US open: Stocks mixed after retail sales rise & jobless claims fall

US futures

Dow futures +0.1% at 31127

S&P futures -0.17% at 3940

Nasdaq futures -0.27% at 12080

In Europe

FTSE +0.35% at 7305

Dax -0.12% at 13013

Euro Stoxx -0.26% at 3560

Learn more about trading indices

Investors continue assessing the Fed’s next move

US stocks are set to open modestly lower after small gains in the previous session and as investors digest the latest data points shedding light on the health of the US consumer and labor market. Meanwhile, fears of hot inflation and a hawkish Fed remain.

Retail sales were a mixed bag. Sales rose by 0.3% MoM in August, ahead of forecasts, but the previous July’s figures were downwardly revised by 0.4%. Meanwhile, core sales also fell 0.3%

Meanwhile, the labor market was again showing its strength, with initial jobless claims falling to 213k, down from a downwardly revised 218k and well below expectations of 226k. This marked the fifth straight week of falling claims.

The data didn’t provoke a strong reaction with investors keeping one eye firmly on the FOMC meeting next week.

The market is pricing in a 75 basis point rate hike next week. But, expectations for a total 1% rise have been steadily building. The market is currently pricing in a 26% probability of a 1% rate hike next week.

We expect the Fed to go 75 basis points in the September FOMC; the bigger question is going to be what follows. Are we now talking 4.5% or even 5% by the end of the year? Stocks could struggle to make any headway before next week’s meeting, given that the Fed could turn more hawkish. At the end of the day, any dovish pivot has been pushed well off the radar.

Corporate news:

Netflix rose pre-market after Evercore ISI upgraded its stance to outperform, up from inline. Analysts consider that the ad-supported subscriber tier could lift the share price by 30%.

Union Pacific and CSX rose 3% and 2.5%, respectively on news that a tentative agreement has been reached, avoiding the threat of a US rail strike.

Where next for the Dow Jones?

The Dow Jones failed to retake the falling trend line resistance and now trades below the 20 & 50 sma. The 20 is crossing below the 50 sma in a bearish signal, and the RSI is in bearish territory. Sellers will look towards 30630, the May low, with a break below this level opening the door to 30000, the key psychological level. On the flip side, buyers will need to rise over the 20 sma at 32000 to bring 32670, the weekly high, back into play.

FX markets – USD rises, GBP falls

The USD is edging higher in quiet trade after jumping earlier in the week. Expectations are building for a 100 basis point hike,

EUR/USD is holding steady as investors digest weaker than expected German wholesale inflation data. Inflation slipped to 18.9% YoY, down from 19.5%. Separately German regulators warned that gas shortages were likely this winter.

GBP/USD is falling after a YouGov survey showed that consumer confidence has fallen to the lowest level since the depth of the pandemic. Attention is turning to UK retail sales tomorrow.

GBP/USD -0.2% at 1.1509

EUR/USD +0.04% at 0.9985

Oil edges lower

Oil prices are edging lower, paring small gains in the previous session, as demand concerns and a stronger USD weigh on the price.

While supply concerns are a constant backdrop, demand concerns are also prevalent, meaning that oil prices have hovered around current levels for two weeks.

This week the IEA warned that oil demand growth would stall in the final three months of the year, which, combined with the USD sitting at recent highs, is pulling oil lower.

This week’s surprise CPI data has paved the way for a more aggressive Federal Reserve. Higher rates for longer will slow economic growth. Meanwhile, a stronger USD makes oil more expensive for buyers with other currencies.

WTI crude trades -1.1% at $87.00

Brent trades -1% at $92.50

Learn more about trading oil here.

Looking ahead

US industrial production

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.