US open: Stocks point higher as dovish Powell reassures investors

Jerome Powell provided support to stocks on his first day before Congress reiterating the Fed’s accommodative stance. He returns today. Nvidia to report after the close.

FED 4

US futures

Dow futures +0.2% at 31559

S&P futures +0.4% at 3894

Nasdaq futures +0.4% at 13255

In Europe

FTSE +0.3% at 6645

Dax +0.8% at 13980

Euro Stoxx +0.6% at 3711

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Jerome Powell reiterates accommodative stance

Federal Reserve Chair Jerome Powell reiterated that the US interest rate will remain low for some time and that the Federal Reserve will continue buying up bonds to support the US economy even as Congress prepares to vote on the Biden administration’s $1.9 trillion covid support package.

Jerome Powell highlighted that the US economy was still a long way from the central bank’s inflation and employment goals. He considered the outlook to be uncertain and that inflation was not an issue.

Jerome Powell’s comments were tonic for the markets and calmed inflation fears which had been sending treasury yields sharply higher taking the shine off stocks.

US 10 year Treasury yield slipped to 1.33% overnight. However, yields have crept higher again today hitting 1.37%

Jerome Powell will testify again today.


Stocks look higher as inflation concerns ease slightly

After a choppy previous session stocks are set to open higher comforted by the prospect of low rates for longer. The Nasdaq managed to recoup its 3.5% selloff on Tuesday and is pushing higher as concerns over lofty valuations ease for now.

Tesla

After closing 2% lower in the previous session Tesla continues its bounce back +3.8% pre-market after asset management company Ark Invest announced that it had added a further $171 million worth of the stock to its portfolio.

Nvidia

Nvidia is due to report after the market close. Earnings for the holiday quarter are expected to produce record revenue of almost $5 billion amid surging sales of gaming cards, chip shortages of and the release of a chips designed for cryptocurrency mining. EPS of $2.81 is expected vs $1.81 in the same period last year. Revenue is expected at $4.82 billion vs $3.11 billion a year before.

The share price has more than doubled over the past 12 months hitting its latest record high of $613.21 on 16th Feb.


FX – EUR rises as German GDP upwardly revised, GBP hit fresh 35 month high

The US Dollar is on the back foot following a dovish Powell, support at 90.00 is still holding.

GBP/USD -hit a fresh 2021 high 1.4240 amid speculation of a quicker reopening of the British economy and rate hikes from the Bank of England. BoE Governor Andrew Bailey is due to speak later.

EUR/USD edges higher after a stronger than expected German GDP reading. GDP was upwardly revised to 0.3% QoQ in Q4. The German economy shrank -5.3% last year a significantly smaller contraction that many other European countries. That said the outlook remains clouded given that the lockdown has been extended to March 7th. Eurozone vaccine delivery delays are keeping the lid on gains.

GBP/USD trades +0.15% at 1.4133

EUR/USD trades +0.1% at 1.2163


Oil resumes its advance

Oil prices are resuming their upward trend after yesterday’s unexpected increase in US crude oil and gasoline inventories.

The API reported crude inventories rising by over 1 million barrels last week, well above the 5 million barrel draw forecast.

Reopening optimism is boosting future demand expectations and under pinning oil prices.

Analyst Fiona Cincotta look is at the price action of WTI crude oil here and levels to watch.

Today’s EIA weekly data is due at 15:30 UTC.

US crude trades +1% at $62.30

Brent trades +1.3% at $65.25

Learn more about trading oil here.

The complete guide to trading oil markets


Looking ahead

15:00 Fed Chair Powell’s second testimony before Congress

15:00 New Home Sales

15:30 EIA Crude Oil Stock Changes

15:30 Fed Brainard Speaks

18:00 Fed Clarida Speaks


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