US open: Futures resume rise ahead of Fed Quarles, oil inventories
Fiona Cincotta May 26, 2021 8:14 AM
US stocks are set to resume the rise after a brief setback yesterday. The Fed continue to rein in inflation expectations boosting stocks. A light economic calendar leaves Fed speak in focus.
Dow futures +0.2% at 34389
S&P futures +0.3% at 4201
Nasdaq futures +0.45% at 13721
FTSE -0.5% at 7000
Dax -0.25% at 15434
Euro Stoxx -0.2% at 4029
Stocks resume rise ahead of Fed Speak
US stocks are pointing to a higher start, resuming the recent rally after a mildly lower close on Tuesday.
Data on a Tuesday revealed that Consumer confidence ticked lower in May for the first time in six months. Concerns that rising prices have taken the edge off re-opening euphoria pulled stocks into the red although the Nasdaq closed flat.
The Fed continued to rein in inflation expectations, with move Fed speakers joining the dovish chorus. As fears of an earlier move by the Fed ease, stocks are pushing higher again today. With the core PCE deflator, the Fed’s preferred measure of inflation due at the end of the week, inflation jitters, whilst seemingly under control right now are unlikely to be going anywhere fast. A sharp rise in core PCE could make it more challenging for the Fed to defend the lose monetary policy.
The economic calendar is quiet on both sides of the Atlantic meaning more attention will be on Fed speakers. Federal Reserve Vice Chair Randal Quarles will be watched closely for any commentary regarding inflation or potential tapering.
Nordstream trades -5% pre-market after missing Q1 earning expectations after the close yesterday.,
Urban Outfitter trades +9% following better than expected earnings.
Looking ahead there are a number of tech stocks reporting today including Snowflake and NVIDIA
Where next for the Dow Jones?
The Dow Jones continues to trade above its ascending trendline support dating back to early April last year. A push above resistance at 34800 is needed in order for the bulls to test 35000 the all time high hit on May 10. However, negative RSI divergence could be forming which suggests upside momentum could be fading and can precede a move lower. It would take a move below strong support at 33650 the 50 day ma, the yearly trendline support and horizontal support to negate the near term uptrend – this could be a tough nut to crack.
FX – USD hovers around 5 month low, NZD jumps post RBNZ announcement
The US Dollar is edging higher after hitting a 5-month low in the previous session. Weaker than forecast consumer confidence and plenty of dovish calls from the Fed are keeping the pressure on the greenback.
NZD/USD is outperforming and trades at a 3 month high after the Reserve Bank of New Zealand kept interest rates unchanged at 0.25% but unexpectedly indicated that rates could rise in September 2022.
NZD/USD + 1% at 0.7305
GBP/USD +0.1% at 1.4165
EUR/USD -0.15% at 1.2231
Oil awaits further clarity on Iran, EIA data
Oil is consolidating around $66 as investors grapple with growing optimism surrounding the reopening of Western economies against concerns of increased supply from Iran.
API inventory data showed that oil stocks fell by 439,000 and gasoline inventories declined by 2 million barrels. The data was encouraging but the focus is likely to be on the indirect US – Iran nuclear talks. The market will want more clarity on whether more supply will be flooding back into the market.
Any signs of progress in talks could knock the price of oil as the market questions whether additional supply can be absorbed. Going forward the more demand picks up in economies as they re-open the more comfortable the market would be with additional supply.
EIA inventory data is due shortly
US crude trades -0.2% at $65.88
Brent trades -0.1% at $68.39
15:00 Fed Quarles to speak
15:30 EIA crude stock inventory
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.