US open: Stocks stabilize, Elon’s about-face
Matt Weller, CFA, CMT May 13, 2021 1:42 PM
Major US indices are poised to open near flat after the Dow Jones Industrial Average saw its biggest decline since January on yesterday’s US CPI reading
Dow futures -0.3% at 33415
S&P futures +0.0% at 4060
Nasdaq futures +0.4% at 13054
FTSE -1.7% at 6889
Dax -0.9% at 15020
Euro Stoxx -0.9% at 3911
Stocks stabilize after yesterday’s inflation rout
Major US indices are poised to open near flat after the Dow Jones Industrial Average saw its biggest decline since January on yesterday’s US CPI reading showING prices rose 4.2% over the same period last month, the highest reading since 2008. Sorting by market cap, every one of the 34 largest US stocks fell yesterday, and traders would have to scroll all the way down to Pfizer to find a large company that didn’t fall amidst the broad-based selling pressure.
After yesterday’s price action, readers should expect to hear traders, economists, policymakers, and pundits endlessly debate whether the unexpected spike in prices was due to short-term “transitory” factors or a secular rise in inflation until we get next month’s CPI report (June 10 for those following along at home).
Separately, European indices are on the back foot amid half-holiday trade with countries like Germany and France off for Ascension Day.
Initial jobless claims
The weekly report on new unemployed Americans showed “just” 473k new claimants. This is the lowest reading in more than a year, and combined with yesterday’s hotter-than-expected CPI report, signals that the US economy is fitfully returning to normal. Friday’s retail sales report will be the next major data point to watch out of the world’s largest economy.
Tesla’s about-face on Bitcoin
Mercurial billionaire Elon Musk surprisingly announced yesterday afternoon that Tesla Motors would no longer accept Bitcoin for payment for its vehicles, citing the environmental cost of the cryptoasset. The impact on Bitcoin was severe, with the cryptoasset falling a full $10,000 before recovering slightly to trade near $50,000 as of writing, but the traders seem to be cheering the move from Tesla’s perspective, with the EV manufacturer poised to open 1% higher.
Technically speaking, TSLA is trading near the bottom of its 6-month range, with potential support levels coming in at the 200-day EMA ($580), as well as previous support levels at $540 and previous-resistance-turned-support at $500.
Source: TradingView, StoneX
FX – CHF and EUR outperform, AUD lags
It’s been a relatively quiet day in the FX market so far, with the euro and Swiss franc topping the relative performance charts while the Australian dollar brings up the rear. Traders will tune into speeches from the heads of the Bank of Canada (at 11:00 EDT) and Bank of England (12:00 EDT) as possible risk events, but more generally, the FX market should take its cue from equities and general risk appetite following yesterday’s big risk-off move.
EUR/USD +0.2% to 1.2090
GBP/USD -0.1% at 1.4040
Oil slips on restoration of US supply, ongoing COVID hit to India’s demand
Oil is trading lower as the disrupted Colonial Pipeline resumed operations on the US East Coast. The pipeline operator stated that “all lines, including those lateral lines that have been running manually, will return to normal operations.”
Seperately in India, the world’s third largest importer of oil, fuel consumption fell nearly 10% in April relative to March. With the ongoing COVID crisis continuing unabated, the demand shock to India may take longer to resolve and keep oil prices under pressure in the near-term.
US crude trades -2.0% at $64.76
Brent trades -1.7% at $67.86
15:00 GMT – BOC Governor Macklem speech
16:00 GMT – BOE Governor Bailey speech
17:01 GMT – 30-year US bond auction
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.