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15.02.2023 07:15 PM
US premarket on February 15: high inflation in the US did not significantly harm the stock market

After yesterday's stress brought on by high volatility due to the contradictory interpretation of inflation in the US, futures on US stock indices are trading lower. Investors evaluated the impact of the UK's declining inflationary pressure on the outlook for interest rates as European indices stabilized.

The S&P 500 futures contract fell 0.3%, while the high-tech Nasdaq 100 futures contract fell 0.4%. Following the company's presentation of a revenue forecast that exceeded analysts' expectations, shares of Airbnb Inc. increased in the premarket.

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Investors welcomed yesterday's US consumer price index data, which revealed that prices increased more rapidly than anticipated. Subsequent comments by representatives of the Federal Reserve System negatively affected the US stock market. The president of the Federal Reserve Bank of Philadelphia, Patrick Harker, said that the Fed is approaching the point where rates become quite restrictive. The central bank may need to take additional action to battle inflation, according to his colleagues Patrick Harker and Thomas Barkin, while Dallas Fed President Lorie Logan cautioned that the rate hike may endure longer than initially anticipated.

Today, a report on UK inflation was released, and while it remained high, in the double digits and five times higher than the Bank of England's target, the fact that it fell more than economists expected to put pressure on the pound, which performed poorly against the US dollar. Because of this, traders have altered their predictions for future rate increases in the UK.

After increasing by 10 basis points on Tuesday, interest rates on two-year U.S. Treasuries remained at their highest levels since November. Additionally, 10-year bonds held steady despite losing four basis points the prior session.

Many traders are currently attempting to predict when interest rates will rise, but it is already clear that the tightening of monetary policy will probably continue, which will cause the economy to enter a recession by the end of the year.

The shares of Deutsche Lufthansa AG, one of the European equities that received attention on Wednesday, decreased after the airline canceled all flights due to issues with its computer systems. Shares of Kering SA rose sharply as investors ignored the sales failure in the fourth quarter to focus on what the owner of Gucci can benefit from the opening of China.

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Following projections from the industry that US inventories had significantly increased, oil prices have dropped for a second day. As China's economy begins to function again after being shut down for years owing to the coronavirus, the International Energy Agency has increased its predictions for global oil demand. Gold prices are down.

Regarding the S&P 500's technical outlook, the pressure on riskier assets has slightly subsided. The index can continue to recover only if the bulls manage to return above $4,150 today. 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 confident to support 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 $4,116 in the event of a negative movement against the backdrop of rising retail sales in the United States and low demand. When it breaks down, the trading instrument will move quickly to $4,091 and open the way to $4,064.

Jakub Novak,
Analytical expert of InstaForex
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