US open: Stocks point to a mixed start, growth fears persist

US futures

Dow futures +0.01 % at 3197

S&P futures -0.1% at 4018

Nasdaq futures -0.12% at 12386

In Europe

FTSE +0.17% at 7364

Dax -0.63% at 13957

Euro Stoxx +0.3% at 3676

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US stocks are set for a mixed open after steep falls from the previous week, as investors look ahead to what is expected to be a key week for retailers. Earnings are due from some of the top names in retail, and US retail sales will be released tomorrow, shedding light on whether surging prices are changing consumer habits or hitting firms bottom line.

All three indices fell sharply lower last week, with the S&P heading towards a bear market as investors fretted over persistently high inflation and fears that the Fed would need to act faster to tame runaway inflation.

The risks of a recession in the US are lower than the risks in Europe. Even so, the growth outlook has softened considerably, with Goldman Sachs downwardly revising US GDP growth for both this year and next.

Fears over slowing global growth continue to weigh on the market at the start of the week, fuelled further by shockingly weak Chinese data reflecting the impact of the ongoing COVID lockdowns. Chinese retail sales fell -11.1%, and industrial output tumbled -2.9%.

There is no high impacting US data due for release, NY Empire State manufacturing index is due later. Fed Williams is also expected to speak shortly and will be watched for further clues on monetary policy.

In corporate news:

McDonald’s will be in focus after the world’s largest fast-food restaurant announced that it was selling its business in Russia after 30 years following the invasion into Ukraine.

More news on the stocks to watch

Where next for the S&P 500?

The S&P500 has rebounded off its 2022 low at 3850, recapturing the key psychological level at 4000. Buyers will want to see a move over 4070 the May 2 low and May 10 high to open the door to the key resistance area between 4100 and 4140. A move above here would negate the near-term downtrend and help build momentum towards 4220 and the 50 sma at 4330. On the flip side, a move below 3850 would create a lower low.

FX markets USD steadies at 20 years high.

USD is edging a few pips lower as USD bulls take a breather and 10-year treasury yields edge lower. The greenback continues to trade around a twenty-year high, boosted by expectations that the Fed will need to aggressively rein in persistently high inflation.

AUD/USD is underperforming its major peers as the China proxy falls following the weak Chinese data. Attention will now shift to the release of minutes from the RBA meeting, which could provide further clues to the central bank’s plans for monetary policy.

EUR/USD is edging higher despite the EC revising the region’s economic growth forecasts downwardly. GDP growth of 2.7% is forecast for this year, down from 4% previously. German PPI came in at 23.8%, a fresh record high.

GBP/USD -0.13% at 1.2190

EUR/USD +0.01% at 1.04370

Oil declines on China concerns.

Oil prices are heading lower at the start of the week as lockdowns in China and weak Chinese data fuel fears of a global recession, overshadowing the news that the EU is moving a step closer to banning Russian oil.

Data showing the COVID lockdowns are seriously impacting the world’s largest oil importing country is hitting the demand outlook. China is showing no signs of letting up on its zero-COVID policy, so that lockdown restrictions could continue for some time yet.

Losses in the oil market are being limited by the prospect of the EU deal banning Russian oil being achieved in the coming days. Oil is likely to remain well supported at around $110 amid the possibility of a Russian oil ban, which is not fully priced in yet. When the deal gets approved, oil prices could climb higher still.

WTI crude trades -1.7% at $106.78

Brent trades -1.3% at $108.74

Learn more about trading oil here.

Looking ahead

15:15 BoE monetary policy hearing

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