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29.03.2023 01:46 PM
US premarket trading on March 29, 2023. US stock market rises noticeably

US stock index futures rallied on rising demand for risky assets. Likewise, Chinese tech stocks edged higher, boosting investor sentiment. Meanwhile, fears of new banking woes in the United States kept easing. Futures on the S&P 500, the NASDAQ, and the Dow Jones added over 0.5%, almost 1.0%, and 0.3% respectively.

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European tech stocks were on the rise as well. Thus, UBS Group AG's share value increased after the Swiss lender announced the return of the former CEO of Credit Suisse Group AG to oversee the takeover.

Treasury bonds rose after a two-day sell-off. Investors are now bracing for comments from Federal Reserve officials and new economic reports, which are set to be released later this week. These reports may shed some light on the regulator's future stance on monetary policy. All eyes will be on the PCE index, which is the Federal Reserve's preferred measure of inflation. Its figures will be taken into account at the next FOMC meeting.

The probability of further rate hikes is now 50%. The central bank is expected to announce a 0.25% rate hike at the next meeting and then either pause tightening or even cut rates. Quite a few major investment firms, including the BlackRock Investment Institute, suggest that investors may be wrong about rate cuts coming soon and that it is unknown how long it may take for inflation to stabilize.

The bad news for markets is that the Federal Reserve is likely to cut rates as early as the second quarter of 2024 if US growth slows significantly and the banking sector is under stress again.

Some experts believe that China's reopening and a surge in consumer activity, which the markets still underestimate, will be another factor that could trigger a spike in inflation.

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Speaking of a recession, risks will remain high if the Federal Reserve's monetary policy does not change.

Elsewhere, crude rose amid a steep decrease in US inventories.

Bitcoin returned to the level of $28,500 per coin. The premier crypto is now bracing for new yearly highs. Gold also recovered slightly and is about to continue the bull run.

As for the S&P500, the pressure on risk assets has decreased. If the bulls push the index above $4,010, the target will stand at $4,040. If they manage to take the $4,065 mark under control, a new bull trend will begin. However, if the price goes down amid subdued demand, the instrument may break through $3,977 and head toward $3,950, targeting $3,920.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2024
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