US open: Futures mixed as recovery strengthens
Fiona Cincotta May 6, 2021 8:45 PM
US indices point to a mixed start. The Dow Jones looks set to inch higher, whilst tech is once again out of favour. Jobless claims drop to the lowest level post pandemic.
Dow futures +0.07% at 34250
S&P futures -0.07% at 4164
Nasdaq futures -0.1% at 13491
FTSE +0.1% at 7048
Dax +0.02% at 15162
Euro Stoxx -0.1% at 3994
Rotation out of tech into value as economic recovery continues
US futures point to mixed start with the Dow Jones looking towards fresh highs, whilst the tech heavy Nasdaq remains out of favour once again. Amid signs that the US economic recovery is strengthening, investors are rotating out of tech into value.
Initial jobless claims
The number of American’s that signed up for unemployment benefit dropped to a new post pandemic low of 498k, down from the upwardly revised 540k and ahead of forecasts. Whilst the larger fall this week is offset by the unexpected upward revision to the previous week, the trend is still encouraging. In line with ADP numbers it is clear that the US labour market is on the right path to recovery and that the economic is gaining strength.
Uber trades lower pre-market after posting encouraging results on Wednesday after the close but setting aside $600 million to cover costs to provide UK drivers with benefit.
Earnings will also be coming in from Beyond Meat, Viacoms & Kellogg among others.
Vaccine IP waiver
The European Commission has said that it too is willing to waiver vaccine intellectual property rights for covid vaccines whilst the pandemic lasts. The idea was first proposed yesterday by US Presidential trade adviser Katherine Tai sending Moderna sharply lower yesterday. BioNtech trades -17% in Germany.
Such a move would face a significant legal challenge from the pharma sector. However, broadly speaking a faster global vaccine programme should mean a quicker global economic recovery.
Where next for the Dow Jones?
The Dow Jones has been trading in a holding pattern since mid April, capped on the upside by 34245 and the downside by 33700. The Dow attempted to break out of the upper band of the channel in the previous session hitting a fresh all time high. The Dow will need to at least hold this level and the fact that it hasn’t immediately fallen away suggests that there is demand at this level. If it can hold then the outlook is for a bullish breakout. It would take a move below 33700 for the bears to gain traction.
FX – US Dollar weaker, EUR rallies, BoE hikes outlook
The US Dollar is edging lower despite strong recent data. This is most likely owing to its safe haven status. With the reopening optimism growing, investors are shunning the greenback for riskier currencies. Equally, the Fed’s insistence that policy won’t be tightened soon could also be keeping the greenback depressed.
EUR/USD trades higher after a stream of upbeat macro stats from the region. German factory orders rose 1.5% MoM in March. Orders surged by 3% double forecasts, highlighting the resilience of the country’s manufacturing sector even as covid cases rose. Eurozone retail sales rose 2.7% MoM ahead of the 1.5% forecast as lockdown restrictions eased. Data suggests thar the Eurozone economy has turned a corner.
GBP/USD trades higher after the BoE kept rates on hold as expected, but upwardly revises the growth outlook for the year. The BoE now expects the UK economy to expand by 7.25% this year, up from a previous expected 6.5%
GBP/USD +0.01% at 1.3910
EUR/USD +0.35% at 1.2047
Oil bulls pause for breath, Indian covid crisis deepens
Oil is slipping lower after hitting its highest level since mid-March on Wednesday on strong data and on Western reopening optimism. Surging covid cases in India continue to cap the upside.
US crude inventories fell by 8 million barrels in the most recent week, well ahead of the 2.2 million barrel draw expected. The data from the EIA additionally showed that exports and refining output were at the highest level in a year.
Demand is clearly picking up as Western economies reopen and this is underpinning a strong rally in oil across recent weeks. Today, oil bulls are pausing for breath, with one eye on the surging cases in Indian and Japan’s higher case load.
India, the third largest importer of out recorded 412,262 new daily covid cases crushing hope that the peak was hit yesterday as the government modelled.
US crude trades -0.6% at $65.17
Brent trades -0.6% at $68.40
14:15 BoE Governor Andrew Bailey speaks
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.