S&P500 Forecast: SPX holds steady after jobs data Apple falls further

US futures

Dow futures +0.26% at 37530

S&P futures -0.0% at 4705

Nasdaq futures -0.40% at 16305

In Europe

FTSE +0.29% at 7702

Dax +0.2% at 16558

US ADP payrolls rise 164k vs 103k previously
Jobless claims fall to 202k from 220k previously
Apple falls after another broker downgrade
Oil extends gains on Middle Eastern tensions

US jobs data highlights reliance in the labor market

US futures are heading for a mixed open as investors digest the latest jobs data and after the minutes of the December Federal Reserve meeting.

The meeting minutes showed that the Fed considered that peak interest rates had been reached and that it could start cutting rates in 2024 as inflation cooled. However, the minutes failed to provide any further clues on the timing of the first rate cut, leaving investors a little disappointed. There was certainly no indication that the Fed would cut interest rates as soon as March as the market is pricing in suggesting that investors may have gotten a little ahead of themselves on rate cut expectations.

Supporting the view that investors may be ahead of the curve as far as rate cuts are concerned, U.S. jobs data came in stronger than expected, with ADP private payrolls rising by 164k in December, up from 103k in November and ahead of forecasts.

Meanwhile, US jobless claims dropped unexpectedly to 202k, down from 220k, again highlighting the resilience of the US labour market.

Whilst the Dow Jones and the S&P are managing to remain in positive territory, the tech-heavy Nasdaq 100 is falling lower.

Elsewhere, attacks by Iran-backed Houthi militants have resulted in over $200 billion in trade being diverted from the Red Sea. With shipping ships being re-routed the long way around South Africa's Cape of Good Hope, freight rights rates are increasing daily, which could see supply chain pressures increasing and inflationary pressures returning.

Corporate news

Apple is pointing to further losses after another broker downgrade. Today, Piper Sandler lowered the stock to neutral from overweight, citing concerns in the smartphone market. The downgrade comes after Barclays moved the stock to underweight from neutral yesterday citing concerns over weak demand for iPhones.

Walgreens Boots is set to open higher after the drugstore chain posted a stronger-than-expected profit in Q1 on the strength of its pharmacy operations.

Ford is also expected to open higher after announcing plans to increase the price of some of its F150 lightning pickup trucks, suggesting that the demand for the product is strong.

S&P 500 forecast – technical analysis

The S&P 500 is falling away from the December peak, just below 4800. The price is testing support at 4700 the 20 SMA and round number. The bearish crossover on the MACD keeps sellers hopeful of further losses. A break below 4700 opens the door to 4635, the March 2022 high and 4605 the July high. Should buyers defend the 20 SMA, a recovery would need to retake 4735, the November 2021 high before brining 4800 back into target.

FX markets – USD rises EUR/USD falls

The USD is rising, recovering from earlier losses, and trades around a two-week high after stronger-than-expected U.S. jobs data has seen investors rein in Fed rate cut expectations.

EUR/USD is rising after four days of losses after German inflation rose to 3.7%, up from 3.2%. The data raises questions over the timing of the first ECB rate cut. Meanwhile, eurozone PMI data confirmed that the economy most likely tipped into recession in the final quarter of last year.

GBP/USD trades modestly higher after UK PMI data showed that the UK economy gathered a bit of pace at the end of last year. The services PMI rose to 53.4 in December from 50.9 in November, expanding at the fastest pace in six months. Prices charged by service sector firms also increased last month, which means that service sector inflation remains stubbornly high, supporting the Bank of England's view that it's premature to talk about rate cuts.

EUR/USD +0.23% at 1.0944

GBP/USD +0.04% at 1.2668

Oil rises as Middle East tension rise.

Oil prices are rising for a second straight day amid concerns over Middle Eastern supply worries as tensions in the region escalate and after a larger-than-expected drawdown on US inventories.

News of further tensions in the Red Sea combined with a full shutdown of Libya’s Sharara oil fields due to local protests have brought supply concerns back under the spotlight. Oil prices jumped around 3% on Wednesday, snapping a 5-day losing streak as investors fretted over supply disruptions.

Data from the API also showed that crude stockpiles fell by 7.4 million barrels, which was double the expected drawdown.

EIA oil data is due later today.

WTI crude trades +0.85% at $73.05

Brent trades +0.45% at $78.50

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.