Dow futures -0.26% at 36137
S&P futures -0.35% at 4648
Nasdaq futures -1.16% at 15408
FTSE +0.08% at 7480
Dax -0.35% at 15881
Euro Stoxx -0.5% at 4280
Inflation fears rise
US stocks are set to open lower as investors fret over rising inflation and the Fed hiking interest rates at the same time that Omicron cases are surging higher.
US treasury yields rose to a fresh 2 year high amid growing expectations that the Fed will tackle surging inflation head on this year raising rates at a faster pace than initially expected.
Tech stocks, which are particularly sensitive to higher interest rate expectations are once again under performing as investors rotate out of high growth stocks into value, with bank stocks rising on the prospect of a rate hike boosting net interest income.
Whilst there is no high impacting US data due for release today attention is firmly on US inflation data and a speech by Fed chair Powell later in the week. Inflation is expected to come in at 7%, which could prompt more hawkish commentary from the Fed, cementing the way to a rate hike potentially as soon as March.
Where next for the S&P500?
After hitting an all time high of 4617 earlier in January, S&P500 is falling lower. The price declining through the 50 sma and the bearish cross over on the MACD are keeping sellers hopeful of further downside. The 100 sma has acted as a key support in November and December making it a key level to watch at 4577 ahead of 4500 the December low. On the upside a move above the 50 sma at 4680 and 4750 could see the price look back towards 4816 and fresh all-time highs.
FX – USD rebounds, EUR slumps despite upbeat data
The USD is on the rise recouping losses from the previous week. The greenback fell sharply on Friday after the headline non-farm payroll figure significantly missed forecasts. However, inflation fears are back, along with expectations of a sooner move by the Fed to raise rates, boosting the USD.
EUR/USD trades under pressure despite upbeat data from the bloc. Unemployment in the Eurozone continues to decline, dropping to 7.2%, down from 7.3%. Meanwhile Sentix investor sentiment unexpectedly improved in January to 14.9, up from 13.5. The data suggests that investors are not expecting economic momentum to stall in the new year despite rising COVID cases.
GBP/USD -0.15% at 1.3573
EUR/USD -0.37% at 1.1314
Oil steadies after strong gains
Oil prices are holding steady after booking big gains in the previous week. Oil jumped almost 5% across last week amid output disruption in Kazakhstan and Libya. Supply concerns remain, however, these are being offset by concerns over future demand as Omicron cases surge across the globe.
Protests in Kazakhstan had hit production at Tengiz, the country’s top oil field. However, output is gradually returning which could act as a tailwind on oil prices.
News that OPEC+ is failing to keep up with the allowed 253,000 bpd increase agreed is supporting the price of oil. OPEC+ managed to increase production by just 70,000 bpd in December compared to the previous month.
WTI crude trades -0.74% at $78.04
Brent trades -0.6% at $81.07
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