US Open: Stocks slip but are set for a strong weekly gain
Fiona Cincotta March 17, 2023 8:56 AM
Stocks pare yesterday's rally after big US banks prop up First Republic Bank. Nasdaq is set to gain over 5% this week. US Michigan confidence is due shortly.
Dow futures -0.8% at 31985
S&P futures -0.6% at 3934
Nasdaq futures -0.4% at 12538
FTSE -0.46% at 7370
Dax -0.9% at 14850
Nasdaq is set to gain over 5% this week
US stocks point to a lower open after strong gains in the previous session, as the relief rally following the lifeline for First Republic bank starts to reverse.
Yesterday major banks in the US, including Citigroup, Bank of America, Wells Fargo, and JPMorgan teamed together to deposit $30 billion of uninsured deposits into First Republic Bank, a regional lender which had suffered following the collapse of SVB.
The move had initially boosted confidence in the financial sector helping the Dow Jones rise 1.1% yesterday. However, those gains are not being extended today. Still, US equities are on track for a solid week. The Nasdaq is set to gain 5.2% this week it’s the best week since November. Meanwhile, the S&P 500 is on track to rise 2.6% this week its best weekly performance since January.
The turmoil in the financial sector has seen investors reprice Federal Reserve rate hike expectations. Many investors are now expecting a 25% basis point rate hike next week, down from a 50 basis point rate hike that had been widely expected just over a week ago.
Looking ahead, on the economic calendar, University of Michigan consumer sentiment is expected to hold steady in March at 67, which is a 13 month high.
FedEx trades 11% higher premarket after beating quarterly earnings expectations and upwardly revising its 2023 earnings forecast. EPS was $3.41, well ahead of the $2.73 forecast as the cost-cutting programme brings results.
Nvidia try its higher pre-market after Morgan Stanley upwardly revised its stance on the chip maker to overweight from equal weight amid rising excitement surrounding AI.
Where next for the Nasdaq?
The Nasdaq rebounded off the 100 sma and has pushed above the 250 sma trading at a monthly high. The break above resistance at 12500, plus the 50 sma crossing above the 200 S ma in a golden cross formation and the RSI above 50, keep buyers hopeful of further gains. Buyers will look to break above resistance at 12900, the 2023 high in order to bring 13200, the Aug 26 high into play. On the flipside, the port can be seen at 12200, the December high, with the breaks below here exposing the 200 sma at 11900.
FX markets – USD falls, EUR, GBP rises
The USD is falling as investors continued to digest the turmoil that has been unleashed across the financial markets this week The US dollar hasn't been attracting safe-haven flows. Instead, investors are questioning whether the Fed will adopt a less aggressive approach to rate hikes, pulling the dollar lower.
EUR/USD is rising capitalising on the weaker U.S. dollar as investors continue to digest the 50 basis point rate hike from the ECB on Thursday. The central bank acknowledged the stress in the financial sector and said some individual institutions could be adversely affected by higher rates. There was no guidance as to what the ECB could do at the next meeting, instead saying the decision will be data-driven.
GBP/USD is edging higher as investors look ahead to next week’s Bank of England monetary policy meeting. The meeting comes after chancellor Jeremy Hunt announced in the budget that he will pump an additional 20 billion into the UK economy, which could encourage the central bank to continue hiking rates. UK inflation remains in double digits but is expected to fall to 2.9% by the end of the year.
EUR/USD +0.08% at 1.0620
GBP/USD +0.2% at 1.2130
Oil rises but remains below $70
Oil prices are pushing higher for a second straight day, but are still set to record a steep loss across the week, marking the largest weekly fall since December.
Oil remains below $70 a barrel as it continued to hover around a 15-month low. Oil prices have been pressurised this week by the turmoil in the financial sector, raising fears of another financial crisis hitting the demand outlook.
Oil prices to appear to have found a bottom and are attempting to grind higher. As OPEC representatives pointed out, this week’s price weakness is owing to financial drivers rather than any fundamental change to supply and demand imbalances. According to OPEC sources, expectations are for the oil market to stabilise.
Meanwhile, optimism surrounding China's demand recovery continued to support the oil demand outlook. US crude exports to China headed towards their highest level in almost 2 1/2 years this month.
WTI crude trades +0.6% at $67.50
Brent trades at +0.2% at $73.80
Learn more about trading oil here.
15:00 US Michigan consumer sentiment
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, commodity futures, or digital assets, 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 StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.