Dow futures +0.47% at 33370
S&P futures +0.39% at 4405
Nasdaq futures +0.54% at 14047
FTSE +3% at 7430
Dax +3% at 14470
Euro Stoxx +3% at 3945
Hopes of talks cautiously lift stocks.
US stocks are set to edge slightly higher on Friday after a spectacular reversal on Thursday. However, they are still set to end the week in the red.
Risk sentiment suddenly improved yesterday following the announcement of sanctions on Russia, which were, once again, milder than expected. The sanctions were aimed at banks and financial markets once again.
Russia continues advancing towards Kiev despite the sanctions and cushioned by a build up of $600 billion in currency reserves thanks in part to surging oil and gas prices.
Reports that China’s leader Xi Jinping has told Putin to hold talks with the government in Kiev, are lifting risk sentiment further. Although Russian forces continue to attack, there could be hope of some level of negotiation.
On the data front, a slew of data revealed that the US consumer was holding up well even as inflation shot higher. The Fed’s preferred measure of inflation, the core PCE rose to 5.2%, above the 5.1% forecast and up from 4.9% in December. Personal spending also rose 2.1%, after falling -0.8% in December.
The data comes ahead of the Fed’s rate decision in March. The strong data would be supportive of a more aggressive move by the Fed to hike rates, maybe a 50 point hike, rather than 25 basis points. However, what the Fed plans to do could depend on what happens in eastern Europe.
Where next for the S&P500?
The S&P 500 rebounded off 4106 yesterday’s low. The rise higher has broken above several important resistance levels, which along with the bullish crossover on the MACD is keeping buyers hopeful of further gains. Buyers will be looking for a move over 4350 the 50sma and falling trendline support ahead of horizontal resistance at 4360. On the flip side support can be seen at 4275 the lae January low ahead of 4250 the February 21 low.
FX markets USD rallies, EUR rises
USD is trading lower despite upbeat data.
EUR/USD trades higher after German GDP contracted less than feared in Q4. GDP fell -0.3%, less than -0.7% initially estimated. Eurozone economic sentiment also improved to 114, up from 112.7, thanks to rising confidence in services retail and construction.
GBP/USD +0.1% at 1.3393
EUR/USD +0.2% at 1.1214
Oil slips but set for weekly gains of 1.8%
Oil prices easing lower, back below $100, but are still on track for gains in the region of 1.7% this week as Russia, Ukraine headlines remain in focus.
Oil fell away from 7-year highs after Western sanctions on Russia left the energy sector alone and after President Biden said that the US could release oil reserves to lower the price. A large than expected build in stockpiles also dragged on the price.
WTI crude trades -0.12% at $92.20
Brent trades -0.4% at $95.35
18:00 Baker Hughes rig count
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