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28.06.2023 12:43 PM
New York pre-market on June 28. Wall Street could extend its rally

Futures for US stock indices opened in the red and cannot recouped losses so far on the back of news that Washington lawmakers are considering new restrictions on chip sales to China. The news led to a major sell-off for chip makers. Futures for the S&P 500 fell by 0.3%, while the tech NASDAQ shed more than 0.5%. Nvidia Corp. and Advanced Micro Devices Inc. sank by more than 3%.

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According to the latest rumors, lawmakers have come to the conclusion that it is necessary to stop sales of some artificial intelligence chips to China. Such prospects could increase tensions between the two countries. Washington's tougher moves will be a headwind for chip makers like Nvidia, they are unlikely to have a significant impact on appetite for stocks that soared amid the AI frenzy seen just a month ago. Undervalued shares of high-tech companies, on the contrary, will come under the spotlight. Even with a slight drop, this is a minor pullback compared to the triple-digit moves in some stocks earlier in the summer.

The European Stoxx 600 index added 0.5%, while the Japanese Nikkei 225 jumped by 2%, catching up with another yesterday's rally in the US stock market.

Shares of UBS Group AG rose after news that the company is preparing to lay off more than half of Credit Suisse Group AG's staff. Shares in Swedish landlord SBB AB jumped after analysts at Goldman Sachs Group Inc. upgraded its rating to "buy".

Given that no important statistics are available today, investors are waiting for news and statements by central bankers from the forum in Portugal, where ECB President Christine Lagarde, Federal Reserve Chairman Jerome Powell, Bank of Japan's Governor Kazuo Ueda, and Bank of England's Governor Andrew Bailey will deliver their speeches.

Meanwhile, Treasury yields are trading slightly lower than a day earlier. Upbeat US economic data released yesterday highlighted the likelihood that the Fed will need to tighten monetary policy further. Lagarde and several ECB policymakers also reiterated yesterday that the ECB will continue to raise interest rates.

The Federal Reserve is expected to publish the results of its annual banking industry stress test today. Analysts are largely betting that nothing major will happen after this, even though regulators are looking into the scenario of imposing stricter capital requirements after several crashes in the financial industry in March of this year.

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Oil futures are trading near weekly lows. Gold, having broken below $1,935, continued its fall. At the time of writing, it has reached the level of $ 1,900 per troy ounce.

As for the technical picture of the S&P500, the demand for the index has returned. Buyers have a chance to enable the uptrend, but the bulls need to push the index to $4,383 and $4,416 by all means. After these levels are taken out, the door will be open to $4,447. Another challenge for the bulls will be to control $4,488. If successful, this will strengthen the bull market. In the case of a move down amid a decrease in the risk appetite, the buyers simply have to assert themselves in the $4,350 area. The breakdown will quickly push the trading instrument back to $4,320 and open the way to $4,290.

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