US open: Wall Street rises despite Netflix horror show

US futures

Dow futures +0.41 % at 34580

S&P futures +0.42% at 4437

Nasdaq futures +0.08% at 13906

In Europe

FTSE +0.24% at 7594

Dax +1.1% at 14077

Euro Stoxx +0.25% at 3822

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Corporate earnings and inflation peaking

US stocks are set for a mildly stronger start, boosted by falling yields and as investors continue to the latest from earnings season.

The expectation that inflation is peaking and that rate hike bets are overdone is helping the rally in global bonds quicken, boosting stocks and dragging the US dollar lower.

The Nasdaq rallied firmly in the previous session and is expected to build on those gains today, despite the horror show that is Netflix

There is little in the way of economic data, just mid-tier home sales with the Fed’s beige book due later.

In corporate news:

From whichever angle you look at it, Netflix was a shocker. The first net loss of subscribers in a decade indicates the start of a new phase for this once darling of Wall Street. With competition heating up and households reining in their spending this is a tough environment for many firms.

Companies which are likely to perform well across corporate America are those which can pass on rising costs to the consumer.

Tesla’s ability to do just that, pass on rising costs to the customer will be under the spotlight when it reports after the close today. We know that a record 310,048 deliveries were achieved in Q1.

Where next for the S&P500?

The S&P500 ran into resistance at 4623 and rebounded lower falling below the 50 & 100 sma. The losses appear to have run out of steam and the price has recaptured the 50 sma and is heading for the 100 sma. The receding bearish bias on the MACD supports further upside.. Buyers will want to see a move over the 100 sma and round number at 4500. Sellers will look for a move below 4360 to open the door to 4285.

FX markets USD falls, EUR rallies

USD is falling, tracing treasury yields lower after both hit a multi-year high yesterday. Fed speakers Evans and Bolstic said that they are not looking at 75 basis point rate hike like James Bullard, which appears to have calmed hawkish bet, at least for now.

EUR/USD is on the rise thanks in part to the weaker USD and a combination of stronger than expected Eurozone industrial production, record-high German wholesale inflation as energy prices soared from the fallout from the Russian war and following hawkish comments from the ECB’s Kazak who said that the central bank could start hiking interest rates as soon as July.

The ECB / Federal Reserve monetary policy divergence had pulled EUR/USD to an almost 2 year low last week. Should expectations of a more hawkish ECB build from here then we could see the pair looking back towards 1.10.

That said the euro could find gains limited leading up the runoff in the French Presidential election on Sunday. Whilst Macron is the favourite to win as Marine Le Pen risk still needs to be prices in. Her dangerous mix of hardline policies with social welfare means that her appeal is wide.

GBP/USD +0.03% at 1.3011

EUR/USD -0.14% at 1.0874

Oil rebounds

Oil prices are on the rebound after booking 5% losses in the previous session. Whilst the IMF’s gloomier outlook for global growth weighed on the demand outlook for oil yesterday, the bears haven’t been able to retain control.

Concerns over the tighter supply outlook, in addition to the news that COVID restrictions in Shanghai could soon be eased, are driving oil prices higher.

OPEC+ has once again failed to reach the upwardly revised output target in what is becoming a very familiar story. US inventories were also lower than expected.

The price of oil continues to hold above $100 per barrel and is likely to remain supported around here. It would take the EU banning Russian oil for the price to really charge higher again and that isn’t looking likely for now.

WTI crude trades +1.81% at $103.70

Brent trades +1.7% at $108.70

Learn more about trading oil here.

Looking ahead

15:00 Existing home sales

15:30 EIA crude stock piles

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