US Open: Wall Street Points Lower Ahead of Trump's Trial, Earnings

US futures point to a softer start as investors eye Trump’s impeachment trial, earnings and as oil eases back from a 13 month highs.

Downtrend 4

  • US stimulus progress saw  Wall Street hit all time high on Monday
  • Trump's impeachment trial to kick off, conviction is expected
  • Oil eases back slightly from 13 month high ahead of API data
  • Bitcoin hits record high after Tesla buys $1.5 billion in the digital currency
  • Earnings due later include Cisco & Twitter after the closing bell

After striking record highs in the previous session US equity markets are consolidating, pointing to a softer start as investors eye Trump’s impeachment trial, earnings and as oil eases back from a 13 month highs.

US futures

Dow futures trade -0.2% at 31200
S&P futures -0.1% at 3901
Nasdaq futures -0.1% at 13675

In Europe

FTSE +0.05% at 6528
Dax -0.45% at 13994
Euro Stoxx -0.15% at 3658

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Stimulus progress

The S&P closed higher for a sixth straight session on Monday boosted by signs that the Biden administration is moving closer to passing a sizeable covid stimulus package. The House of Democrats released the first draft text for the legislation that will make up the covid stimulus bill.

Trump’s impeachment trial to kick off

Donald Trump’s second impeachment trial opens today, which sees him on charge of inciting last month’s storming of the US Capitol. The trial is the fourth impeachment of a US President and is the first time in history that a President has been impeached twice. Although, there is little risk that Trump will be convicted as 16 GOP Senators would need to support the conviction and this looks highly unlikely.   

Given that the GOP has regrouped after initial division following the storming of the Capitol, the main market implication for the trial will perhaps be more on the way the trial is conducted and whether it aids or impedes a bipartisan approach in the coming years.

Oil hovers at 13 month highs ahead of API data

Oil prices are easing back slightly after six straight days of gains and reaching a fresh 13 month high. Brent futures trades -0.2% but remain over $60 the barrel on tightness in the market thanks to the ongoing OPEC production cuts, but also compliance to those cuts. A strike in Libya limiting its export facilities has added to that tightness. Meanwhile on the demand side, falling covid cases and the ramping up of covid vaccination programmes lifted the demand outlook. 
API US oil inventory data is due later at 21:30 UTC.

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Bitcoin hits record high

Bitcoin has surged to a record high $50,000 after Tesla’s announcement on Monday that it had  bought $1.5 billion  of the digital currency as a means of diversification. The move boosted the prospects of Bitcoin going mainstream. At the time of writing Bitcoin is up 16%  at $46500. Other bullish mood is seeping across other crypto assets with the likes of Litcoin and DogeCoin.

Earnings

Whilst the US economic calendar is light, the corporate earnings calendar has more to offer with earnings expected from Fidelity, S&P Global, Fox Corp. 
After the close earnings from Cisco, Fiserv and Twitter are expected.

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Twitter what to expect from Q4 earnings?

Twitter has infamously struggled with monetizing its user base. In Q3 Twitter reported $936 million a 14% rise in revenue yoy with 187 million users which accounted for a 29% increase. These numbers could slip in Q4. Furthermore, the outlook is not as rosy as some other tech firms. After banning Trump’s account following the storming of Capitol Hill, Twitter purged many accounts, many other left and companies also pulled their add spend. EPS is expected at $0.30 which could be considered optimistic after $0.19 in Q3. 

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