US open: Stocks extend gains, retail sales unexpectedly rise

US futures

Dow futures +0.36% at 34042

S&P futures +0.3% at 4451

Nasdaq futures +0.3% at 15098

In Europe

FTSE +0.15% at 7224

Dax +0.5% at 15540

Euro Stoxx 0.3% at 4168

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Market mood remains buoyant

US stocks are set to open higher, building on strong gains in the previous session and boosted by better-than-expected retail sales. Retail sales rose by 0.7% MoM in September defying expectations of a decline. August’s number was also revised higher.

The data suggests that the US consumer is still happy spending despite price rises. According to the data, elevated inflation hasn’t dented consumer demand, which is key for the US’ consumer driven economy.

US banks underpinned a strong rally in the previous session thanks to some eye watering numbers. The solid start to earning season was for the calmed concerns that inflationary pressures could hamper growth.

Banks will remain in focus after more strong numbers from Goldman Sachs as the investment banking arm thrives amid a global boom in deal making and M&A activity.

Energy stocks are also expected to drive higher, tracing ooil higher.

Looking ahead US consumer confidence numbers are expected to show an increase to 72.8, up from 73.1.

Where next for the S&P 500?

The S&P is extending strong gains from the previous session which saw it break back over the 100 sma, multi-week ascending trendline and the 50 sma on the daily chart. The RSI is keeping buyers optimistic with 4500 in sight. On the downside, immediate support can be seen at 4340 the 50 sma. It would take a move below 4380 the 100 sma and falling trendline for sellers to gain traction.

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FX – USD drifts, GBP rises after solid jobs data

The US Dollar edging lower as risk appetite in the market returns. Inflation fears have receded, with the 10 year benchmark yield back below 1.5%.

GBPUSD has pushed back over 1.37 and trades at a multi week high amid rising expectations of a move by the BoE to raise interest rates. Brexit headlines don’t appear to be dampening demand for the Pound, even as the UK and the EU remains miles apart over Northern Ireland protocol.

GBP/USD +0.58% at 1.3751

EUR/USD +0.01% at 1.1601

Oil set for 8th weekly gain

Oil prices continue to March higher, setting up for gains of around 3.5% across the week, the 8^th straight weekly gain for WTI and the 6^th straight week of gains for Brent. Surging gas and coal prices continue to under pin oil. The IEA consider that the energy crunch will boost demand for oil in the region of 500,000 barrel per day, on top of the supply deficit which already existed on the reopening play.

The markets are shrugging off higher crude oil inventories, after EIA data revealed a 6.1-million-barrel rise, well ahead of the 702,000 rise forecast. Fuel stockpiles fell.

WTI crude trades 0.9% at $81.61

Brent trades +1% at $84.50

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Looking ahead

15:00 University of Michigan Consumer Confidence

17:20 Fed Williams Speech

18:00 Baker Hughes rig count

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