US open: Inflation data, bond auction, Roblox IPO

US stocks jump after core CPI misses forecasts. Bond auction in focus and Roblox goes public.

USA (2)

US futures

Dow  futures +0.5% at 31988

S&P futures +0.3% at 3875

Nasdaq futures +0.3% at 12850

In Europe

FTSE -0.1% at 6722

Dax +0.4% at 14496

Euro Stoxx +0.5% at 3805

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Softer core CPI calms nerves, boosts stocks

With the recent ramping up of inflation expectations, today’s CPI data was more closely watch than usual.

CPI rose 0.4% MoM in February, up from 0.3% in January & versus 0.3% expected.

Annually CPI rose to 1.7% in line with forecasts and up from 1.4% .

Core CPI which removes more volatile items is expected rose 1.3% YoY versus 1.4% expected.

The data calmed recent inflation scaremongering in the bond markets, sending stocks surging higher. For now, at least, it would appear that the market may have run away with itself. However, with the House of Representatives to vote through the $1.9 trillion stimulus package, inflation concerns may not be going anywhere fast.

US treasury auctions

Inflation data comes ahead of the $38 billion US 10 year note auction later today. This auction is expected to be more challenging than yesterday’s 3 year note auction.

It is worth remembering that this recent focus on yields intensified after a disappointing 7 year note auction on 25th February which recorded the worst participation since the debenture was introduced 11 years ago. Straight after the auction the 10 year yield broke 1.6% a yearly high and yields have been a key driver of market movement since.

Tech extends gains post CPI

After surging 3.7% in the previous session, Nasdaq futures looking to extend those gains in line with the broader market.

Easing bond yields saw growth stocks surge on Tuesday after a recent rout in tech saw the Nasdaq fall briefly into correction territory at the start of the week. Strong CPI data has calmed inflation fears driving demand for growth stocks once again.

Tesla which sawed 20% on Tuesday is expected to be in focus given those strong gains..

Oracle surged 10% on Tuesday and trades around its all time high of $73 ahead of reporting after the close. The software giant is expected to report EPS $1.11 on $10.07 billion in revenue. The street’s whisper number is EPS $1.13.

Where next for Oracle share price?
The share price has recently broken out of the upper band of its three month ascending channel reaching a fresh all time high of $73.22.
The break out has seen the share price jump into overbought territory on the RSI so it some consolidation or a pull back could be on the cards before moving higher.
Immediate resistance in the all time high of 73.22 before bulls could target 75.00.
Immediate support can be seen at 70.00 the upper band of the ascending channel, before the 20 sma at 65.00.

Roblox IPO’s

Game platform Roblox is set to go public on the New York Stock Exchange with a direct share listing at $45 per share. This values the company at $30 billion. The company has been a stand out beneficiary of the pandemic, experiencing a surge in daily users and average playing times.

Even so, in the 9 months until September Roblox reported a net loss of $197 million on revenues of $614 million.

My colleague Joshua Warner looks into Roblox and the IPO in more detail here.

FX – Euro recovers

The US Dollar have given up earlier gains is edging lower after a 0.4% decline in the previous session. Bond yields dragged the US Dollar lower on Tuesday whilst weak core CPI data has pulled the greenback into the red today.

EUR/USD – managed to pick itself off session lows of 1.1870 and move back up to 1.19 flatline thanks in part to better than expected French industrial production which jumped 3.3% in January, up significantly from -0.7% decline in December and well ahead of the 0.5% expected. Some good news for the ECB ahead of tomorrows ECB monetary policy announcement.

GBP/USD trades +0.02% at 1.3898

EUR/USD trades +0.02% at 1.1900

Fiona looks at the price action of EUR/USD and levels to watch here

Oil steady, base metals drop

After two straight days of steep declines, the selloff in oil is showing signs of steadying. Following an 11% OPEC inspired rally last week, oil sold off at the start of this week as Iraq the second largest producer in OPEC saw output above its quota in February.

Oil is consolidating at lower levels as attention now swings to the government’s inventory data. It comes after API’s weekly estimate shows 12.8 million barrel surge in crude stocks – the largest weekly jump since last April. Lat week’s EIA report revealed a 21.5 million barrel increase in inventory. This week an 800,000 rise forecast. Another larger than expected build could weigh on oil prices.

EIA inventory data due 15:30

US crude trades +0.75% at $64.50

Brent trades +0.5% at $67.90

Learn more about trading oil here.

The complete guide to trading oil markets

Looking ahead

15:00 BoC rate announcement

15:30 EIA oil inventory data

18:00 US 10 year bond auction

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