US open: Futures mixed as COVID lockdown fears return

US futures

Dow futures -0.7% at 35637

S&P futures -0.3% at 4691

Nasdaq futures +0.46% at 16560

In Europe

FTSE -0.66% at 7205

Dax -0.6% at 16125

Euro Stoxx -1% at 4340

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Rotation out of cyclicals as parts of Europe lockdown

US stocks are set for a mixed open with the Dow Jones leading the charge lower whilst the tech heavy Nasdaq outperforms as the COVID trade returns.

Cyclicals are trading under pressure amid a rotation back into tech as COVID lockdown concerns rise. Austria has re-imposed full lockdown restrictions as COVIDA cases jump. Germany also recorded a record number of cases.

With Europe the new epi-centre for COVID could transatlantic travel see restrictions again before its really even taken off? The travel sector is likely to trade under pressure.

Tumbling oil prices will also keep oil giants in the red.

The economic calendar is light. Attention will be on Fed speakers who could provide further clues over the possible timing of the first-rate hike by the Fed.

The House of Representatives is expected to vote on the Democrats Build Back Better $2 trillion bill. Much of the spending for the bill is expected to be covered by higher taxes on wealthier individuals and corporations. Although it is still expected to the Budget deficit.

Where next for the S&P500?

The S&P 500 struck a fresh all time high of 4726 and is now easing back from that record peak. The price has been supported by the 50 sma on the 4-hour chart across he past week and is set to test the level at 4684. The RSI is heading into bearish territory indicating further losses. Sellers will need to break below the 50 sma to expose the 100 sma at 4660. A move below 4630 could see sellers gain traction towards 4550.

 

FX – USD rebounds, EUR tumbles below $1.13

The USD is surging higher snapping a two-day losing streak. The greenback is capitalizing on risk off flows. Looking ahead attention will be back to the Fed and the possible timing of the first Fed rate hike. Fed Clarida and Waller are due to speak.

EUR/USD is tumbling lower extending a fall below 1.13 after Austria goes into lockdown and following dovish comments from ECB President Christine Lagarde despite German PPI surging to 18.2% in October, up from 14.2%.

 

Oil set for weekly decline

Oil prices are trading sharply lower paring gains from the previous session. Headwinds are building against oil. COVID cases are surging in Europe raising fears over the economic recovery. Austria announced its fourth lockdown and the picture in Germany is deteriorating rapidly.

Separately the US is attempting to gather support for a coordinated release of emergency reserves of oil in a bid to lower prices at the pumps.

Baker Hughes rig count data is due.

WTI crude trades -3.2% at $75.76

Brent trades -3.3% at $77.90

Learn more about trading oil here.

 

Looking ahead

14:30 Fed Clarida speaks

18:00 Baker Hughes