US open: Stocks flat ahead of retail sales FOMC minutes

Stocks are set to ease but remain near record levels amid ongoing optimism of a strong economic recovery as the covid vaccine programme ramps up and on expectations of massive US stimulus. US Dollar finds its feet on rising inflation expectations.


Stocks remain near record levels amid ongoing optimism of a strong economic recovery as the covid vaccine programme ramps up and massive US stimulus. Oil hits a fresh 13 month high and the US Dollar finds its feet on rising inflation expectations.

US futures

Dow futures trade -0.05% at 31435

S&P futures -0.1% at 3920

Nasdaq futures -0.2% at 13710

In Europe

FTSE -0.1% 6737

Dax -0.7% at 13962

Euro Stoxx -0.3% at 3713

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Stocks pause for breath

US stocks are pointing to a flat start after reaching fresh record highs in the previous session, boosted by optimism surrounding the economic recovery, expectations of a $1.9 trillion stimulus package and strong gains in energy stocks.

With oil on the rise again today, stocks such as Exxon Mobile & Chevron will once again be in focus. Both are posting strong gains higher pre-market.


Trades -0.7%pre-market reported a 94% jump in revenue in the holiday quarter beating Wall Street’s forecasts as more businesses looked to use the firm’s tools to sell online through the pandemic. Revenues rose to $977.7 million in the final 3 months of the year, up from $505.2 million a year earlier. Expectations had been for $910.2 million.

Hilton International

Trades -2.3% pre-market after the hotel chain posted an unexpected quarterly loss as a resurgence in covid cases and tighter travel restrictions hit bookings. The pick up in momentum which was seen across the summer months has evaporated. The wider rollout of the covid vaccine should prompt a rebound in revenue as the year progresses. Q4 revenue per available room ( RevPAR) dropped 59% to $40.68 below Hilton’s expectations of $45. Loss per share was 10c whilst revenue tanked 62% to $890 million.

Reflation trade

US 10 treasury yields spiked to the highest level since February 2020 at 1.33% before easing slightly to 1.29%.

The US bond market is pricing in a rapid economic recovery and a possible acceleration in inflation on growing expectations of a strong vaccine led economic rebound, combined with massive US fiscal stimulus. The reflation trade is boosting the greenback but taking the shine off stocks. The stock market has powered higher on the prospect of cheap money for longer. Although stocks are still well supported by the prospect of $1.9 trillion covid stimulus near term.

Apart from the cooling in stock, non-yielding gold and the Japanese Yen have been casualties of rising rates.

Gold, which pays no income becomes less attractive when US government debt pays higher yields.

Analyst Fiona Cincotta looks at the price action of gold here.


The US Dollar is surging across the board. The US Dollar Index (DXY)+0.3% at the time of writing is at a 10 day high, rebounding from a 3 week low after US treasury yields spiked.

GBP/USD trades -0.2% at 1.3871

EUR/USD trades -0.4% at 1.2050

Oil powers higher as Texas cold snap continues

Oil is on the rise again extending gains for a second session a reaching fresh 13 month highs driven by the ongoing cold snap in Texas. Texas is the largest oil producing state in the US, so oil supply is a concern as some refineries have been forced to close due to the unexpected weather conditions.

EIA inventory data is due later today.

US crude trades +1.4% at $60.91

Brent trades +1.7% at $64.41

Learn more about trading oil here.

The complete guide to trading oil markets

Looking ahead

Retail sales & FOMC minutes coming later

Investors will be scrutinising the meeting minutes for any clues as to the Fed’s next steps. On one side the US bond market is increasingly pricing in the US central bank tapering support. On the other hand, Federal Reserve Chair Jerome Powell pushed back on the prospect of withdrawing support at the press conference.

US retail sales are expected to rebound 1% month on month in January, after declining -0.7% in December. A strong reading could raise doubts over the decision to refrain from tapering.

Learn more about the Fed

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