Futures on US stock indices opened with gains but later turned red, continuing to react to yesterday's inflation data in the US. S&P 500 futures declined by 0.2%, while the high-tech NASDAQ added 0.3%. Stoxx Europe 600 dropped by 0.7%. European indices are under pressure today, following the Asian market declines, as hawkish statements from representatives of the US Central Bank have led traders to shy away from risk.
The British pound led the growth among G-10 currencies against the US dollar after data showed the strongest quarterly growth in over a year.
President of the San Francisco Federal Reserve Mary Daly's remarks yesterday negatively affected investor sentiment. Daly stated that the Fed still had to grapple with rising prices, which softened the impact of positive inflation data.
Meanwhile, another "pain flare-up" occurred in China related to developers. The largest developer, Country Garden Holdings Co., announced that it could show multi-billion losses for the first half of this year. Economists note that the problems observed in the Chinese real estate market serve as a reminder of what can happen with precarious balance sheets. It is possible that the indebtedness of such companies could present a series of new surprises.
Bank of America Corp. recently released a report that showed a significant movement of safe-haven assets out of the stock market this week. According to Bank of America, citing EPFR Global data, about $20.5 billion was invested in safe assets this week, while investors invested only $6.9 billion in bonds a week ago. The US stock market lost $1.6 billion for the first time in three weeks.
Regarding currencies, the US dollar index remained unchanged after Thursday's rise. The US currency is set for its fourth consecutive week of gains, the longest streak since February of this year. Meanwhile, the ongoing depreciation of the Australian dollar intensifies concerns about inflation. However, the potential upward growth of the US dollar is likely to be limited in the medium term due to the high probability of the Federal Reserve ending its tight policy.
As for commodities, oil prices by the end of the week remained almost unchanged ahead of the report from the International Energy Agency.
As for the S&P 500 index, demand for the trading instrument has not returned, and trading continued within a sideways channel. Bulls have a chance to continue the uptrend, but they need to settle above $4,488 and $4,515. A leap to $4,539 could occur from this level. Bulls also need to control $4,557, which would bolster the bullish market. In the case of downward movement due to decreased risk appetite, bulls will have to protect $4,469. A breakthrough would quickly push the trading instrument back to $4,447 and $4,427.
