US futures
Dow future 0.7% at 41130
S&P futures 1.1% at 5579
Nasdaq futures 1.3% at 19470
In Europe
FTSE 0.98% at 8620
Dax 1.7% at 22710
- US Government avoids a shutdown
- Michigan sentiment falls sharply to 57.9 from 64.7
- The Fed or Trump need to pivot to lift sentiment & stocks
- Oil rises but is flat across the week
Gains could be short lived
US stocks are rising on Friday, bouncing at the end of the week after the S&P 500 slipped into correction territory, joining the Nasdaq amid concerns over the ramping up of Trump's trade war and a potential economic slowdown.
The S&P 500 fell 1.4% yesterday and is in correction territory, which is defined as 10% from a recent peak. The Nasdaq entered correction last week. The Dow is on track for a second-straight weekly loss, posting its largest weekly decline since June 2022.
Today's sentiment has improved since the US government avoided a shutdown. Senate Democrat leader Chuck Schumer announced late yesterday that he would support the Republican stopgap funding bill to prevent the shutdown. This means the federal government avoided a shutdown that would have started at midnight on Friday.
Optimism surrounding the avoidance of a shutdown has overshadowed Michigan sentiment data, which fell more than expected. The index dropped to 57.9, below the 63.1 forecast and a significant downturn from the previous month's 64.7, which showed a deteriorating consumer outlook.
Data comes ahead of the Federal Reserve interest rate decision next week. The central bank is expected to leave rates on hold for a second meeting despite inflation cooling slightly to 2.8%. A pause will give the Fed the opportunity to see how tariffs impact the economy.
Still, rallies could well be short-lived until either Trump or the Fed pivots.
Corporate news
Tesla is rising amid reports that the EV manufacturer is set to introduce a more affordable version of its model Y in China, hoping to strengthen its position in the country's second-largest market.
NVIDIA rose 2.5%, Meta is rising 2%, and Broadcom is rising 2.4% as chip and tech stocks, which were hit hard in the recent sell-off, recovered.
DocuSign traded over 8% higher after the software company posted strong earnings. Subscription revenue for the quarter grew 9%, and professional services and other revenue increased 11%..
Nasdaq 100 forecast – technical analysis.
The Nasdaq has rebounded from yesterday's low of 19,115, recovering towards 19,600 again as it steadies after a steep decline. The RSI is still in oversold territory, so some consolidation could be on the cards. Buyers will look to extend gains towards 20k. However, it would take a rise above 20,300, the 200 SMA, to negate the near-term selloff. Sellers would need to break below 19,100 to create a lower low towards 19000.
FX markets – USD falls, EUR/USD rises
The USD is falling after the US Michigan sentiment fell more than expected, pointing to a deteriorating outlook. The Fed meeting is next week, and no rate cut is expected.
EUR/USD is rising, capitalising on a weaker USD, and is boosted by the prospect of Trump’s trade tariffs being potentially investigated as illegal by the WTO. Trump applied 25% trade tariffs to EU steel and aluminium. The EU retaliated with €26 billion worth of US imports to have tariffs applied. Trump threatened 200% tariffs on EU alcohol as the trade war ramped up.
GBP/USD is falling after weaker-than-expected UK GDP data. The economy unexpectedly shrank by -0.1 % MoM in January, down from 0.4% growth in December last year. The data comes after UK CPI rose to 3%, a 12-month high, pointing to a stagflation trend. The BoE meeting is next week, and policymakers are expected to leave rates on hold.
Oil rises and is flat across the week.
Oil prices are rising on Friday and set to close the week almost flat, following seven straight weekly losses.
Markets are weighing up the possible impact of U.S. President Trump's trade tariffs on the great outlook and the diminishing prospects of the end of the Ukraine war.
While Russian leader Putin said that he supports the US proposal for a ceasefire in Ukraine, he did, however, seek a number of conditions that appeared to rule out a quick end to fighting. As a result, I have reduced confidence in a ceasefire, at least in the near term. Any sanctions on Russian oil are unlikely to be lifted soon.
The International Energy Agency warned yesterday that global oil supply could exceed demand by around 600,000 barrels a day this year owing to expected global demand led by the US.
