US open: Tech stocks lead the way as Chinese regulation appears to ease

US futures

Dow futures +0.8% at 33160

S&P futures +1.04% at 4150

Nasdaq futures +1.4% at 12737

In Europe

FTSE +1.05% at 7638

Dax +1.3% at 14658

Euro Stoxx +1.3% at 3840

Learn more about trading indices

Stocks edge higher, recouping Friday’s losses

US futures are set to rebound after a softer finish to last week. Stocks fell after the US NFP came in higher than expected, with 390k jobs added in May, fueling bets that the Fed will tighten monetary policy aggressively.

Today tech stocks are expected to outperform, helped higher by Chinese tech stocks amid optimism that regulatory crackdowns on the sector are easing. The Chinese economy needs all the help it can get right now, and a softer regulatory environment will help businesses rebound after the strict lockdown restrictions.

The upbeat mood was lifted further by signs of Beijing and Shanghai returning to everyday life following the easing of lockdown restrictions in China’s biggest COVUD outbreak in 2 years.

Still, inflation concerns are not going anywhere fast. Rising crude oil prices and a strong labour report have lifted bets that the Fed may need to act aggressively to rein in inflation. US CPI data and consumer confidence data, both due on Friday, will be the key focus of the market this week.

All eyes will be on US inflation data for signs that peak inflation could have passed and what that might mean for the Fed’s next moves.

The Fed is expected to hike rates by 50 basis points in June and again in July. What happens after that remains to be seen.

In corporate news:

Tesla shares are rising 2.9% pre-market after CEO Elon Musk backtracks on an email last week in which he indicated that he would cut 10% of the Tesla workforce. Instead, he said that the EV maker’s headcount would rise over the coming 12 months.

Didi Global ADRs jump over 60% on reports that Chinese regulators have ended their year-long investigation into the company and will allow the firm to add new customers again.

Read more about stocks to watch

Where next for the S&P500?

The S&P500 rebounded off the 2022 low of 3810, running into resistance at 4200. The price now trades capped on the upside by 4200 and on the lower side by 4100/4070 zone. The RSI is attempting to rise above 50. Buyers will look for a move over 4200 to expose the 50 sma at 4230 and 4300, the May high. Meanwhile, sellers would look for a move below 4100 to expose the 20 sma at 4022 and 4000 round number.

FX markets – USD falls, GBP rises

USD is edging lower after gains in the previous week. The stronger-than-expected non-farm payroll prompted speculation that the Fed would need to act aggressively to cool inflation. Today the price is easing as investors look ahead to CPI inflation data on Friday.

GBP/USD is rising despite Conservative MP’s calling a vote of no confidence this evening against PM Boris Johnson, who has struggled to draw a line under the party gate scandal. In the vote, should over 50% of the 180 MPs support the PM, he can stay. The pound is rising, suggesting that investors are confident that he will breeze through the vote.

EUR/USD is edging higher, capitalizing on the weaker USD in a quiet start to what is expected to be a busy week for the pair with ECB interest rate decision and US CPI inflation due on Thursday and Friday, respectively.

GBP/USD +0.54% at 1.2569

EUR/USD +0.07% at 1.0725

Oil rises as Saudi Arabia lift prices for Asia

Oil prices are rising, building on gains from last week after Saudi Arabia hiked prices for its Asian customers.

The world’s largest oil exporter, Saudi Arabia’s Aramco, lifted prices to $6.50 above a benchmark it uses, up from $4.40 in June. The price for the US remains unchanged.

This hike in price for Asia tells up two things. Firstly, that even after OPEC+ doubled its planned output increase for July and August to 648k bpd, supply is still very tight. And secondly, that demand in Asia is expected to pick up as COVID lockdown restrictions ease.

WTI crude trades +0.86% at $117.50

Brent trades +0.67% at $119.03

Learn more about trading oil here.

Looking ahead

N/A

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.