US open: Stocks fall as 75 becomes the new 25

 

US futures

Dow futures -0.3% at 31078

S&P futures -0.4% at 3900

Nasdaq futures -0.6% at 12167

In Europe

FTSE -0.6% at 7283

Dax -1.5% at 12960

Euro Stoxx -0.7% at 3670

 

Caution ahead of Powell

US stocks are heading for a weaker start on the open as worries over hawkish central banks slowing growth hit risk sentiment.

The ECB has stepped up the battle against inflation with a jumbo-sized rate hike. This follows a 75 basis point hike by the BoC yesterday.

Meanwhile, Goldman Sachs has also lifted its forecast for the pace of rate hikes by the Federal Reserve. The Investment bank now expects a 75 basis point hike in September, followed by 50 basis points in November, up from 50 then 25.

With 75 fast becoming the new 25, all eyes will be on Fed Chair Powell’s speech to see whether he hammers home the Fed’s commitment to fighting inflation. Powell tee-ing up the market for a 75-basis point hike could add downward pressure to US stocks and reignite USD demand.

Corporate news:

GameStop rises 7.5% pre-market after posting a smaller than forecast loss in the second quarter. The troubled video game retailer also announced a partnership with the FTX crypto exchange.

Tesla rises pre-market as the Shanghai plat ramps up output. Tesla announced sales of almost 77,000 Chinese-made vehicles in August, around three times as many as a month ago.

Where next for the NASDAQ?

The Nasdaq trades below its 20 & 50 sma and its multi-month falling trendline. The 20 sma crossed below the 50 in a bearish signal, and the RSI supports further downside. Sellers will look to take out 11925 to extend the bearish move to 11450, the July 13 low, and 11050, the 2022 low. Buyers first need to rise above 12450 the 20 sma and weekly high to expose the 50 sma at 12560. A move over the falling trend line resistance at 12900 could bring 13215 into focus.

FX markets – USD rises, GBP rises.

The USD is falling away from 20-year highs reached early yesterday, tracing treasury yields lower. The Fed’s Beige book showed cooling growth and inflation, which prompted the reversal. Attention is now on Jerome Powell.

EUR/USD is falling after the ECB raised interest rates by 75 basis points, as expected. The aggressive rate hike could accelerate the region’s fall into recession. With an upward revision to, inflation rates could stay higher for longer. All eyes are now on ECB President Christine Lagarde’s speech.

GBP/USD falls following PM Liz Truss’ cap on energy bills for households and businesses as bills spiral higher. The BoE has said that this will slow inflation in the near term. The government will fund this through colossal borrowing. However, investors have been dumping government debt in recent weeks, pushing the 10-year gilt yield over 3% to its highest level in over a decade.

GBP/USD  -0.15% at 1.1550

EUR/USD  -0.17% at 1.0022

Oil falls to 8-month lows.

Oil prices are falling on Thursday, extending steep losses from the previous session on demand worries as China extends its lockdown restrictions.

China has extended its lockdown of Chengdu, home to 21.5 million inhabitants, to prevent further transmission. Millions are also being told not to travel in the upcoming holidays.

Meanwhile, rising interest rates by central banks across the globe fuel economic slowdown fears.

Given the slowing global growth backdrop, which is unlikely to change anytime soon, it would take another output cut from OPEC+ or more threats from Russia to put a firm floor under the price.

Looking ahead, EIA data is due later.

WTI crude trades +0.2% at $82.00

Brent trades +0.15% at $87.90

 

Looking ahead

14.10 Fed Chair Powell’s speech

15:15 ECB Lagarde speech

15:50 EIA crude stockpiles

 

 

US futures

Dow futures -0.3% at 31078

S&P futures -0.4% at 3900

Nasdaq futures -0.6% at 12167

In Europe

FTSE -0.6% at 7283

Dax -1.5% at 12960

Euro Stoxx -0.7% at 3670

Learn more about trading indices

Caution ahead of Powell

US stocks are heading for a weaker start on the open as worries over hawkish central banks slowing growth hit risk sentiment.

The ECB has stepped up the battle against inflation with a jumbo-sized rate hike. This follows a 75 basis point hike by the BoC yesterday.

Meanwhile, Goldman Sachs has also lifted its forecast for the pace of rate hikes by the Federal Reserve. The Investment bank now expects a 75 basis point hike in September, followed by 50 basis points in November, up from 50 then 25.

With 75 fast becoming the new 25, all eyes will be on Fed Chair Powell’s speech to see whether he hammers home the Fed’s commitment to fighting inflation. Powell tee-ing up the market for a 75-basis point hike could add downward pressure to US stocks and reignite USD demand.

Corporate news:

GameStop rises 7.5% pre-market after posting a smaller than forecast loss in the second quarter. The troubled video game retailer also announced a partnership with the FTX crypto exchange.

Tesla rises pre-market as the Shanghai plat ramps up output. Tesla announced sales of almost 77,000 Chinese-made vehicles in August, around three times as many as a month ago.

Where next for the NASDAQ?

The Nasdaq trades below its 20 & 50 sma and its multi-month falling trendline. The 20 sma crossed below the 50 in a bearish signal, and the RSI supports further downside. Sellers will look to take out 11925 to extend the bearish move to 11450, the July 13 low, and 11050, the 2022 low. Buyers first need to rise above 12450 the 20 sma and weekly high to expose the 50 sma at 12560. A move over the falling trend line resistance at 12900 could bring 13215 into focus.

FX markets – USD rises, GBP rises.

The USD is falling away from 20-year highs reached early yesterday, tracing treasury yields lower. The Fed’s Beige book showed cooling growth and inflation, which prompted the reversal. Attention is now on Jerome Powell.

EUR/USD is falling after the ECB raised interest rates by 75 basis points, as expected. The aggressive rate hike could accelerate the region’s fall into recession. With an upward revision to, inflation rates could stay higher for longer. All eyes are now on ECB President Christine Lagarde’s speech.

GBP/USD falls following PM Liz Truss’ cap on energy bills for households and businesses as bills spiral higher. The BoE has said that this will slow inflation in the near term. The government will fund this through colossal borrowing. However, investors have been dumping government debt in recent weeks, pushing the 10-year gilt yield over 3% to its highest level in over a decade.

GBP/USD -0.15% at 1.1550

EUR/USD -0.17% at 1.0022

Oil falls to 8-month lows.

Oil prices are falling on Thursday, extending steep losses from the previous session on demand worries as China extends its lockdown restrictions.

China has extended its lockdown of Chengdu, home to 21.5 million inhabitants, to prevent further transmission. Millions are also being told not to travel in the upcoming holidays.

Meanwhile, rising interest rates by central banks across the globe fuel economic slowdown fears.

Given the slowing global growth backdrop, which is unlikely to change anytime soon, it would take another output cut from OPEC+ or more threats from Russia to put a firm floor under the price.

Looking ahead, EIA data is due later.

WTI crude trades +0.2% at $82.00

Brent trades +0.15% at $87.90

Learn more about trading oil here.

Looking ahead

14.10 Fed Chair Powell’s speech

15:15 ECB Lagarde speech

15:50 EIA crude stockpiles