Forex Analysis & Reviews: 24.06.2022 - US pre-market trading on...

24.06.2022 02:30 PM

US pre-market trading on June 24, 2022. Traders continue to buy up tech stocks

US stock futures continued to rise on Friday. Tech stocks are in high demand today as investors prefer to buy them at attractive prices and in the face of a looming economic downturn, especially when the scope of further monetary tightening has become clear. The Dow Jones 600 Index added 0.5%, the Nasdaq 100 gained 1%, while the S&P 500 futures were up by 0.7%.

However, the upside potential is limited. Investors wonder what happens if the global economy enters a recession. One of the scenarios suggests that the inflationary pressure will ease and, therefore, central banks will slow down the pace of rate hikes. Yet, Jerome Powell confirmed yesterday that the US regulator was determined to fight soaring inflation even at the cost of slowing economic growth as this is the price they would have to pay.

Despite the hawkish statement by the Fed Chair and rising fears of a looming recession, investors hope that the pace of monetary tightening will slow down in the next 12-18 months after the aggressive steps taken this summer.

Interestingly, investors continue to pull money out of ETFs. Global equity funds saw their biggest outflow in nine weeks amid fears that the US economy could be headed for a recession. According to Bank of America Corp., citing EPFR Global data, about $16.8 billion exited global stock funds in the week through June 22.

At the same time, the demand for stocks is slowly recovering amid a decline in crude prices. Oil saw its first weekly losses since early April amid an overall sell-off in the commodities market.

Pre-market

In pre-market trading, FedEx shares jumped by 3.4% on reports about its quarterly adjusted earnings of $6.87 per share, which beat estimates by 1 cent. Although shipment volumes have declined, this was offset by increased shipping rates and fuel surcharges. FedEx also issued an optimistic outlook for the fiscal year of 2023.

Seagen shares went up by 3.5% in pre-market trading after the Wall Street Journal reported that Merck is pushing the deal to acquire the biotech company.

Zendesk soared by 56.5% on reports that the software company is close to a buyout deal with a group of private equity firms. According to the Wall Street Journal, Hellman & Friedman and Permira are among those who are involved in the deal. Last week, Zendesk announced that it had ended efforts to sell the company.

Microsoft gained 1.2% in the premarket after Citi named it a "top pick," pointing to its attractive valuation and the company's ability to sustain growth.

As for the technical outlook for S&P 500.

The bullish rally continues. Today, buyers of risk assets will attempt to control the resistance of $3,826. A breakout of this level will facilitate a further move towards the area of $3,866 and $3,900. At this point, large market players will enter the market. At least, some of them will want to take profit on long positions. The level of $3,942 will serve as the next target although it seems very unlikely that the price will go there. In case the pessimistic sentiment prevails and the talks about inflation continue, the instrument may easily retest the nearest support at $3,788 although this will not do any harm. On the other hand, if bulls manage to test $3,762 and break through this range, this will cause a new sell-off and a subsequent decline towards $3,731 and $3,704.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.