US open: Stocks rebound, tech leads the way

US stocks are set to rebound on the open as dip buyers jump in. Treasury yields have eased slightly. However inflation concerns are likely to linger. US debt ceiling discussions could be in focus amid a quiet economic calendar.

USA (2)

US futures

Dow futures +0.24% at 34380

S&P futures +0.35% at 4370

Nasdaq futures +0.5% at 14851

In Europe

FTSE +0.73% at 7087

Dax +0.7% at 15370

Euro Stoxx +0.93% at 4097

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Bargain hunters out in force

US stocks are set to rebound after yesterday’s blood bath. Dip buyers are out in force boosting stocks as treasury yields ease slightly. Yields had been quietly on the rise since the Fed meeting last week. However, Fed Chair Powell warning that the recent rise in inflation could last longer than initially expected, was the straw that broke the camels back sending stocks sharply lower.

Jitters surrounding elevated levels of inflation and slowing growth are likely to remain for some time. Whilst stocks are rising today the outlook is less clear. There are several factors in play, including supply chain bottle necks and labour market issues. Investors are trying to ascertain how these might play out what they could mean for inflation.

Perhaps the biggest fear is that the Fed will be forced to move at a faster pace that it anticipated on the back of stubbornly high inflation.

Tech stocks are leading the charge higher after taking the biggest hit in the previous session. Micron Technologies will be in focus and could weigh on the sector after providing the market with a disappointing outlook, despite beating on both revenue & profits.

US debt ceiling negotiations will continue. So far the market appears sanguine that a deal will be reached to avert a government shutdown

Where next for the S&P 500?

Once again the 100 sma has acted as a solid support for the S&P 500, with the index staging a rebound from here as it did last week. Buyers will be looking for a move over 4400 to expose the 50 sma at 4450 and cement the bullish trend. Meanwhile sellers will be looking for a move below the 100 sma at 4350 to bring the September low of 4300 into play.

FX – USD extends gains, EUR shrugs off improving sentiment

The US Dollar is rising extending gains from the previous session. The Dollar trades around the highest levels this year as investors reposition themselves for a more hawkish Fed. Following the FOMC last week the Fed look set to start tapering bond purchases at the end of the year.

EURUSD trades at fresh yearly lows on the back of USD strength. The Euro has shrugged off an unexpected rise in economic sentiment in the bloc.  Economic sentiment rose to 117.8 up from 117.6, defying expectations of a decline to 116.9.

GBP/USD  -0.37% at 1.3485

EUR/USD  -0.3% at 1.1650

Oil falls ahead of EIA data

Oil prices are slipping lower for a second straight session following an unexpected build in US crude oil inventories.

API data revealed a build of 4.127 million barrels last week. This was well over a draw of 2.333 million barrels expected and comes following a 6.1 million draw recorded the previous week.

Attention is now on official EIA data which is due later. Should this confirm the build in inventories, it will be the first build in 2 months.

The move lower comes after oil prices rallied hard across the past week on tight supply concerns and as demand rises as countries emerge from pandemic lockdowns. The OPEC world oil outlook report sees demand outstripping supply over the coming years.

An energy crunch in Asia is also helping to underpin the price of oil.

WTI crude trades -0.75% at $74.62

Brent trades +0.65% at $77.81

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Looking ahead

15:00 US Pending home sales

15:30 EIA Crude Oil Stock Change

16:45 Fed Chair Powell Speaks

16:45 ECB Lagarde Speaks

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