US open: stocks set to retreat as WHO warns on covid numbers

After the S&P enjoyed its best one day rally in 9 months on Monday, the bulls are pausing for breath. WHO warns on covid numbers rising & China warns on bubbles. Zoom & Target in focus.

Charts (5)

US futures

Dow futures -0.2% at 31450

S&P futures -0.3% at 3889

Nasdaq futures -0.1% at 13268

In Europe

FTSE +0.5% at 6620

Dax +0.4% at 14070

Euro Stoxx +0.3% at 3719

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WHO warns that covid cases rose

The World Health Organisation warned that new covid cases rose for the first time last week in 7 weeks. Cases rose in 4 or the WHO’s 6 regions. Despite recent encouraging developments on vaccine rollouts the WHO’s warning is a reminder that covid remains a clear risk. 

The numbers come as parts of the US have started to ease restrictions and as the vaccine rollout is expected to pick up after the approval of the single shot Johnson & Johnson vaccine.

In Germany, non- essential shops could be reopened soon in areas where there is a low infection rate. German retail sales were dismal with sales dropping 4.5% MoM after declining -9.1% MoM in December.

The WHO added that it was premature to believe that the Covid health crisis would end this year which is keeping risk sentiment in check.

China regulator warns of bubble

China’s banking regulator warned over the risk of bubbles forming in foreign markets whilst also raising concerns over the Chinese housing sector. His comments sent Chinese stocks lower and dented sentiment on the open in Europe. The fact that markets are moving in an opposite direction to the underlying economies isn’t anything new. However it was enough to take the shine off stocks.

Stocks set to open mildly lower

The S&P 500 enjoyed its best session in 9 months on Monday boosted by JNJ vaccine & stimulus developments. However, the bulls are pausing for breath indicating mild losses on the open.

Retailers will be in focus as earning season continues. Nordstrom, Kohl and Target have reported earnings.

Target gains 0.2% pre-market after reporting a 21% jump in sales in the holiday quarter, signifycantly higher than forecast. The jump in sales came as same day delivery and in store collection services helped fulfill robust demand. Target has regularly outperformed Wall Street expectations thanks to its early focus on its digital offering.

Zoom rises pre-market after beating forecasts

Zoom trade +7% pre-market after posting impressive earnings after the close on Monday and issuing a strong guidance. Zoom achieved EPS $1.22 vs $0.79c expected. Revenue $882.5 million vs 811.8 million expected. Margins improved and Zoom lost fewer customers than it had expected. Zoom sees 42% revenue growth in the year ahead even as life return to sone form of pre-pandemic normalcy.

FX – EUR depressed as German retail sales plunge & inflation misses.

The US Dollar is extending 0.6% gains from the previous week. US Dollar Index DXY +0.15% holding above 91.00.

EUR/USD – trades under pressure owing to dismal German retail sales and softer inflation numbers. Eurozone CPI printed at 0.9% YoY in February missing 1% forecast and a significant distance from the ECB’s 2% target. Core inflation also drifted lower to 1.1%, down from 1.4% in January.

Analyst Fiona Cincotta looks at EUR/USD price action and levels to watch.

GBP/USD trades -0.10% at 1.3910

EUR/USD trades -0.2% at 1.2025

Oil resumes uptrend

After dropping almost 3% in the previous session Oil prices continue to fall lower, although have picked up off daily lows. Both Brent and WTI crude oil rebounded off session lows after data revealed that output from both OPEC & Russia declined in February.

The update comes ahead of the OPEC+ meeting on Thursday where the group is expected to ease output cuts potentially by as much as 1.5 million barrels per day. The group had cut output by 7 million bdp which is around 7% of global output.

Attention first turn to API inventory data later.

US crude trades -0.05% at $60.20

Brent trades -0.02% at $63.70

Learn more about trading oil here.

The complete guide to trading oil markets

Looking ahead

18:00 Fed Brainard speech

21:30 API weekly crude oil stocks

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