US open: Tech stocks rebound ahead of Powell's testimony

US futures

Dow futures +0.06% at 36086

S&P futures +0.1% at 4677

Nasdaq futures +0.18% at 15643

In Europe

FTSE +0.38% at 7485

Dax +0.85% at 15938

Euro Stoxx +0.95% at 4280

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High growth back in favour

US stocks are set to open higher with the Nasdaq set to lead Wall Street higher as investors await Fed Chair Powell’s testimony later in the session. The Senate Confirmation hearing for Powell’s second term could see the head of the US central bank provide more information on potential rate hikes.

The pre-released statement how not provided any new information on policy. However, the Q&A session could provide more insight. Powell is expected to be grilled over the Fed’s plans to prevent high inflation from becoming entrenched.

Goldman Sachs have said that they expect 4 rate hikes from the Fed this year. JP Morgan have said the same.

Tech stocks are set to outperform after a tough start to 2022. Tech has been out of favour amid a rotation into tech as treasury yields surged. However, Fed fears are easing today, 10 year treasury yields are falling and bargain hunters appear to be out taking advantage of the recent tumble in high growth shares, lifting the Nasdaq.

In corporate news:

Tesla trades higher pre-market after reporting 70,847 China made vehicle sales in December. This was the highest monthly rate since it started manufacturing in Shanghai in 2019.

Rivian trades 4.1% lower pre-market after reports that its head of operations Rod Copes left the EV maker last month.

Where next for the Nasdaq?

The Nasdaq is moving higher from the 15165 low howver is stalling around the 100 sma. With the RSI favouring further downside, the move higher could be seen as a selling opportunity. Failure to break cleanly above the 100 sma could see sellers push the price back towards 15165. A move above the 50 sma at 16168 could negate the near term bear trend. 

FX markets steady ahead of Powell

The USD is holding steady as the FX markets remain calm ahead of Fed Chair Powell’s testimony before Congress later today. The prepared statement offers no new fresh policy insight. Any sense of a more hawkish position could boost the USD.

EUR/USD trades quietly around 1.1340 even after the new head of the Bundesbank Joachin Nagel is sworn in and changed the German central bank’s stance on inflation, saying that it was not entirely temporary. This was is stark comparison to ECB President Christine Lagarde who has stuck with the transitory script, down playing inflation risks.

GBP/USD +0.04% at 1.3578

EUR/USD +0.04% at 1.1330

Oil rises towards $80 as demand remains solid

Oil prices are on the rise boosted by a combination of tight supply and optimism that the spread of Omicron won’t derail the global economic recovery and oil demand.

Developed economies are not imposing tighter lockdown restrictions to cope with Omicron, keeping the demand outlook steady. Simultaneously OPEC+ countries are failing to reach their demand output following the increase. In other words, they are running below the allowed increase, mainly due to lack of capacity, whilst demand remains buoyant.

API crude oil stock pile data is due to be released.

WTI crude trades +1.5% at $78.84

Brent trades +1.3% at $81.67

Learn more about trading oil here.

Looking ahead

15:00 Fed Chair Powell speech

21:30 API weekly crude oil stockpiles