Dow futures -0.1% at 31431
S&P futures -0.5% at 3818
Nasdaq futures -1.5% at 12466
FTSE -0.5% at 6628
Dax -0.2% at 14106
Euro Stoxx +0.9%% at 3704
Senate passes US stimulus bill, yields jump
Over the weekend the US Senate approved the Biden administration’s $1.9 trillion covid stimulus package with only minor amendments. This is the largest stimulus package in US history.
The news comes following Friday non farm payroll report which showed that 379k jobs were added in the US in February, double what analysts were expecting. The data suggests that the labour market bottomed in December and is now on the road to recovery.
The upbeat jobs report, massive stimulus package and acceleration of the vaccine rollout programme have boosted hopes of a strong economic recovery in the US this year. Inflation expectations have also risen.
The US 10 year bond yield ticked higher to 1.60% just shy of Friday’s 1.62% a level not seen since before the pandemic. The moved boosted the US Dollar whilst taking the shine off stocks, particularly high growth tech stocks.
Tech wreck resumes
The tech sector which is full of stocks with sky high valuations is particularly under the kosh on the back of surging yields. This is reflected in the Nasdaq which has fallen over 8% across the past three weeks.
Nasdaq futures are pointing to another weaker start for the index.
The tech sell off isn’t confined to the US, tech heavy Asia came under pressure overnight. However, European shares which are more tilted towards value are outperforming global peers.
Stocks are pointing lower
US stocks are pointing to a weaker start, paring gains from Friday as bond yield concerns return to haunt the market.
Microsoft – trades -1.2% pre-market after 20,000 US organisations could be compromised following a hack of the Outlook email programme.
Amazon – 1.4% pre-market on the back of the tech selloff and after Deliveroo recorded a loss of $300 million last year. Deliveroo also announced plans to IPO in London. Deliveroo will target a valuation of $10 billion after the top line grew 54% across the year of the pandemic.
Where next for Amazon share price?
Amazon has slipped below the key psychological 3000 level pre-market. It trades below its 50 & 100 sma on a bearish chart with the RSI supportive of further declines. 2875 offers strong support having capped losses in July and September. The bulls would need a move above 3200 50 & 1000 sma to gain traction.
FX – Dollar strengthens as yields rise
US Dollar Index is charging higher as US bond yields resume their rise. US Dollar index trades +0.25% at 92.25.
EUR/USD tumbled below 1.19 to a 4-month low. Data hasn’t been that helpful with German Industrial Production Jan -2.5% MoM, down from 1.9% in December and well short of 0.2% rise expected. However, Eurozone Investor Sentiment numbers for March were more encouraging jumping to 5 after declining -0.2% in February. Optimism surrounding the vaccine rollout and reopening of economies in the bloc has boosted morale.
GBP/USD trades -0.03% at 1.3837
EUR/USD trades -0.4% at 1.1870
Oil eases back from over $70
Oil prices are easing back after gapping sharply higher on the open. Brent surged through $70 for the first time since the pandemic started before giving back some of those gains. Meanwhile WTI crude oil hit its highest level in over 2 years at just shy of $68, before slipping back.
Oil prices surged after Houthi rebels launched an attack on oil facilities in Saudi Arabia. As reports emerged that there was no damage to the facilities oil markers were reassured as the price came away from the highs.
The prospect of a stronger US economic recovery on the back of a stimulus package is also helping to keep oil elevated. In addition to last week’s news that OPEC won’t increase production until at least April.
Analysts Fiona Cincotta looks at the price movement in WTI and levels to watch here.
US crude trades +0.3% at $66.30
Brent trades +0.25% at $69.53
There is no major US data due to be released today.