US open: Stocks decline as China growth slows, oil slumps

US stocks are slipping lower after reaching all time highs in the previous session. Slowing Chinese growth and sliding oil prices weigh, whilst initial jobless claims came in as forecast.

USA (2)

US futures

Dow futures -0.5% at 34758

S&P futures -0.4% at 4360

Nasdaq futures -0.01% at 14900

In Europe

FTSE -0.93% at 7033

Dax -1% at 15624

Euro Stoxx -0.95% at 4060

Learn more about trading indices

Stocks roll off record highs

US futures were pointing to a broadly lower start after data revealed a slowdown in growth in China and as continue to weigh up Federal Reserve Chair Jerome Powell’s dovish stance even as inflation is surging and other central bank’s globally were turning more hawkish.

China’s GDP grew 7.9% in Q2 largely inline with forecasts. However, this was down considerably from 18.3% in the previous quarter suggesting that growth was slowing and that the V-shaped recovery was over in the world’s second largest economy.

US jobless claims came in as expected with 360,000 initial claims last week, down from 373k the previous week.

Fed Powell spoke yesterday before Congress saying that the US economic recovery was still a way off from where it needs to be for the Fed to tighten monetary policy. Recently the RBNZ and just today the BoE appear to be adopting a more hawkish stance which raises questions over the Fed’s ability to remain so dovish.

Where next for the SP500?

The S&P500 refreshed its all time high in the previous session at 4392 and is edging lower today. The MACD formed a bearish cross over yesterday keeping the sellers optimistic. Any move lower would need to break below today’s low and the 50 sma on the 4 hour chart at 4353 in order to test the ascending trendline support at 4342. A break below here could negate the near term up trend and open the door to 4290 the July low. On the flip side should 4353 hold then buyers could look to take 4292 and on to fresh all time highs.

FX – USD eases, GBP shrugs off hawkish BoE

The US Dollar is moving higher, rebounding after steep losses in the previous session. Fed Chair Powell battered away expectations of the Fed moving sooner after

GBP/USD –  The pound is edging higher but not making impressive headway after UK jobs data. The numbers revealed 365,000 payrolls were added in June by the most since the pandemic began. The unemployment rate ticked up to 4.8% unexpectedly. However, wage growth surges to 7.3% up from 5.7%. The surge in wage growth comes as inflation hit 2.5% in June. BoE policy maker Saunders said that the BoE ay need to step in to curb inflation. Given the hawkish comments the Pound is very muted, most likely on concerns of rising covid cases as Freedom Day approaches.

GBP/USD  +0.04% at 1.3860

EUR/USD  -0.28% at 1.1809


Oil eases on OPEC+ progress

Oil prices are declining, extending losses from the previous session after Saudi Arabia and United Arab Emirates came to a compromise over oil supply, paving the way for more oil to enter the market and as investors digested the latest data which showed that demand had slacked off.

The latest EIA crude stock pile data declined again for an eighth straight week. However the overdraw was overshadowed by lagging gasoline demand.

News that more oil will be re-entering the market as fuel demand shows signs of slowing and covid cases rise is proving too much for the oil bulls to swallow today.

Despite the selloff the broader uptrend remains in tact. It would take a move below 7040 for a lower low to form.

US crude trades -0.6% at $71.51

Brent trades -0.53% at $73.24

Learn more about trading oil here.

The complete guide to trading oil markets


Looking ahead

14:15 US Industrial production

14:30 Fed Chair Powell Speaks


How to trade with City Index

Follow these easy steps to start trading with City Index today:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade.

More from Indices

Disclaimer

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.