US open: Growth concerns send futures sharply lower

Stocks set to tumble as concerns over growth grow.

USA (2)

US futures

Dow futures -01.39% at 34200

S&P futures -1.3% at 4300

Nasdaq futures -1.4% at 14600

In Europe

FTSE -1.9% at 7017

Dax -1.8% at 15393

Euro Stoxx -2.2% at 3987


Jobless claims miss, FOMC moving towards tapering

The mood in the market has soured considerably overnight sending stocks sharply lower across the board. Rising covid cases, growth concerns and a Fed which is looking to taper support is hitting demand for riskier assets.

Rising covid delta cases are unnerving investors, reminding the market that despite the vaccine, the covid threat hasn’t entirely disappeared. Confidence has been knocked that the virus could still come back and hit growth, particularly if new variants arise.

The FOMC minutes confirmed that the Fed was moving towards tapering bond purchases. Although in a mixed message the Fed also said that whilst there was progress in the economic recovery, more progress was needed to set a timeline.

The Fed looking to move towards tapering asset purchases comes at a time when traders are increasingly less concerned over inflation and interest rate rises. The 10 year treasury yield slumped to a 4 month low.

US jobless claims missed forecasts coming in at 373k up from an upwardly revised 371k whilst missing forecasts of 350k.

Recent data from the US has been disappointing with the Citigroup surprise index at the lowest level since February. Peak growth appears to have passed, so the timing of easing back on support is concerning the markets.

Where next for the Dow Jones?

The Dow Jones is dropping sharply lower, breaching a key support a 34350 the 50 day ma and the ascending trendline support dating back to November setting the scene for further losses. The MACD appears to be forming a bearish crossover supportive of further downside. Should the Dow take out 34125 low June 30th then sellers could gain momentum towards 33700 horizontal support. Any move higher would need to retake the 50 dma and ascending trendline at 34350.

FX – Euro rises despite dovish move by ECB

The US Dollar is moving lower away from its three month peak reached yesterday whilst tracing bond yields southwards.

EUR/USD -The pair is capitalizing on the weaker US Dollar, rising despite the dovish tilt from the ECB which will allow an inflation overshoot – essential moving back the goal posts for raising interest rates.

GBP/USD is extending losses despite the weaker USD, as rising covid cases raise doubts over the UK’s easing of covid restrictions. Adding to the downbeat tone surrounding the Pound, PM Boris Johnson warns the EU over the Brexit NI protocol.

GBP/USD  -0.27% at 1.3763

EUR/USD  +0.4% at 1.1837

Oil slumps on OPEC+ concerns, EIA data up next

Oil prices are extending the selloff for a third straight session as investors fret over the supply outlook across the rest of the year. Following the collapse of the OPEC+ talks, where the group of oil producers failed to agree unanimously to raise output, concerns are growing that the current output agreement could be abandoned. Currently the OPEC+ group have in place curbs on output to the tune of 6 million barrels a day until April 2022. However, a lack of agreement as to how to ease the curbs could see oil come flooding back to the market, echoing the price war of last year as producers look to gain market share.

EIA data is due to be released and could offer some support to oil prices. The API reports revealed an 8 million barrel draw highlight the current picture of strong demand and limited supply. However, the market is looking past this now to a potential supply glut later in the year.

US crude trades -0.5% at $71.35

Brent trades -0.3% at $72.86


Looking ahead

15:30 EIA crude oil inventories


How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

  1. Open a Forex.com account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels.
  4. Place the trade.


More from Indices

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.