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26.01.2023 01:52 PM
US premarket on January 26: Investors believe in US stock market growth

The sharp growth of US tech stocks boosted market sentiment amid optimistic earnings forecasts from electric car maker Tesla Inc. Futures contracts on the Nasdaq 100 index rose by about 0.5%. Tesla jumped more than 8% during premarket trading in New York after beating earnings and sales estimates. Futures on the S&P 500 index added 0.3%, and the industrial Dow Jones gained 0.2%.

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In Europe, investors reacted positively to reports from Nokia Oyj Telecommunications Group and chipmaker STMicroelectronics NV, which helped the Stoxx 600 index gain more than 0.5%.

Although companies are not boasting of high figures they are not disastrous either, which keeps the demand for risky assets, including stocks. The January growth is exaggerated given the recession risks. However, next week's Federal Reserve meeting may confirm that the market and investors were right.

The buoyant market sentiment was also linked to China, where data on holiday and tourism spending showed that the country's recovery is gaining momentum. On the first trading day after the Lunar New Year, the Hang Seng Index jumped by 2.4% and closed at its highest level since March 1, 2022.

Expectations of a soft landing of the US economy and that the Federal Reserve is nearing the end of its rate hike cycle are also pushing investors to buy cheaper assets. US GDP reports for Q4 this year are expected today, as well as employment data, which will help determine the Fed's future policy course.

The euro is down slightly, but it is getting continued support from statements by European Central Bank officials, who continue to argue in favor of further significant policy tightening in the coming months. Bond yields in the Eurozone rose by several points.

Oil prices continued to rise amid expectations of a rebound in demand in China. Bitcoin fell by more than 2%, wiping out much of Wednesday's gains.

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As for the S&P 500 index, the situation remains on the side of bulls. The index may continue to grow but bulls need to protect the support level of $4,010 as well as take control over $4,038. After that, we may expect a more confident spurt to $4,064. At the same time, it would be difficult to reach above $4,091. If the pair declines and we see weak activity from bulls at $4,010, they will have to protect $3,980 and $3,960. Breaking through this level, the index may be pushed to $3,923.

Jakub Novak,
Analytical expert of InstaForex
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