US open: Futures surge, USD rallies, as NFP smashes forecasts

US NFP adds 379k jobs in February beating expectations of 182k. The strong print fuelled hopes of a rapid economic recovery.

Charts (4)

US futures

Dow futures +0.7% at 31131

S&P futures +0.7% at 3794

Nasdaq futures +0.5% at 12506

In Europe

FTSE -0.5% at 6640

Dax -0.2% at 14076

Euro Stoxx -0.3% at 3702

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US non farm payroll show a rebounding labour market

The closely watch US Labour Department’s non-farm payroll smashed forecasts with 379k jobs added in February, well ahead of the 182k forecast. January’s 49k was also upwardly revised to 166k.

The data suggests that the US labour market bottomed out in December and is now well on its way to recovery as lockdown restrictions were eased.

The strong data could has boosted expectations of a strong economic recovery.

The US Dollar surged following the release and futures jumped.


Powel dismisses bond market antics

Federal Reserve Chair Jerome Powell showed little to no concern for rising bond yields sending stocks sharply lower on Thursday, the US Dollar surging and gold sub $1700 to fresh multi month lows.

Jerome Powell reiterated that the central bank wouldn’t be tightening policy anytime soon. However, he also failed to point towards intervention, dashing hopes that the Fed would step in to calm the bond market rout.

US 10 year treasury yield wasted no time to spike higher and currently sits at 1.58%. Whilst the Fed is unfazed for now 30 year bond yields are also on the rise which sent 30 year mortgage rates over 3%.

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


Stocks to open higher

The prospect of rising borrowing costs hit stocks hard on Thursday. The Nasdaq bore the brunt of the selloff closing over 2% lower, whilst the S&P 500 closed -1.3%. These indices are set for weekly losses despite futures pointing to a mild recovery on Friday.

Stocks are rebounding as sentiment rises following the release of the NFP report.

Stocks in focus

Costco – trades-1.3% pre-market after Q2 profits fell short of estimates owing to increased costs relating to the pandemic. Additionally, Costco has decided to increase its minimum wage to $16 per hour above its peers.

Exxon Mobile & Chevron – trades 2% higher pre-market on the back of surging oil prices after OPEC kept output unchanged.

 

FX – Dollar strength

Fed Powell’s dismal of rising bond yields & failure to lay groundwork to intervene in the bond market sent US Dollar Index to a 3 month high. Impressive non farm payroll numbers have since boosted the  greenback higher over 92.00

EUR/USD slid to a fresh yearly low of 1.1914 on US Dollar strength. Investors shrugged off better than forecast German factory orders in January which printed at 1.4% up from -2.2% in the previous month and well ahead of the 0.7% expected.  Momentum is not on the side of the EUR/USD which trades below its 50, 100 & 200 sma on the 4-hour chart. Although the RSI is heading into overbought territory

GBP/USD trades -0.5% at 1.3828

EUR/USD trades -0.4% at 1.1923


Oil hits 14 month high after OPEC+ surprises

Oil prices extend the rally on Friday, building on yesterday’s 4.5% gains and hitting an almost 14-month high. The back stuff is on track for gains of over 6% across the week after OPEC+ group defied market expectations and kept output cuts in place. Markets had been expecting a 1.5 million bpd increase in output instead the group of oil producing countries effectively agreed to keep production unchanged.

With economies reopening and production unchanged drawdowns in stockpiles should pick up.

Citigroup expects Brent to hit $70 a day by the end of the month whilst Goldman Sachs has upped its outlook to $80 by Q3.

Baker Hughes rig count due later.

US crude trades +2.2% at $65.28

Brent trades +2.55% at $66.74

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