US Open: Stocks rise cautiously with all eyes on Powell's testimony

US futures

Dow futures +0.07% at 33440

S&P futures +0.13% at 4052

Nasdaq futures +0.25% at 12335

In Europe

FTSE -0.17% at 7930

Dax 1% at 15470

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Powell testifies before Congress

US stocks point to mild gains in cautious trade as investors shy away from taking out big positions ahead of Federal Reserve Chairman Jerome pounds congressional testimony this week.

Today the ahead of Federal Reserve will appear before the Senate Banking Committee he will face the House Financial Services committee. Powell will likely be grilled on the Fed’s steep rate hiking cycle and the US economy’s ability to withstand the hikes without tipping the economy into recession or the likelihood of a recession in the US.  

The timing of this testimony more crucial after a series of stronger-than-expected data across February has seen more hawkish commentary from Fed speakers and investors ramping up their rate hike expectations. Investors will be looking for any clues over the potential size of the rate hike, with the market now pricing in around a 30% probability of a 50 basis point rate hike. This is up from a 0% likelihood just over 1 month ago.

A hawkish-sounding Powell could drag stocks and Gold lower while boosting Gold. Meanwhile, should Powell focus on the disinflation process, as he did in the previous Fed conference, then stocks could head higher, with Gold while bringing the USD lower.

These testimonies, combined with Friday’s jobs report, will likely set the tone for trading over the coming weeks until the FOMC.

Corporate news

Meta rises pre-market on reports that the social media platform plans to cut thousands more jobs as soon as this week. The reports come just a few months after Meta announced 11,000 job cuts amid a move to flatten its structure and reorganise and downside efforts.

Where next for the Nasdaq?

After rebounding off the 50 sma the Nasdaq is testing resistance at the 20 sma 12275. The 50 sma is set to cross above the 200 sma in a bullish signal. The RSI is also supportive of further gains. However, buyers would need to rise above 12467, yesterday’s high, to extend gains towards 12900 the February high, creating a higher high. Should buyers fail to defend the 20 sma, sellers could look to take out 12000 round number and test 11920, the golden cross level, ahead of 11835 the March low. A fall below here creates a lower low.

FX markets – USD rises, EUR falls

The USD is Rising after losses in the previous session as investors look ahead to Powell’s testimony later today. The greenback is rising despite treasury yields falling away from 4%, the 3-month high reached last week.

EUR/USD is easing Back from a two-week high of 1.07 reached on Monday amid renewed U.S. dollar strength, the euro is shrugging off German factory orders, which unexpectedly rose by 1% in January ahead of expectations of a 1% decline. The euro has broadly remained supported by hawkish ECB comments with policymakers pointing to further rate hikes beyond the expected hike in March.

GBP/USD Is heading lower as investors shrug off data that showed that house prices jumped unexpectedly in February, Reflecting improvements in consumer confidence and the mortgage market. house prices rose 1.1% MoM, after a 0.2% rise in January.

EUR/USD -0.19% at 1.0660

GBP/USD -0.14% at 1.20

Oil steadies ahead of API data & Powell’s testimony

After rising over 1% in the previous session oil prices are holding steady on Tuesday as investors supply concerns offset any worries ever China dim and on certainties.

The Chevron CEO yesterday said that there's not a lot of swing capacity in oil markets, His remarks appeared to spark a rally in oil prices.

the reality is that supply from Russia remained a wild card and is the big unknown for 2023. Russia has said that it will cops apply by 25% this month keeping the supply side tight.

Meanwhile oil trade data from China showed that crude oil imports during anyway and February fell by 1.3% YoY to 109.4 million barrels. However imports have been accelerating in February pointing to a recovery in fuel demand.

looking ahead the API oil inventory data will be in focus as well as the comments from Fed Chair Powell. Hints of higher interest rates for longer could hurt the oil demand outlook.

WTI crude trades -0.2% at $80.30

Brent trades at -0.3% at $85.82

Learn more about trading oil here.

Looking ahead

15:00 Fed Powell speech