The stock indices are trading in the black, as are several companies from the broader index, amid news that the Chinese authorities have strengthened economic stimulus measures by allocating another 1 trillion yuan, which will be directed to infrastructure. As it became known today, the State Council and the Cabinet of Ministers of China announced that another 300 billion yuan would be allocated for support. State-owned banks can invest in infrastructure projects in addition to the 300 billion yuan already announced at the end of June. Local authorities will be allocated 500 billion yuan in bonds from previously unused quotas.
However, several economists were pessimistic about such decisions, saying that the announced measures would not be enough to increase the overall growth rate from the 5% predicted by the authorities. The yield on 10-year government bonds rose by 2 basis points to 2.65%. China's CSI 300 stock index ignored the news and rose 0.6%.
The State Council also said an excessive stimulus would not flood the economy. And that China will not overspend the resources it must now use to protect long-term economic growth, confirming the relatively cautious stance of officials towards new incentives.
According to economists, China's latest measures are insufficient to turn the economy around. Although this will create greater public demand, partially filling the growing hole left by the private sector, it is unlikely to provide strong support for future growth. The downturn in the real estate market and the gradual resumption of China's work after another quarantine due to COVID made the government's official goal of gross domestic product growth in the region of 5.5% unattainable. Many predict a growth of less than 4% this year.
Premarket:
As for the premarket, the shares of the Dollar Tree retailer fell by 6.6% after lowering the annual profit forecast due to the impact of investments related to pricing.
Peloton securities fell by 17.5% in the premarket after yesterday's large growth due to the signing of a new major contract. The company reported larger-than-expected losses and revenues that fell short of forecasts.
Abercrombie & Fitch shares tumbled 10.5% in premarket trading after the clothing retailer reported an unexpected quarterly loss and lower-than-expected revenue figures. It is obvious that high inflation seriously affects retailers and will continue to drive companies down, preparing them for hard times that not everyone will survive.
Shares of the beloved Nvidia company dropped 3.6% in the premarket because quarterly results were not as good as expected. The graphics chip maker also issued a subdued forecast as its gaming business continues to face weakening demand.
Snowflake securities were among the growth leaders, which gained more than 19% in the premarket after the data processing software company reported higher-than-expected quarterly revenue.
And in conclusion, Victoria's Secret lost 3.7% in the premarket after the lingerie manufacturer cut its annual forecast. The company expects its customers to be affected by inflation and other financial problems.
According to the S&P500, bulls managed to defend the $4,116 level yesterday and got above $4,150, even managing to reach $4,184. I advise you to place all your emphasis on these levels today. In the case of a downward movement after weak statistics on the US economy, the breakdown of $4,150 will provide a direct road to the area of $4,116 and $4,090, where the pressure on the trading instrument may ease slightly ahead of the start of the symposium. The index will also approach fairly important support levels, breaking below, which will not be easy – provided that there are real buyers in the market. The index will be able to talk about further growth only after controlling the resistance of $ 4,184, the test of which has already taken place today. This will open the way to $4,208. Only in this way we will see a fairly active growth in the area of $4,229, where large sellers will return to the market again. At a minimum, there will be those who want to lock in profits on long positions. A more distant target will be the $4,255 level.
