US open: Futures resume rise ahead of Fed Quarles, oil inventories
Fiona Cincotta May 26, 2021 1:14 PM
US stocks are set to resume the rise after a brief setback yesterday. The Fed continue to rein in inflation expectations boosting stocks. A light economic calendar leaves Fed speak in focus.
Dow futures +0.2% at 34389
S&P futures +0.3% at 4201
Nasdaq futures +0.45% at 13721
FTSE -0.5% at 7000
Dax -0.25% at 15434
Euro Stoxx -0.2% at 4029
Stocks resume rise ahead of Fed Speak
US stocks are pointing to a higher start, resuming the recent rally after a mildly lower close on Tuesday.
Data on a Tuesday revealed that Consumer confidence ticked lower in May for the first time in six months. Concerns that rising prices have taken the edge off re-opening euphoria pulled stocks into the red although the Nasdaq closed flat.
The Fed continued to rein in inflation expectations, with move Fed speakers joining the dovish chorus. As fears of an earlier move by the Fed ease, stocks are pushing higher again today. With the core PCE deflator, the Fed’s preferred measure of inflation due at the end of the week, inflation jitters, whilst seemingly under control right now are unlikely to be going anywhere fast. A sharp rise in core PCE could make it more challenging for the Fed to defend the lose monetary policy.
The economic calendar is quiet on both sides of the Atlantic meaning more attention will be on Fed speakers. Federal Reserve Vice Chair Randal Quarles will be watched closely for any commentary regarding inflation or potential tapering.
Nordstream trades -5% pre-market after missing Q1 earning expectations after the close yesterday.,
Urban Outfitter trades +9% following better than expected earnings.
Looking ahead there are a number of tech stocks reporting today including Snowflake and NVIDIA
Where next for the Dow Jones?
The Dow Jones continues to trade above its ascending trendline support dating back to early April last year. A push above resistance at 34800 is needed in order for the bulls to test 35000 the all time high hit on May 10. However, negative RSI divergence could be forming which suggests upside momentum could be fading and can precede a move lower. It would take a move below strong support at 33650 the 50 day ma, the yearly trendline support and horizontal support to negate the near term uptrend – this could be a tough nut to crack.
FX – USD hovers around 5 month low, NZD jumps post RBNZ announcement
The US Dollar is edging higher after hitting a 5-month low in the previous session. Weaker than forecast consumer confidence and plenty of dovish calls from the Fed are keeping the pressure on the greenback.
NZD/USD is outperforming and trades at a 3 month high after the Reserve Bank of New Zealand kept interest rates unchanged at 0.25% but unexpectedly indicated that rates could rise in September 2022.
NZD/USD + 1% at 0.7305
GBP/USD +0.1% at 1.4165
EUR/USD -0.15% at 1.2231
Oil awaits further clarity on Iran, EIA data
Oil is consolidating around $66 as investors grapple with growing optimism surrounding the reopening of Western economies against concerns of increased supply from Iran.
API inventory data showed that oil stocks fell by 439,000 and gasoline inventories declined by 2 million barrels. The data was encouraging but the focus is likely to be on the indirect US – Iran nuclear talks. The market will want more clarity on whether more supply will be flooding back into the market.
Any signs of progress in talks could knock the price of oil as the market questions whether additional supply can be absorbed. Going forward the more demand picks up in economies as they re-open the more comfortable the market would be with additional supply.
EIA inventory data is due shortly
US crude trades -0.2% at $65.88
Brent trades -0.1% at $68.39
15:00 Fed Quarles to speak
15:30 EIA crude stock inventory
How to trade with City Index
Follow these easy steps to start trading with City Index today:
- Open a City Index account, or log-in if you’re already a customer.
- Search for the market you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
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.