US open Wall Street to open mixed all eyes on Powell

Dow futures +0.1% at 31397

S&P futures -0.1% at 3865

Nasdaq futures -0.1% at 12689

In Europe

FTSE -0.5% at 6640

Dax -0.2% at 14076

Euro Stoxx -0.3% at 3702

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Yields in focus

Bond yields are once again in focus after spiking to 1.5% overnight. The likely cause of the spike – an impressive forecast beating ISM services PMI reading of 60.8. This was firmly up from January’s 58.1 and significantly ahead of the 58.8 expected. The strong reading completely overshadowed weak ADP payroll data, boosting inflation expectations and sparking a selloff in bonds.

The jump in yields triggered a sharp selloff in the Nasdaq on Wednesday although futures are looking to a mildly positive start today.

Base metals have also been hard hit with copper declining -5% at one point. It has since picked up off session lows and trades -1.5%.  

The 10 year yield has stabilized around 1.47%.

Learn more about trading copper.

All eyes on Powell

All eyes are now turning to Federal Reserve Chair Jerome Powell who is due to speak at 17:05 UTC. This will be his last scheduled appearance before the FOMC meeting. So far, the antics in the bond market haven’t concerned Fed Powell or other policymakers. Although Brainard did make a comment about the pace at which rates have risen. Any hints from Powell that the is uncomfortable with the goings on in the bond market could provoke expectations of Fed intervention, bringing yields to heel, pulling US Dollar lower and boosting stocks.

US jobless claims

US initial jobless claims revealed that 745,000 people filed for claims for the first time, this was marginally below forecasts of 750,000. The biggest increase in claims was from Texas owing to the freak weather conditions which saw the energy systems collapse late last month.

Challenger job cuts were more upbeat showing a clear improvement falling by more than half from January's 34,531, the lowest level since before the pandemic. With social distancing and public health measures being lifted in some states hopes of a quicker recovery are rising.

Stocks to open higher

US futures are pointing to a firmer start recovering from yesterday’s steep selloff on bond yield concerns. Tech stocks bore the brunt of the pain and the Nasdaq closed -2.7%.

Stocks in focus:

Snowflake

Snowflake trades +1% pre-market after reporting that revenue more than doubled in the fourth quarter on increased demand, although losses were also wider than forecast.

Walt Disney

Walt Disney trades -1% pre-market after announcing that it will close 60 store in the US which equates to around 20% of its locations. The firm is looking to focus greater attention on its streaming operations rather than distribution through traditional cinema theatres.

After hitting an all time high of just short of $200 last week the price has been slipping lower. The prices remains above its 50 sma. However it is testing its 20 sma and ascending trendline. A break below this support at 190 could open the door to s deeper selloff. to 185 swing low 25th Feb and 180 50 sma. A move below this level would negate the near term uptrend.

Should 190 ascending trendline support & 20 sma hold then a move back towards 200 could be on the cards.

FX – EZ Retail sales tank

EUR/USD - US Dollar strength and dismal Eurozone retail sales is dragging on the pair. Eurozone retail sales for January tanked -5.9% MoM a sharp decline from December’s 1.8% and significantly short of  forecasts of -1.1%. On an annual basis, sales tumbled -6.4% well below December’s 0.9% and the -1.2% forecast.

Analyst Fiona Cincotta looks at EUR/USD price action and levels to watch here.

GBP/USD trades -0.1% at 1.3958

EUR/USD trades -0.2% at 1.2040

Oil rallies ahead of OPEC+

Oil prices push higher building on yesterday’s 2.5% rally as investors look ahead to the keenly awaited OPEC + meeting today.

Optimism is growing that the group of global oil producers could roll over production cuts at today’s meeting rather than easing back on output cuts as way expected earlier in the week. Expectations had been for OPEC+ to ease production cuts by anything between 500,000 bpd to 1.5 million bpd when they meet today. Oil has fallen 6% Friday through to Tuesday. However, oil prices have jumped 3% over yesterday and today reflecting the change in expectations.

Oil markets have shrugged off the record 21 million barrel build in stockpiles and largest decline in gasoline stocks for 30 years which are attributed to the now passed Texas freak weather freeze.

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

US crude trades +1.9% at $62.4

Brent trades +1.9% at $65.3

Learn more about trading oil here.

The complete guide to trading oil markets