US Open: Stocks fall as jobless claims unexpectedly slow

US futures

Dow futures +0.17% at 32725

S&P futures -0.6% at 3960

Nasdaq futures -0.9% at 11825

In Europe

FTSE +0.07% at 7906

Dax -0.33% at 15240

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Jobless claims drop to 190k

US stocks are set to open mixed as investors digest the latest weekly jobless data in addition to more quarterly earnings and as treasury yields top 4%

US jobless claims unexpectedly fell in the previous week, rising by 190k, down from 192k in the previous week. Expectations had been for a rise to 198k. The data highlights the resilience of the jobs market ahead of next week’s non-farm payroll.

A healthy jobs market gives the Federal Reserve room to tighten monetary policy further, dragging US stocks lower while lifting the USD.

The data comes after hawkish comments from Federal Reserve officials. Minneapolis Fed President Neel Kashkari said that a 50 basis point rate hike could be possible at the March meeting. He added that rates could need to go above 5.4%.

Expectations that the Fed will hike interest rates higher for longer have seen the yield on the 10-year treasury yield to 4% for the first time since November.

Looking ahead, Fed speaker Christopher Waller will be under the spotlight.

Corporate news

Tesla falls pre-market after its highly anticipated investor day underwhelmed. The presentation was long on vision and short on details. The EV maker said it attends to reach 30 million deliveries by 2030, up from 1.4 million last year.

Salesforce jumps 15% after upbeat results. EPS was $1.68 ahead of $1.36 forecast on revenue of $8.38 billion ahead of the $7.99 forecast. Revenue was up 14% YoY in Q4. The results come as the firm has been under pressure from activist investors.

Where next for the S&P500?

From the 4195 2023 high, the S&P500 has sold off, breaking below the rising trendline support dating back to October, the 50 sma, and is currently testing support at 3930, the confluence of the 100 and 200 sma as well the year-old falling trendline resistance. The RSI supports further downside. Sellers could look for a break below 3930 to extend losses towards 3900 round number and bringing 3800 into focus, the 2023 low. Meanwhile, should buyers successfully defend the 3930, 3990-4000 zone is the next hurdle, the 100 sma and the psychological level. Above here, 4050 the February 10 low comes into focus.

FX markets – USD rises, EUR falls

The USD is rising, tracking treasury yields higher. Hawkish Fed comments, along with a jump in the prices paid sub-division of the ISM manufacturing PMI keeps investors betting on higher interest for longer.

EUR/USD is falling against the US, but rising against the GBP, after eurozone inflation cooled by less than expected to 8.5% YoY in February, down from 8.6% in January. Core inflation actually rose in February to 5.6% up from 5.3%, adding pressure on the ECB to raise interest rates further.

GBP/USD is falling on the back of rising doubts over whether the BoE will go ahead and raise interest rates again in March. BoE Governor Andrew Bailey said that this may not necessarily be the case. The BoE has been hiking interest rates since December 2021.

EUR/USD -0.8% at 1.0685

GBP/USD -0.78% at 1.19

Oil rises quietly higher

Oil prices are edging higher as investors continue to weigh up signs of a strong economic rebound in China, the world's largest importer, against fears of more interest rate hikes in Europe and the US and higher than-expected crude oil stockpiles.

Yesterday data revealed that manufacturing activity in China grew at the fastest pace in over a decade as the economy continues to recover from the strict zero-Covid measures.

At the same time, inflation worries and fears of higher interest rates slowing growth and oil demand continue to cap the upside. Inflation is proving to be stickier than expected in Europe and the US.

Crude oil inventories saw a significant build last week. The latest EIA report showed a 1.2 million barrel build well ahead of the 0.46 million barrels forecast.

WTI crude trades +0.6% at $78.20

Brent trades at +0.45% at $84.67

Learn more about trading oil here.

Looking ahead

21:00 Fed Waller speech

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