S&P 500 Forecast: SPX grinds higher after last week's gains

US futures

Dow futures +0.19% at 37325

S&P futures +0.29% at 4729

Nasdaq futures +0.18% at 16630

In Europe

FTSE +0.6% at 7620

Dax -0.54% at 16682

• Stocks extend last week’s gains as yields fall
• US core PCE data in focus on Friday
• Apple falls amid more restrictions in China
• Oil rises on supply disruption worries

Stocks set to post a seventh straight weekly gain

US stocks are set to open modestly higher, as treasury yields fall, adding to gains last week, which saw the Dow Jones reach an intra-day high and the Nasdaq reach a new record closing high.

Stocks rallied in the previous week after the Federal Reserve signaled that it would cut right three times next year, up from the twice previously forecasted.

Today, the US economic calendar is quiet and volumes could start to ease off ahead of Christmas. There are still a few data points to be watching out for this week, including Friday's personal consumption expenditure index, the Federal Reserve's preferred gauge for inflation, jobless claims, housing starts, and the final Q3 GDP reading.

The PCE index will be the final inflation figure this year and is expected to show that prices cooled slightly in November. Cool inflation would support the Fed dovish pivot narrative and could support stocks high.

Currently, the market is pricing in a 75% chance the Fed will cut interest rates by 25 basis points in March. Even after NY Fed President Williams pushed back or rate cuts on Friday.

Corporate news

Apple is pointing to losses on the open after Bloomberg reported that more Chinese agencies and state-backed companies have placed restrictions on iPhone use

NIO is set to rise 9.2% on the open after the EV manufacturer signed an agreement with CYVN Holdings, an investment vehicle in Abu Dhabi which has agreed to invest $2.2 billion into Nio.

United Steel Corporation has soared 24% after Japan's Nippon Steel said it would buyout the firm in a deal worth $14.9 billion.

S&P 500 forecast – technical analysis

The S&P 500’s run higher is showing signs of slowing, with the RSI still deep in overbought territory. The index ran into resistance at 4735 last week before easing lower, with the long upper wicks on the candles suggesting there was little demand at the higher levels. Still, with the golden cross formation. buyers are attempting to grind higher again today. A rise above 4735 is needed to test 4745, the November 2021 high, ahead of 4817, the all-time high. Sellers will eye support at 4700 round number ahead of 4640, the July 2022 high.

FX markets – USD falls, GBP/USD rises

The USD is trading mixed versus its major peers on Monday, up versus the pound and the yen and down versus the euro and the CAD. The economic calendar today is relatively light, with just the home builders' sentiment survey. Friday’s core PCE data is likely to be the key focus this week

EUR/USD is rising despite German Ifo business sentiment coming in weaker than expected at 86.4 down from 87.2 in November. The data comes after weaker-than-expected PMI figures on Friday, which raise concerns of a prolonged recession in the region. Still, the market is focusing on the ECB's pushback on rate-cut bets as policymaker Vastle today continued the ECB's rhetoric that rates must stay high for longer.

GBP/USD is falling in cautious trade ahead of UK inflation data later in the week. The data comes after the Bo E meeting last week, where the central bank pushed back against expectations of a rate cut next year given that inflation remains elevated, particularly the services inflation, which is still at 6.6%.

EUR/USD +0.3% at 1.0925

GBP/USD -0.1% at 1.2667

Oil extends gains after Res Sea attacks

Oil prices are rising, extending gains from last week when oil booked a weekly gain for the first time in two months.

Last week, oil prices were lifted by optimism that the Federal Reserve is planning to cut interest rates by more than expected and on China stimulus news.

However, this week, it's the supply side that is driving the price higher as attacks by the Houthis militants on ships in the Red Sea raised concerns over supply disruption. These developments are reminding the market that geopolitical concerns in the region remain live.

Major firms, including BP, have temporarily paused transit through the Red Sea following attacks by Houthi forces, which control most of Yemen.

Meanwhile, Russia announced that it could deepen all supply cuts in December by a possible 50,000 barrels per day, which is also supporting oil prices.

WTI crude trades +2.75% at $73.70

Brent trades +0.75% at $78.80