|

S&P500 Futures: Mildly bid near yearly top above 4,200 as US policymakers prepare to avoid default

  • Market sentiment remains cautiously optimistic even as US President Biden, House Speaker McCarthy unveil debt ceiling extension deal.
  • Challenges to deal’s passage from some Democrats and Republicans weigh on risk appetite.
  • Pre-NFP anxiety, holidays in major markets also restrict the positive mood.

Risk appetite remains slightly positive on early Monday as market players take a sigh of relief, although for now, amid US policymakers’ announcements of an initial deal to extend the debt ceiling expiration. Even so, concerns that the agreement is yet in the pipeline for being the law and the default looms on June 05 amid dissatisfaction with the deal prod the risk-on mood amid holidays in the US, UK and Germany.

Amid these plays, S&P500 Futures remain mildly bid near the highest levels since August 2022, up 0.30% intraday around 4,225 whereas the bond markets are inactive amid off in multiple key bourses by the press time.

US President Joe Biden and top congressional Republican Kevin McCarthy reached a tentative deal to raise the federal government's $31.4 trillion debt ceiling through January 2025. Following the announcements, US President Biden strongly urged both chambers to pass the agreement while McCarthy appears to have no difficulties in getting the deal through the House. However, some of the policymakers have clearly shown their discomfort with the compromises that together tried to avoid the ‘catastrophic’ default, which in turn challenges the market’s positive outlook about the key issue.

Additionally, upbeat US data and comments from the International Monetary Fund Managing (IMF) Director Kristalina Georgieva, as well as some of the Federal Reserve (Fed) officials, also underpin the hawkish Fed bias and weigh on the sentiment.

That said, US PMIs, the second estimate of the first quarter (Q1) 2023 Gross Domestic Product (GDP), Durable Goods Orders and the Core Personal Consumption Expenditure (PCE) Price Index for the said month, known as the Fed’s preferred inflation gauge, marked upbeat details in their latest readings.

With this, the interest rate futures and the CME’s FedWatch Tool show recently increasing support for the Federal Reserve’s (Fed) 25 basis points (bps) rate hike in June.

Elsewhere, China’s improvement in Industrial Profits and the global central bankers’ optimism, as well as upbeat comments from the IMF, keeps the market players on a dicey floor.

Moving on, the US jobs report for May, especially the Nonfarm Payrolls (NFP) will be the key data to watch for the market players for clear directions. However, major attention will be given to the US Congress voting on the debt ceiling deal.

Als read: Gold Price Forecast: XAU/USD bears approach $1,930 support on US debt ceiling extension, NFP eyed

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Editor's Picks

EUR/USD holds losses below 1.1650 on renewed USD uptick

EUR/USD is off the low but remains in the red below 1.1650 in European trading on Thursday. The pair faces headwinds from a renewed uptick in the US Dollar amid a negative shift in risk sentiment. Surging energy prices due to the Middle East war keep the bearish pressure intact on the Euro. The US Jobless Claims data are next of note. 

GBP/USD stays weak near 1.3350 amid UK stagflation risks

GBP/USD sticks to losses near 1.3350 in the European session on Thursday. The Pound Sterling loses ground amid fears that the United Kingdom economy could face stagflation risks due to higher energy prices, while the US Dollar attracts fresh havem demand ahead of the US Jobless Claims data. 

Gold climbs near $5,200 as Iran war fuels safe-haven demand

Gold price extends its gains for the second successive session on Thursday as traders seek safety amid the ongoing war in the Middle East. US and Israeli strikes across Iranian territory and widespread Iranian missile and drone retaliation across the Middle East, including attacks on regional targets and military sites, prolong the crisis and its impact.

Top Crypto Gainers: Decred, Zcash, and Dogecoin lead recovery as Bitcoin crosses $72,000

Bitcoin trades above $72,500 at press time on Thursday, holding its 6% gain from the previous day, contributing to a broader market recovery. The total cryptocurrency market capitalization stands at over $2.43 trillion as the broader market sentiment improves significantly.

First Venezuela, now Iran: The US-China energy war escalates

At first glance, the latest escalation involving the United States with both Iran and Venezuela looks like another chapter in a long-running geopolitical story. But viewed through a broader strategic lens, something else may be unfolding: Energy.

Cardano Price Analysis: Approaches key trendline amid bearish sentiment

Cardano (ADA) price is approaching its descending trendline around $0.28 at the time of writing, set to shape the next directional move. The derivatives metrics paint a bearish picture, with ADA’s Open Interest continuing to fall and short bets rising among traders.