US open: Stocks point lower on inflation fears, Boeing slumps
Fiona Cincotta February 22, 2021 9:54 PM
US stocks are seen dropping lower on Monday with the tech sector under notable pressure amid growing concerns over rising inflationary pressure and bond yields.
Dow futures -0.5% at 31270
S&P futures -0.7% at 3877
Nasdaq futures -1.4% at 13388
FTSE -0.4% at 6595
Dax -0.4% at 13930
Euro Stoxx -0.6% at 3692
The reflation trade is gaining traction with base metal prices surging on expectations of strong global economic recovery fueling demand.
Copper futures broke above the key $9000 resistance for the first time in almost a decade. Futures of iron, which is the principal ingredient in steel making hit a three-week high and now trades less than 5% off the 10 year high reached in January.
The weaker US Dollar is adding support to the base metals, a trend which is being underpinned by the prospect of the Biden administration’s $1.9 trillion package. The bill could be voted on in the House of Representative as soon as Friday.
Stocks look to pick up after yesterday’s sell off
US stocks are set to open lower as rising bond yields and the prospect of higher borrowing costs takes the shine off stocks.
The Nasdaq is a standout loser as the rotation out of growth gains pace.
Berkshire Hathaway reported before the open, whilst earnings from the oil and gas sector will be in focus after the close with Occidental and Williams reporting.
Kohl’s trades9.8% pre-market on reports that a group of activist investors with around a 9.5% stake were attempting to take control of the department store’s board.
Boeing 777’s grounded on FAA orders
Boeing has called for the grounding of 128 of its 777 planes as US regulators, the FAA, issue an emergency order to inspect Boeing 777’s fitted with Pratt & Whitney engines after a mid flight accident in Denver.
This latest incident comes just weeks after Boeing got the all clear from regulators to start flying its737 MAX planes which had been grounded for 2 years following fatal accidents.
The stock trades -3% pre-market. Even so, the bias remains neutral.
FX – EUR & GBP bounce as US Dollar eases
The US Dollar is on the backfoot despite treasury yields rising. The US Dollar Index (DXY) -0.1% at the time of writing paring earlier gains.
EUR/USD trades higher after German IFO business sentiment data showed that optimism has returned to the German economy. Businesses, like the markets, are looking through the near term problems from lockdown and slow vaccine rollout to focus on the recovery. The IFO index rose to 92.4 in February from 90.3 in January.
GBP/USD struck a fresh 35 month high of 1.4050 as investors cheer the rapid vaccine rollout and look ahead to a speech by Boris Johnson later today where he will mark out the path to reopening the UK economy.
Analyst Fiona Cincotta looks at the price action of GBP/USD here
GBP/USD trades +0.05% at 1.4020
EUR/USD trades +0.15% at 1.2130
Oil pares some of Friday’s losses
US crude oil prices have started the week firmer as production wells, pipelines and refineries start to return to normal in Texas following last week’s cold snap.
Separately, according to Bloomberg tensions are once again brewing between Saudi Arabia and Russia ahead of the next OPEC +meeting. Russia is more eager to ramp up production than its peers.
US crude trades +1% at $59.89
Brent trades +0.9% at $62.70
It is a quiet start to the week on the US economic calendar. Things start to pick up tomorrow with Fed Chair Jerome Powell beginning his bi-annual two day testimony before Congress which is set to be one biggest events of the week.
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.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital 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), GAIN Capital Singapore 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 GAIN Capital Singapore 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 GAIN Capital Singapore 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.
GAIN Capital Singapore 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.