US open: Tech to lead, oil supported by Suez Canal blockage

Tech stocks look to lead the charge higher ahead of another appearance by Powell & Yellen. Oil prices rebound, aided by the Suez Canal blockage.

USA (1)

Dow  futures +0.3% at 32582

S&P futures +0.4% at 3926

Nasdaq  futures +0.7% at 13108

In Europe

FTSE -0.3% at 6681

Dax -0.75% at 14575

Euro Stoxx -0.1% at 3825

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Stocks point higher, tech to outperform

US futures are pointing to a stronger start with tech set to outperform. All three main US indices are pointing higher rebounding from yesterday’s lower close as investors gear up for another appearance from Fed Chair Powell & Janet Yellen.

Yields have pared back to 1.62%, significantly down from last week’s 1.75% boosting demand for tech stocks which had come under pressure as yields rise. Yields have eased as Jerome Powell remains firmly dovish and as rising covid cases in Europe, Brazil and India raise questions over the global economic recovery.

Stocks in focus

Disney & AMC Entertainment (-4%) after Disney announced that it will push back the release of its latest Marvel movie Black Widow to July. Furthermore, it will release simultaneously on its streaming platform for a fee and at the theatres. The decision reflects the fact that the public might not yet be ready to embrace large gatherings. The news comes just after AMC started reopening its theatres.

Tesla trades +1% pre-market after CEO Elon Musk announced that Tesla will now accept Bitcoin as payment. Details on pricing policy have been light, but the announcement boosted Bitcoin by 5%.

Intel – trades +4.8% pre-market after announcing plans to expand significantly its advanced chip  manufacturing capacity by spending as much as $20 billion to build 2 factories in Arizona. 

Where next for Intel share price? 

Intel’s share price has been rising since hitting a $44.00 low in November. It trades above its 20 & 50 sma on the daily chart marking an establish bullish trend. 

The RSI is also supportive of further upside and technical bullish. 

The share price has struggled to push beyond resistance at $66 the yearly high, which capped the price last week. A close over this level could bring $68 the 2020 high into focus. 

On the flip-side, support can be seen at $62.50 the 20 sma, a move below here could open the doo to $60 round number and 50 sma. 

GameStop misses

GameStop reported disappointing quarterly numbers will revenue coming in 3.3% lower whilst EPS missed forecasts by 8%. However, it wasn’t all bad news with comparable store sales rising 6.5% whilst digital sales surged 175% boosting the argument for its reinvention as an online only retailer.

GameStop’s reinvention will be in the hands of Jenna Owens previously at Amazon & Google  & Neda Pacifico previously at Chewy.

Jefferies have turned bullish on the stock hiking its target price from $15 to $175.

Impressive PMIs in Europe, Fed Powell, durable goods & PMIs to come

PMIs in Europe showed that business activity accelerated in March, beating forecasts by a significant margin. However, the upbeat data failed to boost the mood in Europe where rising covid and tighter lockdown restrictions have raised concerns over a rapid recovery.

Looking ahead, Fed Chair Powell & Janet Yell will appear fotr a second time before Congress. Yesterday, Powell stuck to the dovish hymn sheet whilst Yellen talked tax hikes to plug the budget deficit.

In addition to durable goods, US PMIs for both manufacturing and service sector will be released. Both are expected to show strong expansion.

FX – GBP extends losses on weak CPI numbers

The US Dollar is advancing on safe haven flows as covid cases rise in Europe and on the possibility of US tax hikes.

GBP/USD – is under-performing peers after weaker than forecast CPI data. UK CPI rose 0.1% MoM in February. This was up from January’s -0.2% decline but still short of the 0.5% forecast. Annually, inflation rose 0.4%, well down from 0.7% in January and 50% below the 0.8% reading expected.

Investors await Fed Chair Powell’s testimony before congress together with US treasury secretary Janet Yellen.

GBP/USD -0.3% at 1.3714

EUR/USD trades -0.1% at 1.1834

Suez blockages aids oil’s recovery

After tanking over 6% lower in the previous session oil prices are on the rise, clawing back some of those losses. Both benchmarks, WTI crude and Brent have fallen around 14% from recent highs into correction territory.

Rising covid cases and tighter lockdown restrictions in Europe raised fears over future demand panicking the oil markets. The selloff pulled both benchmarks into oversold territory, so today’s rebound isn’t so surprising.

On the data front, crude stockpiles rose by 2.9 million barrels against an expected decline of 300,000 barrels. Attention will now turn to the EIA stockpiles data due later today.

It is also worth keeping an eye on the blockage in the Suez Canal, a route used to move oil. Failure to clear the path quickly could offer near term support to oil prices.

US crude trades +2.5% at $59.16

Brent trades +2.2% at $62.23

Learn more about trading oil here.

The complete guide to trading oil markets

Looking ahead

13:45 Manufacturing PMI

13:45 Service sector PMI

14:00 Powell & Yellen testify

14:30 EIA crude oil stockpiles

15:00 EUR Consumer confidence

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