US open: Stocks head higher ahead of consumer sentiment data

US futures head higher as investors remain upbeat despite yesterday's 5% YoY inflation print. US consumer sentiment data is in focus.

USA (2)

US futures

Dow futures +0.2% at 34573

S&P futures +0.2% at 4248

Nasdaq futures +0.04% at 13973

In Europe

FTSE +0.68% at 7133

Dax +0.6% at 15680

Euro Stoxx +0.7% at 4126

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Stocks see follow through buying post CPI

USA futures are trading mildly higher, hovering around record levels as investors shrug off rising prices.

US CPI data rose by more than expected in May, jumping to a 5% increase YoY. However, there was sufficient evidence of one off factors to support the Fed’s belief that the spike in inflation is transitory.

The Fed has been extremely consistent with its view that high inflation will pass. Given that stocks rose even though inflation shot higher, suggests that inflation fears are almost fully priced in for now. The market is comfortable that the Fed won’t move too soon to taper. The data does naturally bring next week’s Fed monetary policy announcement very much into focus.

All three major US indices finished higher on Thursday with the S&P breaking to a fresh record high.

The US labour market continuing its steady recovery also helped risk sentiment. US initial jobless claims fell to the lowest level since the pandemic.

Looking ahead US consumer confidence data will be under the spotlight. Expectations are for

Equities

Meme stocks are likely to be in focus again as the volatility continues. The likes of GameStop, Clover Health and AMC Entertainment all experienced heavy losses on Thursday after recent strong rallies.


Where next for the S&P 500?

The S&P 500 trades around its all time high of 4249.5 reached in the previous session. The trend remains in place and the RSI is supportive of further upside, whilst is remains out of overbought territory.  Buyers could target 4300 ahead of 4350. It would take a move below 4170 for the near term uptrend to be negated.

FX – USD edges higher, GBP falls as GDP misses forecast

The US Dollar is bounding higher, recouping losses from the previous session as the stronger than forecast CPI prints brings next weeks’ FOMC into focus.

GBP/USD trades lower versus after UK GDP data missed forecasts. GDP in April MoM rose 2.3% in a sign that the UK economy was gaining momentum as shops, hairdressers and inside hospitality reopened. This was up from 2.1% in March. However, it was just below the 2.4% growth forecast, which took the edge off sterling.

GBP/USD-0.2% at 1.4150

EUR/USD    -0.4% at 1.2124


Oil rallies 10% over three weeks

Oil prices are edging higher on Friday and are set to book gains of over 1% this week, marking the third straight week of gains. Oil has rallied over 10% over the past three weeks as optimism surrounding the demand outlook grows.

Traffic data has revealed that traffic levels in the US and Europe are returning to pre-pandemic levels in an encouraging sign.

Goldman Sachs expects oil prices to reach $80 the barrel thanks to the rising vaccination rates leading to higher mobility in the US and Europe.

Oil already trades at a 2 year high.

US crude trades +0.13% at $70.27

Brent trades +0.27% at $72.40

Learn more about trading oil here.

The complete guide to trading oil markets


Looking ahead

15:00 Michigan Consumer Sentiment

18:00 Baker Hughes Rig Count


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