US open Stocks flat ahead of retail sales FOMC minutes
Stocks remain near record levels amid ongoing optimism of a strong economic recovery as the covid vaccine programme ramps up and massive US stimulus. Oil hits a fresh 13 month high and the US Dollar finds its feet on rising inflation expectations.
US futures
Dow futures trade -0.05% at 31435
S&P futures -0.1% at 3920
Nasdaq futures -0.2% at 13710
In Europe
FTSE -0.1% 6737
Dax -0.7% at 13962
Euro Stoxx -0.3% at 3713
Learn more about trading indices
Stocks pause for breath
US stocks are pointing to a flat start after reaching fresh record highs in the previous session, boosted by optimism surrounding the economic recovery, expectations of a $1.9 trillion stimulus package and strong gains in energy stocks.
With oil on the rise again today, stocks such as Exxon Mobile & Chevron will once again be in focus. Both are posting strong gains higher pre-market.
Shopify
Trades -0.7%pre-market reported a 94% jump in revenue in the holiday quarter beating Wall Street’s forecasts as more businesses looked to use the firm’s tools to sell online through the pandemic. Revenues rose to $977.7 million in the final 3 months of the year, up from $505.2 million a year earlier. Expectations had been for $910.2 million.
Hilton International
Trades -2.3% pre-market after the hotel chain posted an unexpected quarterly loss as a resurgence in covid cases and tighter travel restrictions hit bookings. The pick up in momentum which was seen across the summer months has evaporated. The wider rollout of the covid vaccine should prompt a rebound in revenue as the year progresses. Q4 revenue per available room ( RevPAR) dropped 59% to $40.68 below Hilton’s expectations of $45. Loss per share was 10c whilst revenue tanked 62% to $890 million.
Reflation trade
US 10 treasury yields spiked to the highest level since February 2020 at 1.33% before easing slightly to 1.29%.
The US bond market is pricing in a rapid economic recovery and a possible acceleration in inflation on growing expectations of a strong vaccine led economic rebound, combined with massive US fiscal stimulus. The reflation trade is boosting the greenback but taking the shine off stocks. The stock market has powered higher on the prospect of cheap money for longer. Although stocks are still well supported by the prospect of $1.9 trillion covid stimulus near term.
Apart from the cooling in stock, non-yielding gold and the Japanese Yen have been casualties of rising rates.
Gold, which pays no income becomes less attractive when US government debt pays higher yields.
Analyst Fiona Cincotta looks at the price action of gold here.
FX
The US Dollar is surging across the board. The US Dollar Index (DXY)+0.3% at the time of writing is at a 10 day high, rebounding from a 3 week low after US treasury yields spiked.
GBP/USD trades -0.2% at 1.3871
EUR/USD trades -0.4% at 1.2050
Oil powers higher as Texas cold snap continues
Oil is on the rise again extending gains for a second session a reaching fresh 13 month highs driven by the ongoing cold snap in Texas. Texas is the largest oil producing state in the US, so oil supply is a concern as some refineries have been forced to close due to the unexpected weather conditions.
EIA inventory data is due later today.
US crude trades +1.4% at $60.91
Brent trades +1.7% at $64.41
Learn more about trading oil here.
The complete guide to trading oil markets
Looking ahead
Retail sales & FOMC minutes coming later
Investors will be scrutinising the meeting minutes for any clues as to the Fed’s next steps. On one side the US bond market is increasingly pricing in the US central bank tapering support. On the other hand, Federal Reserve Chair Jerome Powell pushed back on the prospect of withdrawing support at the press conference.
US retail sales are expected to rebound 1% month on month in January, after declining -0.7% in December. A strong reading could raise doubts over the decision to refrain from tapering.
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.
© City Index 2024