fed has not yet indicated that it will depart from the course it has been on for the entirety of last year, and it appears that the markets are beginning to believe. More investor optimism in January of this year may have resulted in significant losses, which will make them more cautious. Better US economic data will compel the Fed to maintain its aggressive policy. As a result, I wouldn't wager on the bullish rally's continuation into this year's spring.
For the first time since January, the yield on Japanese 10-year bonds briefly exceeded the central bank's yield curve, which is set at 0.5%. Investors are uneasy as they get ready for a speech by Kazuo Ueda, a contender for the position of Bank of Japan governor who will soon face parliamentary confirmation hearings. This coming Friday is the performance date.
When investors considered the likelihood of tightening monetary policy even more in light of signals that Chinese demand is rising, oil futures displayed conflicting characteristics.
Regarding the S&P 500's technical picture, riskier assets continue to be under pressure. Only if the bulls can push the index back over $4,064 and $4,091 today, from where it is not far to $4,150, will the index be able to recover. The bulls' control over $4,185, which will put an end to the bear market, will be no less of a target. After that, we can anticipate an upward movement that is more confidently supportive of the trading instrument at $4,208. The level of $4,229 is a little higher and will be challenging to surpass. Buyers are only required to declare themselves in the area of $4,038 in case of additional downward movement against the backdrop of strong statistics for the United States and lack of demand. As it breaks down, the trading instrument will move quickly to $4,010 and create a path to $3,983.