US open: Stocks fall ahead of midterm election results

US futures

Dow futures -0.5% at 32987

S&P futures -0.6% at 3810

Nasdaq futures -0.6% at 10990

In Europe

FTSE -0.3% at 7285

Dax -0.41% at 13590

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China fears return, Disney disappoints

US stocks are heading for a modestly weaker open after three days of gains as investors await the results from the midterm elections and digested disappointing data from China.

China inflation eased from a 29-month high to 2.1%, and PPI fell for the first time in almost 2 years. In most countries, falling inflation would be well received; however, in China, this is down to falling demand amid COVID lockdowns and slowing global growth, neither of which are for cheering.

In the US, the midterm elections haven’t been the walk in the park that the Republicans might have been expecting, and Biden appears to have avoided a worst-case scenario. Still, the Republi9cans are set to win the House of Representatives, and the Senate is still too close to call. The uncertainty is cresting a slight risk-off mood, although this could also be nerves ahead of tomorrow’s inflation data.

US CPI is expected to show core inflation pushing higher, even as the headline print moderates. The data will be the key catalyst for setting December FOMC rate expectations and directing the market’s next move.

Corporate news:

Disney falls pre-market after missing quarterly estimates for both top and bottom line. The Entertainment giant reported larger-than-expected losses owing to its push into streaming video. Subscriber numbers rose by more than expected by Disney warned that this was likely slow.

Meta rises after announcing 11,000 jobs are being cut, which equates to around 13% of the workforce. This is the first large scale headcount cut in the company’s history and comes as costs spiral and ad revenue declines.

Where next for the Nasdaq?

The Nasdaq has risen from Friday’s low and is attempting to break above resistance at 11200 the 20 sma. Should sellers defend this level the price could look to test support at 10600, the November low, ahead of 10430 the 2022 low. Should buyers push over the 20 sma, the 50 sma at 11540 comes into fovus ahead of 11700 the October high.

FX markets – USD rises GBP falls

The USD is rising in risk off trade after three days of losses. The market mood has soured slightly as the midterm elections were tighter than expected, and political uncertainty hangs on the mood. Attention is also turning to tomorrow’s inflation data.

EURUSD falling on USD strength and amid a quiet eurozone calendar. This slight risk-off tone to the market is also dragging on the pair. Watch for ECB speakers later.

GBPUSD is falling in quiet trade. There is no specific news driving the decline, but failure to retake 1.16 yesterday could have sparked the selloff. Attention will turn to UK GDP data on Friday. Investors are also looking towards the fiscal statement next week, where tough measures are expected to be announced.

GBP/USD  -0.62% at 1.1456

EUR/USD  -0.2% at 0.9980

Oil falls as China COVID fears rise

Oil prices are falling on Wednesday for e third straight session as investors weigh up more COVID restrictions in China and a larger than forecast build in inventories.

COVID in China has been attracting a lot of attention over the last few weeks, be it on hopes that China could consider ending the zero-COVID strategy or more recently, as COVID cases have continued to rise and lockdown restrictions rise. Guangzhou and other China cities are being required to mass test, raising fears of more widespread lockdowns.

According to the latest API data, crude oil stockpiles rose by 5.6 million barrels, well ahead of the 1.6 million forecast.  EIA stockpile data is due later today.

WTI crude trades -1.34% at $86.54

Brent trades -1.25% at $93.16

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Looking ahead

15:30 EIA crude oil inventories