S&P 500 Forecast: SPX rises ahead of the non-farm payroll report

US futures                                          

Dow futures 0.22%, S&P futures 0.13%  & Nasdaq futures 0.00%

In Europe                                                                        

FTSE 0.45% & DAX 0.9%

• U.S futures rise ahead of jobs data
• Fed Chair Warsh reiterated the target to get inflation to 2%
• Memory chip stocks fall after stellar Q2
• Oil falls further as traffic through the Strait normalises

U.S. Futures Rise Ahead of Closely Watched Jobs Report

U.S. futures rise modestly on Thursday as investors await the June non-farm payroll report, the week's key event for markets and ahead of the public holiday tomorrow.

The cautious mood follows a choppy session on Wednesday, when the major indices closed lower after Federal Reserve Chair Kevin Warsh acknowledged that inflation risks had eased but reiterated the central bank's commitment to restoring inflation to its 2% target.

Despite a shaky start to the third quarter, investor sentiment remains broadly constructive. Markets continue to expect at least one Federal Reserve rate hike this year, with recent economic data suggesting the Fed may have scope to tighten policy further without significantly weakening the labour market.

All eyes are now on today's non-farm payroll report. Economists expect the U.S. economy to have added 110,000 jobs in June, down from 172,000 in May. The unemployment rate is forecast to remain unchanged at 4.3%, while average hourly earnings are expected to rise 0.3% month-on-month.

The report could prove pivotal for Fed expectations. Another strong payrolls reading would reinforce the view that the labour market remains resilient, giving policymakers greater confidence to keep the focus on inflation. By contrast, a weaker-than-expected report would support the argument that May's strong payrolls figure was flattered by temporary factors, such as the World Cup reducing pressure on the Fed to tighten further.

Elsewhere, the latest round of indirect U.S.-Iran talks concluded on Wednesday without any significant breakthrough, leaving the broader ceasefire intact but offering little progress towards a longer-term agreement.

Corporate Movers

Alphabet is down around 1% after its subsidiary lost a European antitrust appeal, with the court upholding a €4.1 billion fine linked to Google's Android business practices.

Palantir is rising 3% after D.A. Davidson upgraded the stock to Buy, saying the recent pullback has made the valuation more attractive. Shares remain on track for a gain of around 15% this week.

Strategy and Coinbase are both trading higher as Bitcoin extends its recovery above $60,000, lifting sentiment across crypto-related equities.

Memory chip stocks remain under pressure as investors continue to lock in profits following an exceptional second quarter. SanDisk fell 10% yesterday and is down a further 3% pre-market, while Seagate Technology is set to open around 2% lower after a 5% decline in the previous session.

Reports also continue to circulate that OpenAI could offer the U.S. government a 5% equity stake as part of a broader strategic partnership.

S&P 500 Forecast – Technical Analysis

The S&P 500 continues to trade within a symmetrical triangle pattern.

The index recently rebounded from rising trendline support near 7,290 before reclaiming the 50-day SMA and testing resistance around 7,500 at the upper boundary of the pattern.

A break above 7,500 would expose 7,575, the June high. A move above there would create a higher high and bring the record high at 7,620 into focus.

Immediate support lies at the 50-day SMA near 7,400, followed by horizontal support at 7,350 and rising trendline support at 7,290. A break below the trendline would complete a downside breakout from the triangle and expose the June low near 7,230.

FX Markets – USD Softens, Yen Remains on Intervention Watch

The U.S. dollar is edging lower despite higher Treasury yields ahead of today's payrolls report. Yen strength and fading safe-haven demand as U.S.-Iran tensions ease are offsetting support from higher yields. Today's jobs data could either reinforce or challenge expectations that the Federal Reserve will raise interest rates later this year.

EUR/USD is edging higher on the softer dollar but remains close to a one-year low following weaker-than-expected Eurozone inflation data and dovish comments from ECB President Christine Lagarde. Lagarde said risks to both inflation and growth had diminished, reinforcing expectations that the ECB is approaching the end of its tightening cycle.

USD/JPY has fallen sharply as the yen rebounded from a 40-year low. While the catalyst remains unclear, the move comes at levels where traders remain highly alert to the risk of intervention by Japan's Ministry of Finance. Even if intervention has occurred, history suggests that without a narrowing in the U.S.-Japan yield differential, any support for the yen is likely to prove temporary.

Oil Falls as Geopolitical Risk Premium Continues to Fade

Oil prices are falling for a third consecutive session as progress in U.S.-Iran negotiations continues to erode the geopolitical risk premium that supported crude earlier this year.

WTI has slipped towards $67.50, while Brent has eased back to around $70 a barrel after reports of further progress in indirect talks between Washington and Tehran over the Strait of Hormuz.

Commercial shipping through the Strait has now returned to pre-conflict levels, easing supply concerns and allowing more crude to reach global markets.

With geopolitical risks fading, the market's focus has shifted back to fundamentals. Expectations of subdued demand growth, combined with another likely OPEC+ production increase at Sunday's meeting, are increasing concerns that the oil market could move into oversupply during the second half of the year, keeping downward pressure on prices.