US Open: Stocks rise cautiously ahead of a key week for risk events

US futures

Dow futures +0.17% at 33450

S&P futures +0.3% at 4057

Nasdaq futures +0.5% at 12355

In Europe

FTSE -0.57% at 7930

Dax 0.2% at 15670

• Stocks rise in March after weak February
• Tesla rises after more price cuts
• EURUSD holds steady after weak retail sales
• Oil falls after weak China GDP projection

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March sees a strong start after a weak February

US stocks pointing to mild gains on the open amid a cautious market mood as investors look ahead to a big week for risk events. This week sees Federal Reserve Chair Jerome Powell testifies before Congress and the February non-farm payroll report. Together these events could set expectations for future rate hikes and set the tone in the market for the next few weeks until the US FOMC meeting.

After weakness across February as the markets repositioned for more rate hikes for longer, there now finally seems to be an acceptance that the Fed could need to continue acting aggressively to bring down stubbornly high inflation. The S&P500 lost 2.6% in February and trades 1.9% higher in March so far, a typically strong month for US equities.

Today US factory orders are due to be released and are expected to show that orders fell -1.8% in January after rising 1.8% in December.

Corporate news

Tesla rises pre-market after the EV maker announce more price cuts to some of its premium models. The Model S price will be cut by 4% and the more expensive Model X by 9%.

Apple rises pre-market after Goldman Sachs initiated coverage on the iPhone maker with a buy rating, saying that it could rally by more than 30% on the back of its services business.

Where next for the S&P500?

The S&P500 closed above the 200 sma on Thursday and extended gains above the 100 sma and the rising trend line resistance in a bullish signal. This combined with the receding bearish bias on the MACD keeps buyers hopeful of further gains. Buyers are testing resistance at 4050 the Friday 10 low, with a rise above here brining 4100 the round number, and 4150, the December high into play. On the flip side, a fall below the rising trendline resistance turned support could see the price test the 200 sma at 3940. A break below 3920 creates a lower low.

FX markets – USD steady, AUD falls

The USD is holding steady after losses last week in cautious trade ahead of a big week for the USD. Fed Chair Powell and US jobs data are likely to set the direction of the USD for the coming weeks until the March FOMC meeting.

EUR/USD is clinging to gains just below 1.0650 after eurozone retail sales rose by less than expected in January to 0.3% MoM, up from -2.7%. Expectations had been for a rebound to 1%. Stubbornly high prices continue to impact the consumer. Eurozone Sentix investor confidence also fell by more than expected dropping to -11.1 in March, down from -8.0

AUD/USD is falling, dragged lower by the Chinese yuan after China’s GDP forecast disappointed at 5%, below the 5.3% expected. Attention will now turn to the RBA meeting, where the central bank is expected to raise rates for a 10^th straight meeting. Hints that the RBA could hike again in Q2 could lift the AUD.

EUR/USD +19% at 1.0615

AUD/USD -0.64% at 0.6725

Oil drops on China growth concerns

Oil prices fooling at the start of the week, reversing games from the previous week amid the ongoing tug-of-war between China reopening and fed jitters.

Upbeat data from China, the world’s largest importer of oil, has helped oil prices climb higher over the past four weeks. However, over the weekend, China set a lower-than-expected GDP projection of 5%, below the 5.3% expected. Weaker expected growth in China hurts the oil demand outlook.

Today’s drop in oil prices comes after oil jumped on Friday on rumors that the UAE was considering leaving OPEC.

Looking ahead, attention will be on Fed Chair Jerome Powell’s testimony, where he could provide clues on the future path of rate hikes. Higher interest rates mean slower growth which could hurt the oil demand in the US, the world’s largest oil consumer.

WTI crude trades -1.4% at $77.50

Brent trades at +0.45% at $84.43

Learn more about trading oil here.

Looking ahead

15:00 US factory orders

15:00 CAD Ivey purchasing PMI0