US open: Wall Street mixed as retail sales unexpectedly rebound

US retail sales unexpectedly rebound lifting Dow futures out of the red.

USA (2)

US futures

Dow futures +0.2% at 34730

S&P futures -0.4% at 4465

Nasdaq futures -0.4% at 15443

In Europe

FTSE -0.02% at 7028

Dax +0.31% at 15680

Euro Stoxx +0.7% at 4173

Cyclicals rebound after retail sales beat

US stocks have opened mixed following a surprise jump in US retail sales. Retail sales unexpectedly jumped 0.7% MoM in August, up from -1.1% in July and well ahead of the -0.8% decline forecast. The upbeat sales data shows that consumers are resilient despite concerns over the rise in Delta covid cases. Whilst travel and leisure sales stagnated, back to school sales overshadowed this.

For the markets the data all links back to what the Fed will do in the meeting next week. The resilience seen in consumers has boosted bets that the Fed could fire the tapering gun in September. The US Dollar is charging higher and cyclicals, which are closely tied to the health of the economy, are outperforming high growth stocks. Dow futures managed to quickly reverse losses

There were few surprises from jobless claims which rose from the previous week’s 310k to 332k, just slightly above forecasts.

Where next for the Dow Jones?

The Dow Jones continues to trade below its 50 sma a key support across the year. It is now approaching the 100 sma at 34700. A break below here will bring 34500 into play, this is the weekly low and also the August low. It would take a move below this level for the bears to gain traction, possibly sparking a deeper sell off to 34750 the July 20 low. Any recovery would need to retake 35000 the round number, 50 sma. It would take a move over 25200 for the bulls to gain traction.

Dow Jones

FX – USD rallies EUR trades sub 1.18

The US Dollar is on the rise as attention turns to the Fed meeting next week. Expectations are building that the Fed will taper which is lifting the US Dollar.

EUR/USD – the Euro is bearing the brunt of the stronger US Dollar. The common currency shrugged off upbeat Eurozone industrial production numbers yesterday and more hawkish commentary from the ECB. All eyes are on Christine Lagarde who is due to speak shortly.

GBP/USD  +0.07% at 1.3839

EUR/USD  -0.36% at 1.1772

Oil rises on as stockpiles decline

Oil prices are holding steady around multi-week highs hit in the previous session. A huge draw on US inventories lifted the price. US crude stockpiles fell by 6.4 million barrels last week, well over the 3.5 million forecast as offshore facilities continue to recover from Hurricane Ida. The recovery to output has taken longer than expected.

Oil is also finding support from the surge in European power prices. The energy crisis in Europe is like to deteriorate before it gets better.

This week could be a key week for oil which is expected to see global oil demand  rise to over 100 million barrels a day – last seen in 2019.

WTI crude trades -0.12% at $72.15

Brent trades -0.13% at $74.90

Looking ahead

15:00 US Business Inventories

23:30 NZ Business PMI

How to trade with

Follow these easy steps to start trading with today:

  1. Open a 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.

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 or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account