Dow futures +0.47% at 33723
S&P futures +0.5% at 3964
Nasdaq futures +0.45% at 11607
FTSE +0.65% at 7429
Dax +0.1% at 14400
Fed speakers to indicate a slowdown in rate hikes?
US stocks are set for a stronger start, paring losses from the previous session as investors focus on the latest retailers’ earnings and a less hawkish stance from the Fed. Concerns over rising COVID cases in China persist, and although these concerns are being overshadowed today, they could still cap gain in riskier assets.
Retailers Urban Outfitters and Best Buy beat earnings forecasts bringing cautious optimism to the sector ahead of Black Friday. Broadly speaking, US retailers have performed better than expected, suggesting that the US consumer is resilient heading into the crucial holiday quarter.
There is no high-impacting US data due to be released. Investors will be listing to a number of Fed speakers who are due to speak later, including Cleveland Fed President Loretta Mester and known hawk James Bullard.
The majority of speakers have hinted towards slower rate hikes from December, although hikes could continue higher for longer. Any less hawkish comments could lift stocks higher.
According to CME Fed watch tool the market is pricing in a 75% probability of a 50 basis point hike and a 25% likelihood of a 75 basis point hike.
Zoom falls 8% pre-market after beating on the top and bottom line but disappointing with the outlook. The video conferencing firm reported EPS of $1.07 ahead o the $0.84 forecast. Revenue was roughly in line at $1.10 billion. Q4 revenue guidance was cut to $1.10 billion - $1.11 billion short of the 1.12 billion expected. Full-year revenue is expected to be 4.37 billion, down from 4.38 billion.
Dell initially jumped after beating both earnings and revenue forecasts. EPS was $2.30, 44% ahead of $1.60 expected. However, the outlook also unnerved investors.
Where next for the S&P500?
The S&P is consolidating, capped on the upside by 4042, last week’s high, and 3920, the October high, on the lower band. The RSI is above 50, and the 20 sma has crossed above the 50 sma keeping the bulls hopeful of further upside. Buyers will look for a rise over 4042 to extend the upside towards 4100, the falling trendline resistance, and 4155, the September high. Sellers could look for a fall below 3920 to expose the 20 sma at 3870 ahead o the 50 sma at 3800.
FX markets – USD falls, GBP rises
The USD is falling after Fed speakers hinted towards a slower pace of hikes in the coming meetings and as the market mood improved, reversing yesterday’s safe haven flows.
EURUSD is rising as the common currency capitalizes on the weaker USD and despite comments from ECB officials that the central bank could hike at a slower pace in December. The ECB is weighing up a 50 bps hike.
GBP/USD is rising but again, this is looking like a USD weakness story rather than any fundamental improvement in the outlook for the UK economy. The pound is rising despite the OECD predicting that the UK economy would sshrink0.4% in 2023 after expanding 4.4% this year.
GBP/USD +0.6% at 1.1900
EUR/USD +0.39% at 1.0270
Oil rises on Saudi supply comments
Oil prices are rebounding on Tuesday after some volatility on the previous session. Saudi Arabia denied reports that OPEC was going to increase output in December and instead suggested that further output cuts could be on the cards. The next OPEC meeting is due on December 4th, the day before the G7 cap on Russian oil prices is set to begin.
The comments from Saudi Arabia overshadowed global recession fears and rising COVID cases in China which are hurting the oil demand outlook.
API stockpile data is due later today.
WTI crude trades +1.4% at $81.19
Brent trades at +1.14% at $88.30