US open: Stocks rise as earnings impress

US futures

Dow futures +0.7% at 33783

S&P futures +0.9% at 3984

Nasdaq futures +1% at 11800

In Europe

FTSE +0.85% at 7400

Dax +1.2% at 14437

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Hawkish Fed commentary

US stocks are set for a positive open as investors digest the latest quarterly earnings from retailers and hawkish calls from Fed speakers.

Retailers’ earnings have broadly been encouraging. It would seem that those that have outperformed are retailers catering to the lower or higher income bracket. While those in that middle area have underperformed.

The retailer’s earnings and robust retail sales data earlier in the week come as some Federal Reserve officials still sound more hawkish than what the market was hoping for. Recent Fed speakers have indicated that more hikes are needed.

James Bullard, St Louis Fed President sees the peak interest rate much higher than where it is now and said that rate hikes have only had a limited effect so far. Meanwhile, Neel Kashkari said rate hikes should continue until it is clear that rates are falling.

Corporate news:

GAP rises 8% pre-market after earnings impress. The fashion retailer beat estimates for sales and profits thanks to solid demand for formal clothing from higher-income clients.

Palo Alto Networks rises after the earnings and revenue beat forecasts. Palo Networks trades 9% higher pre-market.

Where next for the Nasdaq?

The Nasdaq trades caught between the 50 & 100 sma. The RSI is over 50 suggesting further gains are to be had. Buyers will look for a rise over 12000 the 100 sma and 12100 weekly high, to extend the bullish trend towards 12900, the September high. Sellers could look for a fall below 11400 the 50 sma to extend the selloff to 10640.

FX markets – USD eases lower, GBP rebounds.

The USD is edging lower after yesterday’s gains. The USD is still set to gain across the week after several Fed speakers pushed back against the idea of the Fed adopting a less aggressive stance to rate hikes when inflation was still so elevated.

EURUSD is rising after ECB President Christine Lagarde warned that interest rates would need to keep rising. Gains could be capped after she added that the risk of recession had also increased.

GBP/USD rises after UK consumer morale, and retail sales rise more than expected. UK GFK consumer confidence rose to -44, up from -47 after PM Rishi Sunak replaced Liz Truss. Retail sales also rebounded from a -1.5% decline in September, rising by 0.6% after shops were closed for the Queen’s funeral.

GBP/USD  +0.4% at 1.1909

EUR/USD  +0.09% at 1.0370

Oil falls as China demand slows.

Oil prices are falling further on Friday after steep losses in the previous session, putting oil on track for a weekly decline. This will be the second straight weekly decline as concerns over demand drag the price lower.

With COVID cases still rising in China and the US still hiking interest rates to slow growth, the outlook for oil prices remains weak. Recession fears are growing not just in the US but also in Europe. China’s growth is also starting to falter.

Right now, there are few bullish drivers for oil prices. Looking ahead, the EU’s ban on Russian crude coming into play on December 5^th and the potential for OPEC+ to cut production further could impact the price of oil.

WTI crude trades -2% at $83.14

Brent trades -at 1.4% at $90.14

Learn more about trading oil here.

Looking ahead

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