US futures
Dow futures +1.0% at 34818
S&P futures +1.3% at 4625
Nasdaq futures +1.3% at 16357
In Europe
FTSE +1.18% at 7160
Dax +1.71% at 15406
Euro Stoxx +2.23% at 4151
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Fed turns hawkish, Omicron fears ease for now
US stocks are rebounding on Wednesday after another steep selloff in the previous session. Omicron concerns and a surprisingly hawkish turn from the Fed sent stocks tumbling with the S&P 500 closing 1.9% lower.
Fed Powell told the Senate Banking Committee that the risk of inflation has increased and the word transitory should be retired. He also said that the pace of tightening could be accelerated, which means interest rate rises could also come sooner. The hawkish turn came from the Fed at a time when uncertainty surrounding the covid outlook rose abruptly. Even so, the Fed don’t consider that the new variant will cause the same economic chaos that COVID initially caused.
Today, the mood in the market has improved amid encouraging comments from the Israeli health minister and BioNTech who see the Pfizer vaccine offering protection against Omicron. US ADP payrolls were also encouraging, showing the continued recovery in the labour market. ADP private payrolls rose 534k, ahead of the 520k forecast but below October’s 571k.
ISM manufacturing data and another appearance from Fed Powell means that there is still plenty for investors to digest across the session.
Corporate updates
Salesforce is set to open over 5% lower after the software company issued disappointing guidance. Crowdstrike, Okta and PVH report after the close.
Where next for the S&P500?
The S&P500 is extending its rebound from 4650, yesterday’s low. The price is currently testing resistance at 4625 the 200 sma on the 4 hour chart and the November 10 low. A move above here exposes the 50 sna and weekly high around 4670. Rejection at 4625 could see the price head back towards 4560 and 4550 the September high.
FX – USD steady, EUR falls after weak data
The USD is holding steady after a volatile few sessions. The surprise hawkish turn from the Fed helped pick the greenback off session lows in the previous session.
EUR/USD is moving lower after a slew of disappointing data. German retail sales slumped a larger than expected -2.9%. Manufacturing PMIs were also downwardly revised as soaring cost pressures hit manufacturers.
GBP/USD+0.18% at 1.3323
EUR/USD -0.16% at 1.1322
Oil rallies ahead of OPEC
Oil prices are on the rise at the start of the month after plunging 16% across the month of November. Prices are rising amid ongoing uncertainty from Omicron and ahead of the OPEC+ meeting.
OPEC are due to meet today, followed by OPEC+ tomorrow. There are rising doubts over whether the OPEC+ group will step up production adding 400,000 barrels as planned, given rising uncertainty surrounding to the demand outlook. The discovery in Omicron has sparked travel restrictions and could prompt further curbs to restrict its spread.
OPEC+ have erred on the side of caution, particularly as they expect a supply glut next year, so not going ahead with the planned output increase would be in line with this more cautious stance.
WTI crude trades +4.5% at $68.91
Brent trades +4.6% at $72.42
Learn more about trading oil here.
Looking ahead
16:30 Canada Manufacturing PMI
16:45 Manufacturing PMI
17:00 Fed Chair Powell Speech
17:00 ISM Manufacturing PMI
17:30 EIA Crude Oil Stock
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