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08.09.2023 02:09 PM
US premarket for September 8: US stock market hovers near weekly lows

US stock index futures started Friday's trading in the red. The S&P 500 futures dropped by 0.2%, while the tech-heavy NASDAQ fell by 0.3%. The US dollar retreated from its six-month peak as dovish remarks from Federal Reserve officials sparked rumors that the regulator might maintain interest rates at their current levels in their September meeting. There is also speculation that they might avoid rate hikes in the ongoing monetary tightening cycle.

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Yesterday, New York Federal Reserve Bank President John Williams stated in an interview that US monetary policy was rightly positioned and there was no need to expose the economy to further risks. He also highlighted that the current Fed policy maintained a balanced demand-supply equilibrium and reduces inflation. Williams mentioned that the Fed had significantly increased interest rates. However, he did not rule out the possibility of adjustments to ensure inflation remains close to the 2% target.

Meanwhile, Europe's Stoxx 600 index is experiencing its eighth consecutive day of decline, the longest streak since 2016.

This week, stock markets have been affected by data hinting at deepening economic downturns in Europe and China. Sentiments are particularly gloomy regarding European markets, which have witnessed 26 straight weeks of capital outflows. Nevertheless, the growing disparity in economic growth outlooks between the US and the rest of the world was under the spotlight. Given the solid performance of the US economy, as evidenced by recent labor market data and strong PMI indices, markets are turning to the US dollar.

BlackRock International noted that the recent US dollar growth momentum had exceeded all expectations. However, there are doubts if the dollar can maintain its stance, especially as the Fed might hint at a hawkish pause in their September meeting.

In China, the yuan is nearing an all-time low. However, Chinese officials do not take measures, likely because they may boost the country's exports.

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As for the commodities market, gas prices surged by 11%, while Brent crude hovered around $90 a barrel. The spike in gas prices came amid issues at Chevron Corp's key facilities in Australia. Workers began a partial strike on Friday after talks failed to reach an agreement.

As for the S&P 500, the pressure on the index has returned, and its upside potential is capped. Bulls need to secure control at $4,469. Only from this level, they can push the price to $4,488. Bulls also should control $4,515 to reinforce the bullish trend. If the index declines due to decreased risk appetite, bulls will have to protect $4,447. A breach of this level may push the index back to $4,427, paving the way to $4,405.

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