Futures on the US stock market increased after Federal Reserve Chairman Jerome Powell stated yesterday that the government's efforts to combat inflation had been successful. This raises the possibility that the Central Bank's cycle of rate increases is coming to an end. It was widely reported yesterday that there are still two 0.25% interest rate increases left before the maximum can be achieved. Investors did not need to know how many bets would be put on them because it was not disclosed.
Following yesterday's 2.2% increase in the same NASDAQ's regular session to its four-month high, futures contracts for the S&P 500 and Nasdaq 100 both increased today by 0.3% and 0.2%, respectively.
Powell's comment on Wednesday that the deflation process has already started points to the conclusion of the aggressive tightening cycle by the middle of this year. As traders anticipate that adverse changes in the economy would influence the Central Bank and force it to start relaxing policy at the end of the year, positioning in the US swap markets suggests that the Fed is approaching the first step to cut rates.
Treasury bond yields declined by about 10 basis points over all maturities ranging from 2 to 10 years. While the yields on German 10-year bonds decreased by roughly three basis points, European bonds as a whole increased.
The Stoxx Europe 600 index increased by roughly 0.5%, and traders are now anticipating the ECB's monetary policy decision. The discussion over how much rates should climb in the eurozone was revived by yesterday's inflation statistics.
After the Bank of England increased interest rates by half a point and stated that additional hikes would be necessary if signs of an inflationary spiral persisted, the benchmark stock index for the UK fell. The 10-year bond yield dropped from its session high.
After declining on Wednesday, crude oil barely changed in other markets. Following the Fed's decision, gold traded around a nine-month high and bitcoin reached its best level since August.
Regarding the S&P 500's technical picture, it is evident that there is still a demand for riskier assets. The index could increase further, but this would require a break over $4,150. The control of $4,180, which will enable the bullish trend to continue, will be no less of a priority for the bulls. After that, we can anticipate an upward movement that is more confident to support the trading instrument at $4,208. The level of $4,229 is a little higher and will be challenging to surpass. Buyers need only declare themselves around $4,116 in the event of a downward movement and lack of demand. When it breaks down, the trading instrument will be immediately pushed to $4,090 and open the way to $4,064.
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