US open: Stocks rise cautiously higher ahead of data drop, Fed speakers

Congress building
Fiona Cincotta
By :  ,  Senior Market Analyst


US futures

Dow futures +0.5% at 33190

S&P futures +0.4% at 4150

Nasdaq futures  +0.4% at 12695

In Europe

FTSE +0.35% at 7608

Dax +0.5% at 14458

Euro Stoxx  +0.3% at 3800

Learn more about trading indices

Stocks edge higher, BoC decision later

US futures are pointing to a modestly higher start to trading on Wednesday, rebounding cautiously from as Shanghai reopens and with inflation and the health of the US economy in focus.

Yesterday stocks closed lower, as fears over surging inflation and slowing global growth dominated, although off the session lows after US consumer confidence data came in ahead of expectations.

The Fed will start its quantitative tightening program today, although the impact is unlikely to be felt until 15 June when the bonds will mature. This comes as Treasury Secretary Janet Yellen admitted that she was wrong about inflation.

Looking ahead there are plenty of Fed speakers who could give further insight as to what could come next for monetary policy. After Raphael Bostic said last week that the Fed could pause the hiking cycle after September, Christopher Waller was considerably more hawkish sounding saying that outsized hikes could be implemented until inflation lowers.

Before the Fed speakers attention will be on US ISM manufacturing PMI data which is expected to show that manufacturing activity grew at a slightly slower pace in May at 54.5, down from 55.5 but remained comfortably above the 50 level which separates expansion from contraction.

JOLTS job opening data is also due and is expected to show that job vacancies in the US remain at around a record high, underscoring tightness in the labour market.

The BoC is also expected to hike interest rates by 50 basis points today when it meets to discuss monetary policy.

Learn more about what to expect from the BoC.

In corporate news:

Salesforce is set to jump 8% pre-market after the software firm lifted its full year profit guidance and calmed market nerves by saying that it saw no impact from uncertainty in the broader economic outlook.

Victoria Secret jumps 10% premarket after beating earnings forecasts as its international business recovered post COVID

Where next for the Dow Jones?

The Dow Jones extended its rebound from 30600 the May 20 low, running into resistance at the 50 sma and horizontal resistance at 33500. The price has eased slightly, although the RIS remains in bullish territory, keeping buyers hopeful of further upside. Buyers need to retake 33500 in order to extend the upside towards 34000 round number. Support can be seen at 32775 the May 17 high ahead of 32225 the February.

Dow Jones

FX markets – USD rises, EUR falls

USD is rising, tracking Treasury yields higher. Hawkish Fed comments and better than expected consumer confidence have boosted the buck. Attention is now on the data drop and numerous Fed speakers late today.

GBP/USD is struggling to find a firmer footing after UK manufacturing growth falls to a 16-month low in May. The manufacturing PMI was confirmed at 54.6, the preliminary reading.

EUR/USD is falling, underperforming peers after mixed data from the bloc. German retail sales unexpectedly tumbled -5.4% MoM in April, well down from, -0.1% in March and missing forecasts of 0%. However, the manufacturing PMI was upwardly revised for May to 54.6, up from 54.5. However this was still the slowest manufacturing growth since early 2021.

GBP/USD  -0.54% at 1.2589

EUR/USD  -0.7% at 1.07003

Oil rises Shanghai reopens

Oil prices are resuming the uptrend after falling in the previous session. Oil bulls are pressing northwards following the EU Russian oil ban and the end of the Shanghai lockdown.

EU leaders approved a ban on 90% of Russian oil yesterday which initially sent oil prices to a two-month high. However, speculation that OPEC+ could suspend Russia from the group and hike output then dragged the oil price lower yesterday.

The OPEC+ meeting is tomorrow, and those concerns continue to cap gains in oil prices. In the meantime, oil bulls are digesting the idea of tighter supply, with the sanctions being phased in across a six-month period. 

Meanwhile, and simultaneously the demand outlook is improving as Shanghai reopens after 2 months of COVID lockdown restrictions

WTI crude trades +0.86% at $117.50

Brent trades +0.67% at $119.03

Learn more about trading oil here.

Looking ahead

14:45 US manufacturing PMI

15:00 US ISM manufacturing PMI

15:00 US JOLTS job openings

15:00 BoC rate decision

15:30 EIA crude oil stockpiles

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