FX.co ★ 27.06.2022: Wall Street poised to extend growth, but investors remain cautious (S&P, USD, CAD, BTC)

Hi, dear traders! Here is a red-hot review of US markets. Wall Street indices closed on Friday with significant gains as we had predicted. The market is trading with cautious optimism in the pre-market.

The benchmark stock indices closed last week on the optimistic note. The Dow Jones added 2.7%. The Nasdaq jumped 3.3%. The S&P 500 closed 3.1% up at 3,912. Today, the global stock market retained optimism in the Asian and European sessions. The S&P 500 is expected to trade in the corridor between 3,890 and 3,980.

Last week, Wall Street halted its three-week losing streak. The Nasdaq was the best performer, having gained almost 7%. On Friday, the S&P 500 logged the biggest 1% intraday growth since May 2020. The index closed with a weekly gain of 6.4%. The reason behind optimism is a considerable decline in commodity prices and the hope that the US Fed could moderate a pace of rate hikes. Jerome Powell stated that the central bank would do everything at its power to avoid recession, though it would be a challenge because another goal is to curb inflation. Investors were inspired that Powell’s acknowledgement of recession means that further monetary tightening could be not as aggressive as expected.

Despite gloomy prospects of the global economy, some analysts predict a short-term rally on Wall Street. This landmark week will be the final week of the month, the second quarter, and the first half a year. It means a hectic time for investors with fixed portfolios. They have to revise their assets to evaluate previous moves in the past. This phenomenon might lift the stock market by 7%.

Stocks of all companies were trading higher in the pre-market on Monday. Tesla, Netflix, Alphabet, and Apple grew 0.6 – 1.4%. Robinhood shares jumped 3.5% following reports in the media that Goldman Sachs upgraded the retail broker’s rating to neutral. At the same time, Goldman Sachs downgraded the rating of Coinbase. As a result, the crypto platform’s shares slumped 4.8%.  

A lot of events this week might derail the fragile rally. The highlight of the week is the annual ECB forum in Sintra. The honored speakers will be ECB President Christine Lagarde and Fed’s Chairman Jerome Powell. The US PCE Price index will be released on Wednesday, the preferred barometer of the US Fed.

The US dollar is losing ground. Its index edged down 0.22% to 103.95, consolidating at around one-month low printed in mid-June. The intraday corridor for the index is seen between 103.5 and 104.1.

Traders seem to exaggerate the Fed’s hawkishness. The greenback mirrors this sentiment today. In this context, yields of 10-year US Treasuries settled at the level slightly above 3%. Downbeat US economic data also pushed the US dollar down. The survey released on Friday showed that consumer sentiment plummeted to record lows. This made investors reduce bets on the bullish US dollar. Today traders can judge fresh economic data.

Durable goods orders in the US expanded 0.7% in May, the third month of growth in a row. The data surpassed market expectations of a 0.1% uptick. It proves that business spending remains robust despite rate hikes and soaring inflation.

The USD/CAD pair settled at 1.290, the highest level of the last week amid a rally in oil prices. Today the currency pair is trading quietly in the corridor between 1.2870 and 1.2930.

Canada’s major export commodity, crude oil has regained some of the last week’s losses. Today oil is trading mixed on the back of the G7 summit in Germany. The event is conducted ahead of the talks between the US and Iran on rebooting the nuclear deal of 2015. The G7 leaders discussed the mechanisms of curbing prices of Russian oil through restrictions on insurance and freight. The market is facing a threat of dwindling oil supplies. Meanwhile, oil is oscillating between minor gains and dips. Brent crude again declined to 111.79 dollars a barrel. WTI slipped to 106.18 dollars.