US open: Futures point lower on J&J Shock, CPI In Focus

The mood in the market has turned sour after J&J single shot covid vaccine is paused. CPI data up next.

USA (2)

US futures

Dow futures -0.35% at 33630

S&P futures -0.27% at 4117

Nasdaq futures -0.05% at 13814

In Europe

FTSE -0.2% at 6876

Dax +0.03% at 15231

Euro Stoxx  -0.03% at 3962

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J&J vaccine use paused sending futures lower

US stocks are heading lower in risk off trade. The mood in the market turned negative following an announcement from both the FDA and the CDCP that they have recommended the pause in the use of Johnson & Johnson’s vaccine amid concerns over rare blood clots.

This news is a considerable set back for the US’s covid vaccine rollout. As a single shot vaccine, the J&J jab has the potential to speed up the vaccine programme significantly in the US, where all adults were expected to be eligible for a covid vaccine from next week. With the J&J jab now on hold, a deceleration in the programme is expected. This ultimately means that full scale reopening and normalistation of the economy could take longer.

All eyes on inflation data

Investors have been looking cautiously ahead to US CPI data due shortly. Expectations are for an increase of 0.5% MoM and 2.5% increase YoY, up from 1.7% in February.

The data come following PPI inflation figures at the end of last week which saw annual wholesale inflation jump at the largest clip in 9 ½ years. A stronger than forecast number could boost expectations of an earlier move by the Fed to tighten policy, even though the Fed has been clear than any rise in inflation is likely to be temporary

FX – EUR outperforms, GBP has worst week this year

The US Dollar is rising in risk off trade after the J&J covid vaccine announcement.

GBP/USD is under pressure following disappointing GDP data. The UK economy expanded 0.4% in February a firm rebound from January’s -2.2% contraction, but still falling short of the 0.6% expected.

AUD/USD is lagging its peers after disappointing Chinese trade data. China reported a 30.6% rise in exports in March YoY, against expectations of a 35.5% increase. Imports rose by a more than expected 38.1% against a 23.3% annual rise expected. The softer data raised questions over momentum behind the Chinese economic recovery, hitting the Australian Dollar a China proxy.

GBP/USD  -0.15% at 1.3722

EUR/USD -0.17% at 1.1888

WTI crude oil pushes above $60.00 may not last

Oil prices are advancing for a second consecutive day clawing back some of last week’s 3.5% loss. Upbeat data from both China, along with tension in the Middle East are supporting oil prices.

Chinese crude oil imports jumped 21% in March, albeit from a low base the year before. The data suggests that refining operations and fuel demand ramped up amid the pandemic recovery.

The pick up in oil prices could be short lived following the J&J announcement. A slower vaccine rollout in the US  means a slower recovery.

Attention will now turn to crude oil inventories which are expected to drop again last week, marking the third week of declines. However, gasoline inventories are expected rise as lockdown restrictions tightened in Europe and parts of South America.

US crude trades +0.4% at $60.02

Brent trades +0.6% at $63.44

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Looking ahead

13:30 CPI

13:55 Redbook

21:30 API crude oil inventory

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