After four consecutive days of gains, the S&P500 Futures (CME: ES) are attempting to close off a fifth day in positive territory. The index is approaching a second-quarter 2022 high and could potentially be in the running to close a fifth month higher.
With U.S. inflation cooling to 3% in June from 4%, the market has found confidence in a potential monetary tightening cycle pause nearing. The U.S. economy could be pointing towards a lesser need for more rate hikes due to a slightly subdued services sector month-on-month, a decline in manufacturing activity, and private sector Nonfarm employment. However, with core inflation still sticky at 4.8%, there could still be headwinds oncoming for the S&P500 Futures if it fails to taper off quickly enough for the Federal Reserve.
The S&P500 Futures has embarked on an uptrend with vigorous intention, leaving behind its 100-day moving average in the dust. The index has broken through multiple resistance levels on its way up and is now approaching a high formed earlier in 2022. The breakout above the 4493.75 level established a new support level, while the 4588.75 high forms the next significant resistance level.
With upside momentum in control, the index will likely continue on its uptrend, with the 4588.75 level probably earmarked as the next point of interest to the upside. In contrast, the faltering of upside momentum could present a case for a reversal, with the 4493.75 level most likely to be a point of interest to the downside.
Given that inflation is cooling in the U.S., aggressive rate hikes could become less likely. The S&P500 Futures will likely be boosted by a potential rate hike slowdown, which could improve borrowing costs and weigh less on earnings in the medium to long run. If upside momentum persists, the 4588.75 level could come into play.
Quellen: Reuters, TradingView
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