US open: Wall Street heads high on Biden's spending plans, OPEC in focus

Stocks are set for a stronger start after Biden's infrastructure and tax plans. OPEC expected to keep production cuts in place.

USA (2)

US futures

Dow  futures +0.1% at 33066

S&P futures +0.3% at 3992

Nasdaq  futures +1.1% at 13243

In Europe

FTSE +0.3% at 6745

Dax +0.45% at 15070

Euro Stoxx  +0.6% at 3936

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Biden’s spending & tax plans boosts stocks

Stocks are set to open broadly higher following US President Biden’s $2 trillion infrastructure spend announcement yesterday. However, the added caveat that corporate tax hikes to the tune of 28% will be used to pay for the spending spree over the medium term has helped to ease the bond rout.

US treasury yields have eased lower, pulling the US Dollar off 5 month highs. The tech heavy Nasdaq is set to outperform its peers as yields decline. This is a slightly confusing move considering that Biden’s tax plans include foreign earnings and would dis-proportionally hit of the largest US firms such as Apple and Facebook.

Jobless claims higher than expected

Initial jobless claims came in higher than expected back over the 700k level to 719k, well over the 680k expected and a significant rise from last week's 658k. The disappointing number came following yesterday's ADP data which showed a strong rise in March. All eyes will now turn to tomorrow's non farm payroll data for further clues over the health of the US labour market recovery.

Stocks in focus

Micro Technology – trades 4.7% higher pre-market after reporting strong earnings and guidance after the close on Wednesday. Semiconductor sector as a whole is likely to be in focus.

Microsoft – rallied 1.5% in the previous session and trades +1.2% higher pre-market following an announcement yesterday that it won an Army contract worth $22 billion over 10 years. The deal is to build 120,000 custom HoloLens reality headsets.

Where next for Microsoft share price?

Microsoft has seen a solid runup across 2020 hitting an all time high of 246 last month. The price has since eased back sightly and has been trading in a tight ranged holding pattern since late February, capped on the upside by 240 and on the lower side by 230.

The 20 & 50 sma on the daily chart are flat and the RSI is all around 50 indicating a neutral bias.

Microsoft is expected to open at the top end of the range. Bulls will be looking for a close above 240 in order to target the all time high of 246, before looking towards 250 round number.

On the downside, failure to retake 240 could see the price tip lower. Bears should be looking for a break out below 230, before testing resistance at 223 the March low.

FX – EUR, GBP sluggish despite upbeat manufacturing PMIs

The US Dollar has eased off a recent 5 month highs after bond yields fall as Biden looks to corporate tax hikes to pay for the latest $2 trillion spend.

EUR/USD – trades marginally higher after data revealed that Eurozone manufacturing expanded at at faster pace than initially expected in March. The PMI rose to 62.5, upwardly revised from 62.4. and a fresh all time high as the manufacturing sector remains a bright spot. The service sector may not fair so well given the renewed lockdown restrictions in the region.

GBP/USD -0.1% at 1.3775

EUR/USD trades +0.1% at 1.1737

Oil rises ahead of OPEC+ meeting

After two straight days of losses, oil prices are on the rise ahead of the OPEC+ meeting later today. Concerns over the demand outlook dragged on the price of oil earlier in the week as France announced its third national lockdown and covid cases in India topped 70,000.

Two options are reportedly on the table. On is to keep cuts in place, the other is to increase production by 500,000 barrels. Russia  and Kazakhstan prefer the latter option whilst other OPEC members favor the first.

Expectations are for the oil cartel to keep output cuts in place at least for another month, which is underpinning the price of oil.

US crude trades +1.4% at $60.00

Brent trades +1.5% at $63.97

Learn more about trading oil here.

The complete guide to trading oil markets

Analyst Fiona Cincotta looks at the price action of WTI and levels to watch here.

Looking ahead

14:45 Markit manufacturing PMI (March)

15:00 US ISM manufacturing PMI (March)

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