US futures
Dow futures -0.92%, S&P futures -0.78% & Nasdaq futures -0.77%
In Europe
FTSE 0.15% & DAX -0.11%
- US stocks fall further as oil prices jump
- Oil soars to $100 on supply worries despite IEA record reserve release
- US jobless claims fall by 1k to 213k
- Oil rises as vessels are attacked in the Persian Gulf, as the war continues
Stocks fall as oil prices jump, lifting inflationary worries
U.S. stocks are pointing to a lower open, hovering around their lowest level this year, as rising oil prices continue to fuel stagflation concerns for the global economy.
Despite the IEA’s decision to release 400 million barrels of oil from strategic reserves, this failed to prevent another rally in crude prices. Investors remain worried about supply after tankers in the Persian Gulf were attacked, with no signs of de-escalation in the Iran conflict.
Treasury yields across maturities are pushing higher this week as inflation concerns rise. The market is no longer expecting the Fed to cut rates in the first half of this year.
On the data front, U.S. jobless claims fell by 1,000 to 213,000 last week, indicating that layoffs remain contained. Meanwhile, continuing claims, a proxy for the number of people receiving benefits, also fell to 1.85 million in the previous week. These figures follow last week’s nonfarm payroll report, which showed an unexpected drop of 92,000 jobs in February, raising questions about whether the U.S. labour market is stabilising.
Economic data has taken a back seat to developments in the Middle East and movements in oil prices, which are currently driving market sentiment. If markets and investors begin to price in a prolonged conflict that causes significant economic damage, U.S. stocks could fall further, particularly as there are still no concrete signs of de-escalation.
Corporate News
Oil majors such as ExxonMobil, Chevron, and ConocoPhillips are all higher in pre-market trading as oil prices remain elevated, despite pulling back from earlier gains.
Airlines have been among the sectors most negatively impacted by rising oil prices and the closure of some flight paths. S&P 500 airline stocks are on track for their biggest monthly loss in a year.
Blue Owl Capital, which has been at the centre of recent concerns about the state of the private credit industry, fell after the asset manager backed its decision to offload $1.4 billion of loans from three of its funds.
Dollar General is falling after the discount retailer’s in-line annual sales forecast disappointed the market following a sharp rally in its share price.
Eli Lilly is slightly lower after the U.S. drugmaker said that compounded weight-loss drugs containing the main ingredient found in its popular Zepbound medication could pose health risks due to a previously unknown impurity in their preparation.
Nasdaq 100 forecast – technical analysis.
The Nasdaq continues to trade in a narrow range, capped by the 50 SMA on the upside and 24,700 on the lower side, a level which has limited losses on several occasions over the past month. However, with the RSI below 50 this support is looking more vulnerable. A break below 24,700 could open the door to 24,335, the 200 SMA and 24,000, the 2016 low. A bearish below here creates a lower low, potentially spurring a deeper selloff towards 23,000. Should 24,700 support hol, buyers could look for a rise above the 50 SMA at 25,200 and up towards 26,000.
FX markets – USD rises, EUR/USD falls
The U.S. dollar is rising for a third straight day, remaining close to its highest level this year as soaring energy prices fuel inflation worries, potentially forcing central banks to reassess the need for rate cuts. The dollar is also benefiting from safe-haven flows, as well as the fact that the U.S. is a net energy exporter.
EUR/USD is falling as investors monitor oil and energy prices, which are adding stagflationary pressures to the eurozone economy—an economy highly reliant on imported oil and gas. ECB policymakers have warned that they could be forced to raise interest rates if oil and gas prices remain elevated for a prolonged period, with markets considering the possibility of a hike as soon as July.
GBP/USD is trading lower amid the stronger U.S. dollar as investors await comments from Bank of England Governor Andrew Bailey, who will appear before the Treasury Select Committee. The market is no longer expecting the BoE to cut rates in March and is instead considering the possibility of a rate hike before the end of the year.
Oil spikes to $100 despite IEA record reserve release
Oil prices briefly climbed back above $100 a barrel this morning before easing to around $95 at the time of writing.
The moves come as markets weigh attacks on ships in the Persian Gulf. The price increase has largely been driven by uncertainty and a rising geopolitical risk premium. Supply concerns continue to dominate, even after the International Energy Agency announced a record 400 million-barrel release from strategic reserves.
In addition, the U.S. has said it will release 172 million barrels from its reserves in an attempt to ease supply concerns. However, even these record releases would only cover a few weeks of global oil demand.
