S&P 500 forecast: Stocks hover around a 3-month high at the start of a busy week

US futures

Dow futures -0.1% at 35342

S&P futures -0.08% at 4551

Nasdaq futures +0.02% at 15956

In Europe

FTSE -0.24% at 7474

Dax -0.25% at 15997

• US inflation data & Fed speakers in focus this week
• Market sees rate cut more likely than not in May
• E-commerce stocks under the spotlight on Cyber Monday
• Oil slips ahead of Thursday’s OPEC+ meeting 

US inflation data & Fed speakers in focus this week

U.S. stocks point to a mixed open amid a cautious market mood as investors look ahead to a busy week with US inflation data as well as commentary from Federal Reserve policymakers, including Chair Jerome Powell.

Last week US indices ended the Thanksgiving-shortened week on a positive note, with the three main bourses posting a fourth straight week of grains on optimism that the Federal Reserve has finished hiking interest rates.

Traders are pricing in another pause in rate hikes in the December meeting and see the chance of at least a 25 basis points cut in May 2024 as more likely the rates being left on hold.

US Core PCE, the Federal Reserve's preferred gauge for inflation, along with a host of Fed officials who are due to speak, will provide further insight as to when the Fed may start to cut rates.

Retailers will once again be in focus after a strong showing on Black Friday. Data from Adobe Analytics show that US consumers spent $9.8 billion U.S. dollars, up 7.5% annually. Deal hunting is expected to continue on Cyber Monday, with shoppers expected to spend up to a record $12 billion.

Corporate news

Amazon is set to rise 0.7% on the open after the online retailer reached an agreement with most of its Spanish workers, avoiding strikes on one of the busiest online shopping days of the year.

Shopify is set to rise 4% after the e-commerce group reported that its merchants recorded an all-time high of $4.1 billion in sales on Black Friday.

Octa is falling over 1% pre-open after Jefferies downgraded the cyber security firm to perform from outperform citing the security breach on October 20^th, which has damaged the brand.

Footlocker is set to fall 3.6% following a downgrade to sell from neutral by analysts at Citi..

S&P 500 forecast – technical analysis

After rising to 4568 last week, the S&P500 is consolidating around 4550, just above the October high. The RSI is on the brink of being overbought. Buyers need to hold above 4550 to focus on 4600, the July high, and 4640, the March 2022 high. Failure to hold above 4550 could see the price fall back towards the 4500 round number and 4450.

FX markets – USD falls, GBP/USD rises

The USD is falling after losses last week as the market considers that the Fed's next move will be a rate cut. The market is currently pricing in that the Fed would more likely cut rates than not in the May meeting.

EUR/USD is rising, adding to gains from last week, ahead of a speech from ECB president Christine Lagarde. Lagarde is expected to reiterate her thoughts from Friday, the message that the central bank has stuck to since the meeting that it's too early to claim victory against inflation. Eurozone inflation data, which is due out later in the week, will be key in providing further clues over outlook for the future path for interest rates. Hot inflation could see rate cut expectations pushed back into H2 2024.

GBP/USD has risen to an almost three-month high after Bank of England governor Andrew Bailey warned that bringing inflation down further from here will be hard work. He added that the central bank was unlikely to cut interest rates in the foreseeable future.

EUR/USD +0.10% at 1.0945

GBP/USD +0.2% at 1.2625

 

Oil slips ahead of Thursday’s OPEC meeting

Oil prices are heading lower as Brent falls below $80 a barrel as investors await this week's OPEC meeting on Thursday.

Oil prices are extending losses from last week after OPEC+ delayed its meeting, which will now happen on November 30th, raising concerns over how much further the group of oil producers will be able to cut supply.

Saudi Arabia and Russia could roll over their voluntary supply cuts into 2024, and the group may discuss plans to reduce output further. However, reports that the group pushed back the meeting due to a lack of consensus about extending production cuts, particularly with African producers, is dragging on the price.

Markets dislike uncertainty, and these developments clearly hit a nerve. In the meeting, should OPEC+ refrain from further output cuts, the price of oil could tumble quite sharply lower.

Meanwhile, high crude stockpiles in the US, record non-OPEC production, and concerns over the recovery in the Chinese economy could all keep oil prices under pressure

Chinese industrial profits grew by 2.7% year on year in October, down sharply from 11.9%. In September and raising concerns that more stimulus may be needed in order to support the slowing economy.

WTI crude trades -0.12% at $75.30

Brent trades -0.13% at $80.24