US open: Stocks surge as rate bets cool

USA (2)

US futures

Dow futures +0.8% at 31200

S&P futures +0.95% at 3882

Nasdaq futures +1.13% at 11987

In Europe

FTSE +1.5% at 7140

Dax +2% at 12597

Euro Stoxx +1.55% at 3418

 

Stocks rise

US stocks are pointing to a firmer start adding to gains in the previous session, as investors continue to weigh up the prospect of more aggressive monetary policy and the impact that this could have on growth.

Recession fears have picked up again this week with the US 2-year and 10-year treasury yields inverting, a traditional recession warning bell. Of the 28 inversions of the 2/10 yield curve over the past century, 22 have resulted in a recession.

Recession fears have helped pull commodities sharply however over the past month, with the Bloomberg commodities index down 20% since the June peak. Weak commodity prices help ease inflation fears.

However, commodities are on the rise again on news that China is considering a $200 billion stimulus programmme. The stimulus would be aimed at helping it shake off its ongoing real estate crisis and revive consumer demand after COVID lockdowns. Copper, also another indicator for the health of the global economy is on the rise, heading for its best day in 9 years.

On the data front, a rise is US jobless claims to 235k, around a 6-month high, has been broadly brushed off by the market and comes following JOLTS vacancies data yesterday which showed that there are still nearly 2 vacancies for every unemployed worker.

Fed speakers Waller and Bullard are due to speak later.

In corporate news:

GameStop rises 9% on the open after announcing a stock split. The board approved a 4 for 1 split which would make the stock more affordable for retail investors.

FX markets – USD falls, EUR edges lower

USD is edging lower after several sessions of strong gains. The upbeat mood in the market is helping draw safe-haven flows out of the greenback.

EURUSD is edging higher but remains broadly steady after a steep selloff in the previous few sessions. Concerns over energy security and the ECB arriving late to the rate hiking party have dragged on the common currently

GBP/USD is rising despite UK prime minister Boris Johnson resigning.  The move paves the way for a leadership battle,, with issues such as Brexit and the cost of living crisis in focus.

GBP/USD +0.4% at 1.1950

EUR/USD +0.05% at 1.02

Oil rises after steep falls

Oil prices jumped after steep falls earlier in the week. News of a huge stimulus drive in China has helped lift commodities across the board.

Oil prices have fallen across the week as recession fears hurt the demand outlook and prices fell lower back below $100.

Looking ahead, the EIA crude oil inventory data is due to be released.

WTI crude trades +4% at $103.07

Brent trades +4% at $103.10

 

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