US open: Stocks fall as inflation worries rise, Netflix jumps
US futures
Dow futures -0.42% at 30425
S&P futures -0.6% at 3700
Nasdaq futures -0.5% at 11090
In Europe
FTSE -0..3% at 6920
Dax -0.3% at 12712
Learn more about trading indices
Stocks drop as yields rise
US stocks are pointing to a lower start as Netflix optimism is overshadowed by surging yields, which have climbed to the highest level since 2008.
After two straight sessions of gains, as banks’ earnings boosted the market mood, rising interest rates and recession fears are back to haunt the market.
Bear market rallies are a completely normal phenomenon, but we are not expecting to see a meaningful break higher until the Fed shows that it’s ready for a dovish pivot, and we are just not there yet.
Fed official Kashkari highlighted this point saying that the Fed can’t pause rate hikes with core inflation accelerating.
The economic calendar is relatively quiet again today. Housing starts and building permits are expected to confirm a further slowdown. This follows from yesterday’s NAHB report, which showed its 10th straight month of declines noting that buyer interest was all but dead after a huge rise in the cost of homes and rising mortgages.
Corporate news:
Netflix jumps pre-market after adding 2.4 million subscribers in Q3, recouping those lost in the first half of the year. Netflix also said that it hopes to add a further 4.5 million subscribers in the final quarter of the year. EPS also smashed forecasts coming in at $3.13, over 40% above forecasts of $2.17.
Tesla will be in focus as the EV maker is due to report after the close today and will likely show that profit growth slowed YoY in Q3 as the economy cooled and supply chain issues continued. Forecasts are for EPS of $1.01 on revenue of $22 billion, up 59% YoY.
Where next for the Dow Jones?
The Dow Jones has rebounded off the October low of 28600, re-taking the 20 sma, the 3000 psychological level, and rising above the falling channel. The price ran into resistance at 30840 yesterday and is falling today. The bullish MACD is keeping buyer’s hopeful, although a rise over 30840 is needed to expose the 50 sma at 31200. Meanwhile, sellers will look for a move below support at 30,000, to open the door to 29700, the June low, and bring 28600 back into target.
FX markets – USD rises, EUR falls
The USD is rising after booking losses in the past two sessions. While upbeat earnings had boosted the market mood, at the end of the day, the Fed remains very hawkish, which will keep the USD supported.
EUR/USD is falling after inflation for September rose less than expected to 9.9% YoY, up from 9.1% and a record high, but short of the 10% in the preliminary reading. The data comes ahead of the ECB meeting next week where the central bank is expected to hike by 75 basis points.
GBPUSD is falling after UK CPI data showed that inflation rose back to double digits and a 40-year high at 10.1%. This was above forecast of 10% and up from August’s 9.9%. The data will pile pressure on the BoE to hike interest rates aggressively at the November meeting, even as the cost of living crisis deepens and household incomes are squeezed further.
GBP/USD -0.75% at 1.1230
EUR/USD -0.84% at 0.9777
Oil steadies after steep falls
Oil prices are holding steady after steep losses in the previous session. Oil fell sharply yesterday on reports that the US is considering releasing 15 million barrels of reserves to ease oil supply concerns after OPEC+ cut production. The Biden administration is also open to further releases across the winter to keep petrol prices at the pumps lower.
Recession fears and China not releasing Q3 GDP data this week has also weighed on the demand outlook for oil. Oil prices have fallen over $10 per barrel since the October high after the OPEC+ meeting.
Attention will now turn to the EIA stock pile data, which is expected to rise by 1.3 million barrels.
WTI crude trades +1% at $82.90
Brent trades +0.63% at $89.70
Learn more about trading oil here.
Looking ahead
15:30 EIA stock pile data
19:00 Fed’s Beige Book
19:00 Fed Bostic speaks
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024