E-mini S&P 500 (ES) futures

E-mini S&P 500 (ES) Futures Forecast: Higher Prices Expected Amid China’s Easing

  • China’s easing of COVID-19 restrictions has rekindled hopes for better growth prospects.
  • The ECB will raise rates gradually.
  • 4000.00 is the next target on the charts.

The E-mini S&P 500 (ES) futures outlook is bullish owing to China’s easing of COVID-19 restrictions, giving hope for a better growth outlook. On Tuesday, China reduced the quarantine time for inbound travelers by half. This restriction has hurt China’s economy, resulting in international flights running at just 2% of pre-pandemic levels. Businesses have welcomed the easing of restrictions.

“It will hopefully work towards increasing business exchanges and stemming the outflow of international talent, some of whom are coming up to having had three years of separation from family and friends overseas,” the British Chambers of Commerce in China told Reuters.

Beijing and Shanghai’s caseloads have dropped to single digits in the past week, allowing businesses to reopen slowly.

Despite these new developments, most analysts still believe the bear market can only be reversed when central banks pause in their rate hikes.

“Equity markets will not be out of the woods until central banks shift their rhetoric to a less hawkish stance. Unfortunately for many investors, such a pivot will likely not happen until after the economy has slowed down sufficiently to bring inflation on a sustainable downward path,” said Salman Baig, portfolio manager, cross-asset solutions, at Unigestion

The European Central Bank’s Forum on Central Banking continued today, and investors will be paying attention to ECB President Lagardes’s speech. She said the ECB would move gradually when it began raising interest rates, with the option to act decisively if medium-term inflation fell.

Investors are also awaiting the CB consumer confidence report from the US, which will give clues on consumer spending and the overall economy.

E-mini S&P 500 (ES) futures technical forecast:

E-mini S&P 500 (ES) futures 4-hour chart
E-mini S&P 500 (ES) futures 4-hour chart

Looking at the 4-hour chart, we see the price of ES pushing higher after a short pullback yesterday. The price is trading above the 30-SMA, showing bulls are in control, and the RSI is trading above 50, favoring bullish momentum.

If the price pulls back again, it may retest the resistance-turned-support level at 3843.75. However, if bulls keep up their strength, we could see the price pushing toward 4000.00, which is a critical psychological level.