US open Powell Yellen take the hot seat oil slides

US futures

Dow futures -0.3% at 32681

S&P futures -0.2% at 3933

Nasdaq futures +0.24% at 13119

In Europe

FTSE -0.3% at 6706

Dax +0.16% at 14670

Euro Stoxx -0.01% at 3836

Learn more about trading indices

Powell & Yellen to testify before Congress

Federal Reserve Chair Jerome Powell & US treasury secretary Janet Yellen make their first joint appearance before Congress.

The pair begin a two-day session where they are expected to discuss the state of the US economy and the economic policy response to the covid pandemic. The hearing comes two weeks after President Biden’s $1.9 trillion stimulus package was approved and as the Democrats consider a further $3 trillion stimulus plan.

In light of the stimulus package and given the recent turmoil in the bond market, which sent US treasury yields sharply higher, questions over the outlook of inflation are almost certain.

From the prepared statement Fed Powell is expected to stick to the supportive hymn sheet re-affirming that the central bank stands ready to keep policy loose until the labour market returns to its pre-pandemic state.

Stocks point to a mixed open

Risk off trade dominated the European session and is transferring across to the US. Rising covid cases and tighter lockdown restrictions hit risk appetite in Europe, as did souring relations with China.

The Nasdaq is looking to outperform, with treasury yields easing back growth stocks are back in favour.

Riskier assets such as stocks are out of favour whilst demand for the safe haven US Dollar has picked up.

Where next for the Dow Jones?

The Dow trades above its 50 & 100 sma on the daily chart, a bullish trend. It broke out of the top side of its 4 month ascending channel, hitting an all time high of 33231 last week. However, the shooting star pattern indicated a bearish reversal.

The price has since lost ground and is testing the resistance turned support upper band of the ascending channel at 32700. A move below this level could see the sellers look towards 13200 round number a resistance mid March before attacking the 50 sma at 31500. A move below here could negate the near-term bullish trend. It would take a move below 31000 the lower band of the ascending channel for sellers to gain momentum.

On the flip side, should support at 32700 hold bulls could look to the all time high beyond 33000 again.

Stocks in focus

AstraZeneca ADR -2.4% pre- market after a US health agency raised questions over the covid vaccine results saying AstraZeneca used outdated data. This could delay the US rollout of the vaccine or halt it altogether.

Boeing -0.9% pre-market after announcing that it had entered into a $5.28 billion two year revolving credit agreement suggesting that it doesn’t see a rapid recovery in demand from the pandemic

GameStop – trades flat pre-market but could see some volatility ahead of earnings later. There are questions over how much fundamentals really matter for this stocks which has been central to the populist short squeeze movement of day traders versus hedge funds.

FX – GBP breaks below 1.38 after mixed jobs data

The US Dollar is advancing on safe haven flows in a broadly risk off session.

GBP/USD – dropped through $1.38 on a combination of US Dollar strength and Pound weakness following a mixed jobs report. The UK unemployment rate unexpectedly slipped lower to 5% in the three months to January, down from 5.1%. However, the claimant count in February surged to 86.6K, versus 9k expected as more people signed up for unemployment benefits.

Investors await Fed Chair Powell’s testimony before congress together with US treasury secretary Janet Yellen.

GBP/USD -0.6% at 1.3782

EUR/USD trades -0.5% at 1.1927

Analyst Fiona Cincotta looks at the price action of GBP/USD and levels to watch here

Oil tanks on demand fears

Crude has slide through $60.00 as it struggles to find its mojo following last weeks’ decline. Rising covid cases in Europe and tighter lockdown restrictions are reviving future demand concerns. Summer holiday’s abroad this year are looking increasingly unlikely which will mean demand could take even longer to recover.

Whilst countries are set to reopen economies in the coming months, any rise in demand from here is likely to be matched by increased supply as OPEC+ is set to ease production cuts in the coming months and as US shale output picks up.

US crude trades -3.8% at $59.16

Brent trades -3.7% at $62.04

Learn more about trading oil here.

The complete guide to trading oil markets

Analyst Fiona Cincotta looks at the price action of WTI crude oil and levels to watch here

Looking ahead

14:00 New home sales

16:00 Fed Powell testifies

20:30 API weekly crude oil stock

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.