Dow Jones outlook: Stocks mixed after jobless claims jump

US futures

Dow futures -0.08% at 33636

S&P futures +0.05% at 4270

Nasdaq futures +0.15% at 14333

In Europe

FTSE -0.00% at 7617

Dax +0.02% at 15986

• US jobless claims rise by 261k
• Attention turns to the Fed rate decision
• GameStop drops 20% on a management shake-up
• Oil rises as Saudi cuts support the price

Jobless claims rise by 261k

US stocks point to a mixed open as investors digest the latest weekly jobless claims number and look ahead to next week's highly anticipated US inflation data and federal reserve interest rate decision.

US jobless claims came in higher than expected at 261k; this was up firmly from the previous week’s 232k and marked the biggest jump in jobless claims since October 2021

The US jobs market has so far proved to be very resilient, with 339k jobs added in May, although unemployment ticked higher. Today’s jobless claims suggest weakness is starting to seep into the labour market. More US companies announced layoffs in the first five months of this year than in the whole of last year.

Following the data, market expectations for a pause in hiking rates by the Fed were upwardly revised to 73% from the mid-60s before the release. The Fed is still expected to hike rates again in July.

Recent data has raised questions over the health of the US economy, which appears to be showing signs of slowing. The US ISM services PMI unexpectedly fell in May to 50.3,

Corporate news

GameStop falls over 20% premarket after a shakeup of top executives. CEO Matthew Furlong has been terminated and will be replaced by Ryan Cohen. Losses at the video retailer narrowed.

Lucid rises pre-market as the luxury EV maker prepares to enter the Chinese market, the world’s largest auto market.

Dow Jones outlook – technical analysis

After the bullish engulfing candle on Friday, the Dow Jones has eased off from the 33840 high but remains supported by the 50 sma near term. Buyers will look to rise above 33840, the weekly high, and the falling trendline resistance to break out to bring 34265, the May high, into focus. Meanwhile, should the 50 fail to hold, sellers could encounter support around the 33000 level ahead of 32770, the rising trendline support.

FX markets – USD falls, GBP gains

The USD falls for a second straight session after jobless claims data fuels bets of a less hawkish Fed. Investors look cautiously ahead to inflation data and the Federal Reserve interest rate decision next week.

EUR/USD is rising, capitalising on a weaker U.S. dollar as investors shrug off data that showed that the eurozone economy slipped into a recession in the first quarter of the year. The revised GDP data shows that the eurozone economy shrunk by -0.1% in Q1 and Q4 2022. With more rate hikes expected from the ECB, growth could slow further.

GBP/USD is rising despite a lack of fresh catalysts. The OECD warned that the UK would see the highest inflation of all G20 countries except for Turkey and Argentina. Inflation is expected to be 6.9% in 2023. Hot inflation Phil's expectations at the Bank of England could raise interest rates further.

EUR/USD +0.23% at 1.0730

GBP/USD +0.21% at 1.2467

Oil rises, supported by Saudi output cuts

Oil prices are heading higher for a second straight day. Saudi Arabia’s pledge to cut production and amid a possible pause to US interest rates overshadow concerns of a global economic slowdown and rising US gasoline inventories.

At the start of the week, Saudi Arabia said it would cut oil output by 1,000,000 barrels per day in July, which has helped to support oil prices. Attention now turns to the US Federal Reserve when it meets next week. There are growing expectations that the Fed could skip a rate hike which could help boost oil prices.

Meanwhile, EIA data showed that US gasoline inventories rose by 2.7 million, more than expected, raising concerns over the demand picture. Crude oil inventories, on the other hand, filed by 451,000 barrels in the previous week, was unless had expected a 1,000,000 barrel rise.

WTI crude trades +0.94% at $73.22

Brent trades at +0.98% at $77.08

Looking ahead

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