US open: Earnings optimism boosts Wall Street

Stocks are set to rise as optimism surrounding earnings season drives indices back towards all time highs.

USA (2)

US futures

Dow futures +0.49% at 35431

S&P futures +0.5% at 4508

Nasdaq futures +0.43% at 15365

In Europe

FTSE +0.05% at 7208

Dax +0.09% at 15494

Euro Stoxx +0.23% at 4160

Learn more about trading indices

Stocks rise, Netflix to report after the close

US stocks are pointing to a stronger start as the spotlight falls on earnings. Upbeat numbers from Johnson & Johnson come following impressive figures from the banks last week and are helping to set a positive tone for the session.

US indices have recovered well from the blip that sent them lower testing the 200 day moving average at the end of last month. The rebound has the S&P just over 1% shy of its all time high again. Another week of upbeat results could be the boost that bulls are after to recapture those record levels. However, it is worth noting that banks aren’t particularly exposed to supply chain constraints which have been hampering the economic recovery.

Netflix is due to release earnings after the bell and will almost certainly focus attention on the tech giants as they prepare to dish out their numbers next week.

Separately energy stocks are on the rise, tracing oil prices higher as the energy crunch shows no signs of letting up.

Significantly weaker than expected housing data was also brushed aside no doubt to return to haunt the market at a later date.

Where next for the Dow Jones?

The Dow Jones is extending the rebound from 34100 hit last week pushing through the 50 & 200 sma on the 4-hour chart. The Dow has also broken above the 34064 horizontal resistance keeping buyer optimistic and setting their sights on 35600 and fresh all-time highs. The RSI is in overbought territory so some consolidation, or a pull back could be on the cards. Watch for trendline resistance at 35475.

Dow chart

FX – USD drops, GBP rallies on BoE expectations

The US Dollar is falling sharply lower amid expectations that other major central banks could start tightening monetary policy begore the Federal Reserve. Fed speakers are in focus in an otherwise quiet economic calendar.

GBP/USD is charging higher as bets rise that the Bank of England could start hiking rates as soon as this year. UK CPI data is due tomorrow. So far the Pound is ignoring the fact that covid cases are rising sharply, just shy of 50,000 new daily cases.

GBP/USD +0.73% at 1.3826

EUR/USD +0.4% at 1.1661

Oil gains ground

Oil prices are extending gains on Tuesday as the ongoing energy crisis shows few signs of easing. The crunch in natural gas, coal and electricity continues whilst temperatures fall in China the world’s second largest economy fueling fears of shortages and boosting the appeal of oil as a comparatively cheap alternative. Coal futures in China rose 7.8%. As the northern hemisphere moves towards the colder months, the situation is only going to deteriorate, as colder temperatures boost heating demand.

API inventory data is due later today.

WTI crude trades +1.8% at $82.64

Brent trades +0.84% at $84.57

Learn more about trading oil here.

 

Looking ahead

15:00 ECB Lane speaks

16:00 Fed Daly speaks

19:50 Fed Bostic speaks

21:30 API crude oil inventories

 

How to trade with City Index

 

Follow these easy steps to start trading with City Index today:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade.

 

 

 

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

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.