US open: Reopening optimism and a dovish Fed lift futures

Stocks point higher as optimism surrounding the economic reopening overshadows rising covid cases in Asia and as the Fed continues to reiterate its dovish intentions. USD dives to 3 month low.

USA (2)

US futures

Dow futures +0.15% at 34382

S&P futures +0.2% at 4171

Nasdaq futures +0.5% at 13386

In Europe

FTSE +0.3% at 7060

Dax +0.05% at 15414

Euro Stoxx +0.2% at 4012

Learn more about trading indices

Stocks rebound

US futures are pointing to a stronger start amid rising commodity prices, the Fed playing down inflation fears and strong earnings from US retailers. Reopening optimism is overshadowing concerns of rising covid cases in Asia.

Fed speakers have been out in force relaying the Fed’s dovish message since last week’s spike in inflation. The market appears to be all ears with the US Dollar tanking whilst equities, particularly tech stocks, drive higher.

The high growth tech stocks have been under pressure, under performing peers in recent sessions amid fears that the Fed could act sooner to tighten policy. As those fears are easing demand for tech returns.

Soothing comments by Dallas Fed Kaplan and Federal Reserve vice chair Richard Clarida have been tonic to the markets.  Kaplan doesn’t see a rate rise until next year and Clarida highlighted the weak jobs data as a reason for the Fed to stay supportive.

The weaker US Dollar is underpinning commodity prices, which are resuming their uptrend after recent weakness. Re-opening optimism is also driving demand for commodities higher.

US building permits and housing starts could garner some interest. The release of the Fed minutes to morrow are likely to be a bigger market mover as investors will be looking closely for any clues of a timeline for scaling back stimulus.

Earnings

Walmart and Home Deport reported blowout Q1 earnings helped by the latest round of stimulus checks.

Macy’s raised its earnings for annual sales and profits amid expectations of pent up demand  as shoppers return to stores.

Where next for the Nasdaq?

The Nasdaq formed a double top reversal pattern at the end of April before selling off. The price didn’t complete the double top reversal pattern which would have be down at 12225. Instead the index found support around 12900 the lower band of the ascending channel dating back to late September and has rebounded higher. Currently it trades caught between the lower band of the ascending channel on the down side and the 50 sma at 13450 on the upside showing some indecision. A move over 13400 could open the doot towards 14070 resistance. However, a move below 12900 could see the sellers gain traction.

FX – USD weakens, GBP rallies an unemployment falls

The US Dollar is heading lower towards a 3 month low after more dovish Fed rhetoric. Dallas Fed Kaplan reassured the markets that he doesn’t see a rate hike until next year. Federal Reserve vice chair Richard Clarida highlighted the soft jobs market as a reason to keep supporting the US economy. The Dollar is listening loud and clear to the Fed’s dovish calls.

GBP/USD trades above 1.42 after upbeat jobs data. The unemployment rate in the UK unexpectedly fell to 4.8% in the three months to March, down from 4.9% despite the ongoing lockdown restrictions. The claimant count also unexpectedly dropped by 15.1k, rather than rising by 25k as expected.

GBP/USD  +0.38% at 1.4207

EUR/USD  +0.5% at 1.2215


Oil rallies on demand outlook optimism

Oil trades on the front foot on Tuesday, although has eased back for session highs. The tussle continues between the re-opening optimism as the West continues to ease lockdown restrictions boosting demand outlook and rising covid cases in Asia. India has seen total covid cases top 25 million and domestic sales of fuel and gasoline by state refiners have declined 20%. These concerns are limiting the upside for oil.

US crude trades +0.3% at $66.40

Brent trades +0.4% at $69.50

Learn more about trading oil here.

The complete guide to trading oil markets


Looking ahead

13:30 Building permits & housing starts

21:30 API crude oil stocks


More from Indices

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.