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07.06.2023 02:31 PM
US premarket on June 7, 2023: US stock market shows growth

US stock index futures have shown a slight increase in Wednesday's morning trading after failing to achieve it on Tuesday. Apple Inc., Nvidia Corp., and Microsoft Corp. shares dropped during early premarket trading. This indicates that the tech stock rally has paused, and that it was largely generated by the hype surrounding AI.

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At the same time, there's a growing probability that central banks will maintain high rates longer than previously expected. The fact that the Fed might only decide to lower rates at the end of this year is putting pressure on the NASDAQ, which is currently trading positively, showing a 0.3% gain. The broader S&P 500 has also added about 0.3%, while the Dow Jones Industrial Average has grown only by 0.2%.

EU shares are trading mixed as market sentiments were weakened by a more significant than expected drop in Chinese exports. European markets were also affected by the OECD's warning that the global economy is set for weak recovery, plagued by persistent inflation and restrictive central bank policies.

While weaker global trade is not newsworthy, many experts have noted how quickly China's bullish momentum has faded. Apparently, the trade wars currently being waged by the US and EU against China could genuinely harm China's GDP growth. This is also indicated by the fact that Chinese authorities plan to resort to several stimulus programs to maintain economic growth this year.

In the currency market, the Turkish lira fell about 7% to a record low against the dollar amid growing concerns about President Recep Tayyip Erdogan's appointment of former Merrill Lynch strategist Mehmet Simsek as his new finance minister. A return to more orthodox monetary policy has made government intervention in currency pricing less likely. The US dollar index has changed little.

US Treasury bond yields slightly increased after the announcement of the Treasury bill auction.

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Regarding the technical situation of the S&P 500, demand for the index has somewhat returned. Bulls still have a chance to start an upward trend, but they need to cling on to $4,290, from where a jump to $4320 can occur. An equally important task for the bulls will be to maintain control over $4,370, which will strengthen the bull market. In case of a downward movement against the backdrop of reduced risk appetite and hawkish comments from Fed representatives, buyers will have to act around $4,255 and $4,230. A breakout below these levels will quickly push the trading instrument back to $4,175 and open the path to $4,143.

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