S&P500 Forecast :Stocks subdued on higher rates for longer concerns

US futures

Dow futures -0.10% at 34448

S&P futures -0.17% at 4444

Nasdaq futures -0.23% at 15224

In Europe

FTSE -0.14% at 7432

Dax -0.35% at 15656

• Upbeat data this week boosted hawkish Fed bets
• Apple remains in the spotlight
• USD set to book longest stretch of weekly gains in 9 years
• Oil rises 2% across the week on supply concerns 

Upbeat data this week boosted bets of higher rates for longer

US stocks are pointing to a weaker open amid renewed concerns over the future path of interest rates.

A series of stronger-than-expected data points this week, including a jump in the ISM services PMI and a fall in initial jobless claims, have raised concerns that the Federal Reserve may need to keep interest rates higher for longer or potentially raise interest rates again before the end of the year.

The tech sector has been most heavily impacted by the prospect of a more hawkish Fed, with the Nasdaq falling over 2% this week.

The Federal Reserve is still widely expected to keep interest rates on hold in the September meeting but given the resilience in US economy, a hike in November is not off the table. Dallas Federal Reserve president Lori Logan confirmed this on Thursday by saying that the Fed still has work left to do.

The US economic calendar is quiet today. Federal Reserve Official Michael Barr is due to speak later. Attention will start to turn to US inflation data, which is due to be released next week.

Corporate news

Apple Will remain in the spotlight for another session after the world's most valuable company has seen around $200 billion wiped from its market cap in just two days. Reports that China is curbing iPhone use by state employees have hit the stock hard. The restrictions point to a slowdown in Apple's sales just as the firm is set to launch its new range of iPhones next week.

DocuSign is rising after the e-signature firm beat quarterly revenue and earnings forecasts. Revenue rose 10.5%, and management lifted the annual revenue forecast.

S&P500 forecast – technical analysis

The S&P 500 is finding support at 4430, yesterday’s low, and has recovered slightly to 4450, the June high. Should the recovery continue, buyers could look for a rise towards the 50 sma at 4480 before bringing 4540 the September high back into play. Sellers would need to break below 4430 to extend the bearish run toward 4404, the weekly low.

FX markets – USD falls, GBP rises

The USD trades modestly lower after seven straight winning days. The greenback is on track to rise across the week marking its eighth straight week of gains, the longest winning run since 2014. The USD has been boosted by upbeat data and rising expectations of another rate hike from the Fed this year.

EURUSD is holding steady around 1.07, a three-month low after German inflation cooled to 6.1% YoY in August, down from 6.2%. The data comes after a series of softer data across the week from the region, which has investors questioning whether the ECB will hike rates again at the meeting next week.

GBPUSD is hovering around a three-month low on bets that the Bank of England is close to ending its right hiking cycle. Industry data showed that UK employers are curbing hiring at the fastest pace in over three years in a sign that the labour market is cooling. Starting salaries rose at the slowest pace since March 2021, which could point to record wage growth cooling in the coming months.

EUR/USD +0.05% at 1.07

GBP/USD +0.07% at 1.2485

Oil is set for another weekly gain

Oil prices are rising mildly and are set to book gains of over 2% across the week, putting gains in September already at over 4%.

Oil continues to be supported by the news that Saudi Arabia and Russia will extend supply cuts of a combined 1.3 million barrels per day until the end of the year.

The prospect of tighter supply has lifted oil prices however, concerns over the demand outlook, particularly in China, could limit the upside for oil. Recent data from China this week has added to mounting evidence that the economic recovery is faltering in the world's largest importer of oil.

Meanwhile, the stronger U.S. dollar is also pressuring oil prices.  The US dollar trades at a six-month high, which makes it more expensive for buyers of crude oil in foreign currencies.

Looking ahead, the Baker Hughes rig count will be in focus.

WTI crude trades +0.7% at $87.02

Brent trades +0.7% at $90.40

Looking ahead

18:00 US Baker Hughes Oil Rig count