US open: Stocks edge higher at the start of Thanksgiving week

Futures trade mildly higher amid M&A activity & signs of possible easing measures in China.

USA (2)

US futures

Dow futures +0.23% at 35673

S&P futures +0.28% at 4710

Nasdaq futures +0.36% at 16636

In Europe

FTSE -0.11% at 7219

Dax -0.26% at 16137

Euro Stoxx -0.25% at 4344

Learn more about trading indices

Rotation out of cyclicals as parts of Europe lockdown

US stocks are set to start the holiday shortened Thanksgiving week in an upbeat fashion. M&A activity and signals of possible easing measures in China support the market mood, even as European stocks come under pressure.

The People’s Bank of China dropped several sentences from its latest monetary report which ruled out further accommodation, setting the stage for easier monetary policy. The change, which has been well received by the markets comes as Chinese economic growth has slowed in recent months.

Today only sees the release of mid-tier home sales data. However, looking ahead across the week there is plenty for data for investors to be focusing on including PMIs, durable goods, PCE inflation and the minutes from the latest Fed meeting.

This week President Biden is also expected to name the Fed Chair nominee either current Chair Fed Powell or Governor Lael Brainard. Whilst Brainard is considered the more dovish choice, with inflation surging at its fastest pace in 30 years the challenges are clear to see.

Stocks in focus

In corporate news, Vontage trades over 27% higher pre-market after Swedish telecommunications group Ericsson announced that they will pay $21 per share for Vontage. This values the firm at $6.2 billion.

Separately freshly IPO’d Rivian trades down 5% pre-market after the EV maker and Ford halted plans to jointly develop an EV together. Rivian debuted on November 11 surging 57% in the first few days of trading before falling back towards the IPO price.

 

Where next for the S&P500?

Whilst the Dow Jones is attempting to claw a few pips higher, the 4-hour chart remains bearish. The index has been trending lower since early November, the 50 sma is crossing below the 100 sma in a bearish signal. The RSI is also supportive of further downside whilst it remains out of oversold territory. Sellers will be looking for a move below 35500 for further downside. Any meaningful recover would need to retake 36050 Friday’s high and the 50 & 100 sma in order to retake 36300 to expose the all time high.

Dow chart

FX – USD moves higher, EUR consolidates below 1.13

The USD is edging higher, building ion last week’s gains. Hawkish Fed speak and surging inflation boosted expectations of a move by the Fed to hike rates sooner, lifting the greenback.

EUR/USD is consolidating under 1.13 after dropping 1.4% across the previous week. Rising COVID cases and dovish commentary from the ECB have dragged the common currency lower. Attention will now shift to Eurozone consumer confidence data which is expected to show consumer morale deteriorated in November amid rising covid cases and surging inflation. The Bundesbank have said that they expect German inflation to be just below 6% in November.

GBP/USD +0.01% at 1.3445

EUR/USD -0.03% at 1.1278

 

Oil extends declines on supply & demand concerns

Oil prices dropped around 6% last week in its 4th straight week of losses, the worst losing streak since March last year. The price came under pressure as the US and China explore the possibility of releasing emergency oil reserves in order to bring the oil price and petrol prices at the pump lower.

Over the weekend, Japanese Prime Minister Fumio Kishida indicated that this was something that Japan was also looking into.

In addition to concerns over increased supply, the demand outlook is also starting to darken as COVID cases in Europe rise. Austria has re-imposed a full lockdown, this comes after Holland increased restrictions earlier in the month and as German COVID cases hit record highs.

WTI crude trades -0.3% at $75.76

Brent trades -0.4% at $78.12

Learn more about trading oil here.

 

Looking ahead

15:00 Eurozone Consumer Confidence

21:45 NZ Retail Sales

 

 

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.

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.