US open: Stocks drop as retail sales slump, earnings season kicks off
Fiona Cincotta January 14, 2022 9:03 AM
Stocks are set to extend losses after retail sales unexpectedly drop 1.9% MoM. Earning season kicks off with banks painting a mixed picture.
US futures
Dow futures -0.83% at 35824
S&P futures -0.92% at 4619
Nasdaq futures +-1.03% at 15344
In Europe
FTSE -0.55% at 7524
Dax -0.98% at 15853
Euro Stoxx -1.25% at 4262
Learn more about trading indices
Banks report mixed earnings
US stocks are extending losses for a second straight session as retail sales unexpectedly slump and attention turns to earnings. Concerns over earnings, add to worries that the US economy won’t withstand the Fed’s aggressive path to tightening monetary policy.
High growth tech stocks were the biggest losers on Thursday after Fed officials signaled that they were ready to combat high inflation head on in 2022. The Nasdaq is set to underperform again today with the Nasdaq futures falling more steeply than the Dow Jones or S&P 500.
On the data front US retail sales unexpectedly tumbled -1.9% MoM in December, well below 0% expected. Surging Omicron cases in December kept shoppers at home.
Looking ahead, Michigan consumer confidence is due later in the session. Expectations are for sentiment to tick slightly lower to 70 in January down from 70.6.
In corporate news:
Attention will now turn to earnings as banks kick off the Q4 earnings season. JP Morgan and Citigroup are falling pre-market after reporting disappointing numbers. Wells Fargo, however, is on the rise after higher-than-expected revenue and earnings
Away from the banks investors will be focusing on how companies have performed amid surging inflation and pandemic restrictions.
Where next for the Dow Jones?
The Dow Jones is extending losses from resistance at 36500. The price is testing the 50 sma and the multi-week rising trend line at 35800. A fall below here and 35630 could see sellers gain traction towards 34950 the key 200 sma support. It would take a move above 36500 for the dominate near term trend to change to bullish and buyers target 36955 the all time high.
FX markets USD steadies, GBP rises on GDP beat
The USD is steadying after booking steep losses across the week. The greenback has picked up off session lows but continues to hover around 2-month lows. With the Fed set to hike rates 3 to 4 times across the year, investors are still selling out of the USD suggesting that they are unsure whether the US economy can withstand such aggressive tightening.
GBP/USD trades higher after the UK economy finally returns to its pre-pandemic size. UK GDP rose 0.9% MoM in December, ahead of 0.4% forecast. This was also firmly up from 0.1% in October. Omicron is expected to dent growth in December, but the impact is expected to be short-lived and contained leaving the BoE to hike rates at the next meeting.
GBP/USD +0.20% at 1.3727
EUR/USD -0.04% at 1.1448
Oil set for over 3.5% weekly gain
Oil prices are showing resilience despite China agreeing with the US to release oil reserves from its strategic stockpiles, around the beginning of next month. The move is party of a plan coordinated by the US at the end of last year with other oil consumers in a bid to lower oil prices.
The amount release by China will depend on the price of oil at the time. Should oil prices be above $85 China will release a larger amount than if the price is around $75.
Separately data revealed that China’s annual crude oil imports averaged 10.26 million barrels per day, this was down 5.4% compared to the previous year.
The Baker Hughes rig count is due to be release later today.
WTI crude trades +0.7% at $82.11
Brent trades +0.8% at $84.70
Learn more about trading oil here.
Looking ahead
14:15 Industrial production
15:00 Michigan confidence
16:00 Fed Williams speaks
18:00 Baker Hughes rig count
How to trade with City Index
Follow these easy steps to start trading with City Index today:
- Open a City Index account, or log-in if you’re already a customer.
- Search for the market you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels
- Place the trade.
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.
