US futures hit fresh record highs amid surging risk sentiment as the markets reopen after President's Day. Cyclical stocks such as banks and the energy sector are set for strong gains amid growing hope of a strong vaccine led economic recovery & more US fiscal stimulus. Metals extend gains on super cycle talk and Bitcoin hits $50,000.
Dow futures trade +0.6% at 31450
S&P futures +0.5% at 3918
Nasdaq futures +0.3% at 13715
FTSE flat at 6756
Dax +0.05% at 14114
Euro Stoxx +0.05% at 3736
Economic recovery on vaccine optimism & stimulus hopes
After a sluggish start the US covid vaccine programme has ramped up with 52.9 million vaccines administered so far. Expectations are growing of a strong vaccine led global economic recovery.
Meanwhile Biden’s $1.9 trillion stimulus package continues to make its way through Congress adding to the upbeat mood.
Metals & miners support super-cycle talk
Metal prices are driving higher on expectations of buoyant global demand and a slow supply side response. Platinum trades at a fresh 7 year high whilst copper futures are also trading at their highest level since 2012.
Surging commodity prices have recently boosted speculation of a new commodities super cycle. Dividend announcements from BHP & Glencore further supported speculation.
Stocks point higher
Under priced value stocks are in focus as investors rotate out of growth stocks into those stocks more closely associated to the performance of the economy. Oil stocks
Earnings from CVS, Zoetis and Ecolab will be in focus. Results from Occidental Petroleum have rescheduled their earnings report owing to the weather disruptions.
According to Goldman Sachs earnings per share for SP500 companies have actually risen in Q4. It’s a rise of just 2% yoy, but still a rise and all the more impressive given that expectations were for an 11% decline heading towards earnings season.
Bitcoin hits $50,000
Bitcoin struck a fresh all time high cracking through $50,000 amid growing interest from major financial firms including BNY Mellon and Mastercard, adding to the asset’s legitimacy. Speculation is also growing that asset managers will increasing allocate at least a fraction of their assets under management to cryptocurrencies.
Eurozone Q4 GDP falls less than estimated
Eurozone Q4 GDP fell less than initially estimated contracting -0.6% QoQ vs -0.7% initially estimated. YoY GDP -5%, a slight improvement on -5.1% fall from the preliminary reading.
Employment also rose by 0.3% in Q4, after a 1% QoQ rise in Q3. However, employment is still 2% lower than the same period a year earlier.
German investor morale unexpectedly surged in February to 71.2, up from 61.8 in January indicating a strong level of confidence that the German economy will be back on the growth track quickly.
Strong data propelled EUR/USD over 1.2150.
Market analyst Fiona Cincotta looks at the price action of EUR/USD here.
Demand for the safe haven US Dollar remains weak on Tuesday with the US Dollar Index (DXY) falling to a three week low. Meanwhile demand for riskier currencies rises amid rising optimism over a vaccine le global economic recovery.
GBP/USD trades +0.15% at 1.3925
EUR/USD trades +0.3% at 1.2165
Oil pauses for breath after hitting fresh 13 month high
Oil bulls are pausing for breath after hitting $60.85 in the previous session a level last seen pre-pandemic. Growing optimism surrounding a vaccine led global economic recovery is boosting the demand outlook. Meanwhile rising tensions in the Middle East and a cold front shutting some refineries in Texas are underpinning the price.
US crude trades +0.3% at $59.84
Brent trades -0.06% at $63.24
Market analyst Fiona Cincotta looks at the price action in WTI crude oil here.
US Empire State Manufacturing Index (FEB)