US open: Stocks point to a mixed open, jobless claims disappoint

US futures point to a mixed start with tech supported by the prospect of watered down tax rises. US jobless claims unexpectedly rise.

USA (2)

US futures

Dow  futures -0.04% at 33401

S&P futures +0.3% at 4090

Nasdaq futures +0.8% at 13721

In Europe

FTSE +0.4% at 6914

Dax -0.06% at 15178

Euro Stoxx  +0.3% at 3968

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US futures are pointing to a stronger start with the tech heavy Nasdaq set to outperform. Stocks are being boosted by confirmation of a supportive Fed and by the prospect of Biden’s tax cuts being watered down.

The minutes from the Fed’s March meeting saw policy markets acknowledge progress in the US economic recovery, but also reiterate that the recovery would take some time. The Fed showed no intentions of tightening policy sooner than anticipated. The prospect of an ultra-loose monetary policy for longer has boosted stocks whilst pulling on the US.

Also supporting the market are reports that Biden’s corporate tax plans are less ambitious than feared with 15% minimum tax proposed by Janet Yellen, applying to companies with over $2 billion annual income, a much higher threshold than the $100 million initially proposed.

As a result of Biden’s softer tax plans, big tech are on the rise. The sector stood to be hard hit by ambitious tax plans so any suggestions that the tax hit could be lower is good news.

US jobless claims unexpectedly jump

Jobless claim unexpectedly rose last week to 744k, up from 728k previously and significantly worse than the 680k expected.

The data come following a blowout non-farm payroll report and upbeat JOLTS job opening numbers earlier in the week.

Federal Reserve Chair Jerome Powell is expected to speak later but he is not expected to add anything new to the minutes released yesterday.

Where next for the Nasdaq?

The Nasdaq trades above its 50 & 100 EMA on the 4 hour chart. The rally has gained momentum since the start the April, however the rally appears to be running out of steam. The RSI is also in overbought territory so a slight pull back could be on the cards before an attempt is made back towards the all time high of 13900 and then on to 14000. Any slip lower could meet support at 13500 this week's low and 13400 the 50 EMA. It would take a move below here to negate the upward trend.

FX – EUR rises, gains capped by AstraZeneca vaccine concerns

The US Dollar is moving southwards after the minutes from the FOMC March meeting reiterated a dovish stance and after weaker than forecast non-farm payrolls.

EUR/USD – there were few surprises from the ECB minutes as policy makers reassured that they will maintain an accommodative stance for as long as necessary. The central bank added that it saw no risk of the economy overheating. EUR/USD has had a strong rally so far this week, although gains in the pair are being capped by concerns surrounding the AstraZeneca covid vaccine in Europe. Regulators have drawn between rare blood clots and the vaccine; a covid vaccine that Europe’s already sluggish vaccine programme depends heavily on

GBP/USD +0.2% at 1.3765

EUR/USD trades +0.13% at 1.1881

Oil lower after disappointing EIA data

Oil is trending lower, snapping a two-day winning run, despite the upbeat market mood and a weaker US Dollar. A disappointing EIA crude oil inventory report is dragging on the price along with the ongoing covid concerns.

The EIA report released on Wednesday revealed a larger than expected 3.5 million barrel draw in inventories. However, gasoline stocks saw a much larger than expected rise with a build of 4.044 million.

Concerns over rising covid numbers in key developing markets such as Brazil and India are weighing on the future demand outlook. The ongoing lockdown in Europe is also a headwind.  

US crude trades -0.4% at $59.50

Brent trades -0.25% at $62.87

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Looking ahead

16:00 Fed Bullard Speech

17:00 Fed Chair Jerome Powell Speech

18:00 Fed Kashkari Speech

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