US open: Strong data sinks stocks

US futures

Dow futures -0.85% at 33830

S&P futures -1.13% at 4101

Nasdaq futures -1.52% at 12500

In Europe

FTSE -0.12% at 79991

Dax -0.35% at 15470

Learn more about trading indices

US PPI rises by more than forecast

Stronger-than-expected data has continued into Thursday, sending futures lower ahead of the open.

US futures quickly pared earlier gains following the release of hotter-than-expected US PPI and a stronger-than-forecast labor market.

US PPI rebounded in January, rising 0.7% MoM, up from -0.2% in December and ahead of forecasts of 0.4% MoM.

Meanwhile, US jobless claims unexpectedly fell to 194k from 196k in the previous week, down from 200k forecast.

The data build on the theme of stronger-than-forecast data points this week, after US CPI and retail sales came in ahead of estimates, suggesting, far from cooling into a recession, the US economy is still pretty hot. Inflation concerns are once overtaking recession fears as the prime concern for the markets, which means hawkish Fed fears are back in the driving seat.

There are now growing worries that the Fed won’t be pausing rate hikes any time soon, let alone perform a dovish pivot.

As we would expect, as hawkish Fed bets rise, stocks are heading lower, led by the tech-heavy Nasdaq. Meanwhile, the USD is pushing higher.

Looking ahead, investors will focus on the Fed policymakers who are due to speak and could shed more light on the Fed’s future path for rate hikes.

Corporate news

Shopify falls almost 10% pre-market after the e-commerce platform beat revenue and profit forecasts but gave disappointing forward guidance. The firm expects consumers to rein in spending.

Roku rose 12% pre-market after the streaming device beat Q4 revenue estimates and posted a 16% increase in active users. Roku also forecast strong growth in the current quarter.

Where next for the Nasdaq?

The Nasdaq rebounded from 12400, running into resistance at 12750 today, before easing lower. The index continues to trade above the multi-week rising trendline and the RSI supports further upside. Buyers could look for a rise to 12900, the 2023 high, to extend the bullish run and create a higher high. Above here 13200 the August 26 high comes into play. On the flip side, a break below 12240 the February 13 low, and 12100, the 100 sma could create a lower low exposing the 200 sma at 11920.

FX markets – USD rises, AUDfalls

The USD is rising to a monthly high after strong data fuels bets that the Fed will keep raising interest rates for longer.

AUD/USD is falling amid a stronger USD and after Australian jobs data. The figures showed an unexpected rise in Australian unemployment and signs that the labour market is starting to weaken as the impact of rate hikes starts to show through. Unemployment rose to 3.7%, up from 3.5%, and the economy lost jobs for the second straight month.

GBP/USD has fallen below 1.20, adding to steep losses yesterday. There is a growing divergence between the US and the UK, whereby the US is showing signs of hotter-than-forecast inflation and a more hawkish Fed, while the UK is experiencing cooler-than-forecast inflation and signs of a less hawkish BoE.

AUD/USD -0.38% at 0.6877

GBP/USD -0.41% at 1.1985

Oil trades in a familiar range

Oil prices continue to train in a narrow range across the week, consolidating after rallying 9% in the previous week and as investors continue to weigh up fundamental factors.

Traders have largely shrugged off a strong build in US crude inventories. According to EIA data, US crude stockpiles rose to the highest levels since June 2021. However, this is reportedly owing to a data adjustment that explains the muted moves in oil prices following the data.

Elsewhere oil traders continue to weigh up Russia's 500,000 bpd production cut from next month, the uncertain global economic outlook, as well as the economic rebound in China.

WTI crude trades -0.01% at $78.85

Brent trades at -1% at $85.06

Learn more about trading oil here.

Looking ahead

N/A

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.