US open Stocks rise as jobless claims hit 8 month high
Dow futures +0.18% at 31840
S&P futures +0.1% at 3960
Nasdaq futures +0.5% at 12460
FTSE -0.17% at 7250
Dax -0.2% at 12970
Euro Stoxx +0.4% at 3599
Jobless claims rise to 251k
US stocks are heading higher adding to solid gains in the previous session and as investors digest the latest earnings.
The three main indices closed higher yesterday lifted by gains in technology stocks after upbeat earnings from Netflix and other firms in the sector boosted optimism regarding the outlook.
The upbeat numbers overshadowed news of more job cuts from Ford and tech firms, such as Google freezing hiring.
Data this week has been in short supply but earnings, a weaker USD and falling commodity prices have helped boost sentiment. The S&P500 is trading 2.4% higher across the week.
Today, saw the release of jobless claims which rose to 251k, the highest level so far this year and above 244k recorded in the previous week. Weakness is slowly starting to creep into the labour market. Given the high number of vacancies, those coming out of jobs can quickly find re-employment. However, as the economic slowdown continues, this could become less likely.
With weakness creeping into the labour market the window that the Fed can be hiking rates aggressively could be slowing. This is reflected in the falling USD.
In corporate news:
Earnings continued to come through after the close with Tesla beating estimates, reporting a smaller than expected fall in quarterly profit thanks to price increases.
Meanwhile, United Airlines fell after posting a lower-than-expected quarterly profit.
Where next for the S&P500?
FX markets – USD falls, EUR climbs
USD is falling at the start of the week as the market continued paring hawkish Fed bets and amid ongoing recession concerns and as jobless claims rise to an 8 month high.
EURUSD is powering higher after the ECB finally joined the rate hiking club. Arriving late and with inflation at a record high policymakers felt the need to join with a bang. In the first rate hike in over a decade, the central bank lifted rates by 50 basis points as opposed to the 25 basis points that they initially committed to in June. 50 basis point hikes have become the new norm and anything less than that would have sent the euro lower adding to inflationary pressures. The bank also softened its forward guidance which suggests that the bank sees the time frame within which rates can be hiked is starting to close. This move is unlikely to tame surging prices but could help to restore the ECB’s tapered reputation.
GBP/USD +0.06% at 1.1930
EUR/USD +0.9% at 1.0120
Oil falls by $5
Oil prices are falling heavily as Nord Stream 1 gas flow comes back online after 10 days of maintenance work. Fears had been growing that Russia would use gas as a political weapon and keep gas offline.
Also weighing on demand was a jump in gasoline stockpiles, which raised concerns over demand. US gasoline inventories rose by 3.5 million barrels last week, well ahead of forecasts. The fact that gasoline demand is looking shaky in peak driving season is unnerving the market.
WTI crude trades -4.5% at $95.20
Brent trades -4% at $99.00