US open: Wall Street Points To Mixed Start, Jobless Claims Hit Pandemic Low
Fiona Cincotta May 20, 2021 4:58 AM
US jobless claims fell again this week, highlighting the recovery in the labour market and boosting market sentiment. Tech stocks are set to lead the risers. Oil falls on Iran US nuclear talk progress.
Dow futures -0.1% at 33842
S&P futures +0.02% at 4117
Nasdaq futures +0.3% at 13275
FTSE +0.7% at 6985
Dax +0.8% at 15257
Euro Stoxx +0.9% at 3974
Tech stocks lead the risers after jobless claims drop
Jobless claims continued to fall, hitting a new pandemic low. 444k initial claims were made last week, down from 478,000 the previous week. This was mildly ahead of the 450,000 forecast.
The data adds to evidence that the US labour market is seeing a steady recovery as the US economy reopens. The data should help ease concerns over labour shortages adding upwards pressure to wages, a dynamic which raises inflation fears. The reaction in the market appears to be one of easing inflation fears with tech stocks picking up and the US Dollar weakening.
The data comes after the minutes to the April FOMC revealed that policy members are ready to start talking about tapering asset purchases in the coming months. This caught the markets a little by surprise after the Fed had re-iterated on numerous occasions its dovish stance. Immediate following the release as treasury yields rose. But that move has faded, treasury yields are lower and tech is leading the gains.
Earnings from consumer facing companies will ensure that inflation risks continue to linger. Strong consumer spending helped the likes of Target, Home Depot and Walmart report bumper earnings earlier in the week. Whilst pent up demand has been strong what is less clear is well demand will be maintained across the year.
Today earnings from Kohls, Ralph Lauren.
Other stocks likely to be in focus include Cisco after highlighting concerns over disruptions from the global chip shortage.
Where next for the Dow Jones?
The Dow Jones sold off in the previous session but found support on its ascending trendline dating back to late March. Whilst this trend line support holds and the price remains above horizontal support at 33290, buyers can remain hopeful. Any recovery would need to retake 34000 the key psychological level and 200 sma on the 4 hour chart in order to book further gains. A move below 33290 could see the sellers gain traction.
FX – USD bounces fades, AUD rises post jobs report
The US Dollar is trading lower, paring gains from the previous session. The cue from the Fed that they are ready to discuss tapering asset purchases hasn’t been enough to alter the down trend in the greenback that has been in place since the start of the year but it could help put a floor in place.
AUD/USD trades higher, outperforming G10 peers after an encouraging jobs report. Australian unemployment fell for the 6th straight month to 5.5%, the lowest level in a year. The data was well received as it comes as the fall in unemployment came despite the end of job-keeper wage subsidies programme.
AUD/USD +0.4% at 0.7758
GBP/USD +0.1% at 1.4126
EUR/USD+0.2% at 1.2200
Oil falls on reported progress in Iran US nuclear talks
Oil is trading sharply lower, extending losses for a third straight session. The latest sell off in oil comes after the Iranian President Hasan Rouhani said that a break-through had been achieved in restoring the 2015 Iran nuclear deal limiting its nuclear programme. He announced that all major sanctions had been lifted, this would include sanctions on oil exports, meaning more oil would come flooding back into the market.
US crude trades -1.13% at $62.59
Brent trades -2% at $67.29
00:00 Australia Markit Mfg & Services PMI
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 Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.