US open: Futures point lower, factory orders and earnings to come

US stocks point lower after solid start to May. Factory orders in focus after surprise fall in ISM manufacturing PMI. Earnings continue.

USA (2)

US futures

Dow futures -0.4% at 33990

S&P futures -0.5% at 4170

Nasdaq futures -0.8% at 13680

In Europe

FTSE -0.07% at 6978

Dax -1.5% at 15025

Euro Stoxx  -0.8% at 3965

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US stock point higher as the good news keeps rolling in

US futures are pointing lower after a strong start to May for both the S&P 500 and the Dow Jones. The Nasdaq closed lower in the previous session as the reopening trade boosts cyclicals whilst dragging on high growth stocks.

The Dow Jones and the S&P500 are both up around 11% so far this calendar year, boosted by reopening optimism and fiscal and monetary stimulus along with upbeat corporate earnings.

Earnings

Earnings will continue rolling in this week with 130 companies due to release results.

Pfizer will be particularly in focus after raising guidance for both revenue and earnings ahead of the opening bell by 15%! Other big names reporting include CVS Health, Under Armour and Match Group among others.

Sell in May?

Whilst stocks had a strong start to May, things are easing off today. The stocks market has had an exceptionally good run over the past six months, hovers around all time highs, so a topping out and some easing off over the coming months wouldn’t be unusual, months which usually see a more lacklustre performance.

Factory orders

Factory orders data will be in focus a day after US ISM manufacturing PMI unexpectedly dropped from multi-decade highs. The ISM orders subindex hit an all time high, reflecting pent up demand. However inventories hot an all-time low amid troubles of supply keeping up with demand. Supply chain disruptions need to be ironed out in order to address the imbalance. Meanwhile, prices surged to 13 year high reflecting desperation on the part of the buyer.

Where next for the Dow Jones?

The Dow pushed back over its two week descending trendline in the previous session to within a whisker of the all time high. However, it was unable to maintain the gains, with futures slipping back below the support today. The index still lacks conviction is either direction. Buyers will be looking for a more meaningful move over 3400 towards the all time high. Sellers might look for a move below 33700, a level which has capped losses over the past two weeks.

FX – US Dollar rebounds, AUD slumps post RBA

The US Dollar is rebounding after weakness on Monday following disappointing manufacturing PMI data. The reopening trade is lifting the greenback as investors question the Fed’s ability to keep monetary policy lose in the face of a roaring reopening economy.

GBP/USD shrugged off better than expected manufacturing activity data. The manufacturing PMI rose to 60.9 in April a 24 year high as new orders jumped for a third straight month.

AUD/USD is underperforming its peers despite the RBA upwardly revising growth forecasts. There was still no mentioning of tightening monetary policy until 2024.

GBP/USD  -0.15% at 1.3919

EUR/USD  0.26% at 1.2087

Oil surges high on improved demand prospects

Oil is shooting higher as investors focus on reopening optimism surrounding Europe and the US. As the European Commission is reportedly setting out plans to reopen the region to holiday makers and as the UK government prepares the green list for restarting travel, hope is growing that demand will rebound firmly. Over in the US more states are lifting most covid related restrictions allowing life to return to normal and fuel demand to rise.

Investors are starting to look past the covid crisis in India, even as new daily cases remain above 300,000 and the IPL cricket league is finally cancelled.

API stockpile data is due later today.

US crude trades +1.7% at $65.50

Brent trades +1.65% at $68.65

Learn more about trading oil here.

The complete guide to trading oil markets

Looking ahead

14:45 ISM NY Business Conditions April

19:00 US Factory Orders March

21:30 API Weekly Crude Oil Stocks


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