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31.08.2023 02:15 PM
US premarket on August 31: US stock market holds near monthly highs

Futures for US stock indices are trading in the green. S&P 500 futures have gained 0.2%, while the high-tech NASDAQ has added 0.3%. The yield on 10-year treasury bonds remains near a three-week low, as traders now focus more on tomorrow's US employment report. The European Stoxx 600 index is also in the green, boosted by record profits from Swiss UBS Group AG following its emergency acquisition of Credit Suisse Group AG.

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Investors are likely to continue buying risk assets until the start of September, as the September Fed meeting will be a significant market catalyst. However, tomorrow's US labor market data, which have recently disappointed traders, could also flip the situation. Special attention needs to be given to wages, which hold immense importance. Without a slowdown in wage growth, a soft landing is impossible, as this would push the Fed to raise rates again this autumn. Non-farm employment is expected to stand at 170,000 in August, down from 187,000 in July. A slight deceleration in hourly wage growth is also anticipated. We will delve into this in more detail tomorrow.

Today's less critical figures regarding weekly jobless claims, forecasted at 235,000, are unlikely to bring about significant market changes.

In the currency market, the euro has slipped 0.5% against the US dollar after core inflation in the Eurozone returned to slowdown in August, though overall prices remain steady. This places officials from the European Central Bank in a dilemma as they weigh the possibility of tightening policies against signs of economic slowdown.

Mainland China and Hong Kong stock indices fell as manufacturing activity in China contracted again, albeit less than expected. The services PMI showed a growth slowdown. As for expected mortgage changes, China's two largest cities have already eased mortgage requirements for some homebuyers in line with central government directives. Other cities are likely to follow suit soon, aiming to halt the record housing market decline.

Regarding other markets, Brent is rising for the third consecutive day, and gold has climbed following a series of fluctuations this week.

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As for the S&P 500, demand for the index remains, but its upward potential is limited by significant fundamental statistics. Bulls now need to gain control above $4,515. Only from this level, they may drag the price to $4,539. Bulls also need to control $4,557, which would reinforce the bullish market. In case of a downward move due to reduced risk appetite, bulls will have to protect $4,488. Breaking through whis level, the trading instrument may return to $4,469 and $4,447.

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