US open: Stocks move higher, jobless claims hit 8-week high

US futures

Dow futures +0.26% at 36396

S&P futures +0.2% at 4735

Nasdaq futures +0.3% at 15953

In Europe

FTSE +0.28% at 7561

Dax +0.39% at 16057

Euro Stoxx +0.25% at 4328

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Inflation, jobless claims and rate hike in focus

US stocks are set to open higher after booking mild gains in the previous session. The debate over inflation and interest rates continues after CPI rose to 7% in the previous session. Today PPI inflation rose to 9.7% in December, up from 9.6% but short of the 9.,8% forecast.

Jobless claims unexpectedly rose to 230k, up from 207k, marking the highest number of initial claims since mid-November. The increase comes as COVID cases surged. However, the rate of initial jobless claims is still reflective of a rapidly tightening labour market. Let’s not forget that there were still 10.6 million job vacancies in the US at the end of November.

The broad expectation is that the Fed will hike 4 times across the coming year starting in March. The data this week has been consistent with this expectation so no additional Fed fears have shown up in the market

In corporate news:

Boeing is trading 2.5% higher pre-market on reports that the troubled 737 MAX jet could begin service in China as soon as this month.

Taiwan Semiconductor Manufacturing rose 4.4% after the chip maker reported a record quarterly profit amid surging demand.

Where next for the Nasdaq?

The Nasdaq continues to extend its rebound from 15165 reached earlier in the week. The move above above the 100 sma is keeping buyers hopeful. However, the RSI is in neutral territory. Buyers might look for a move over 50 sma at 16150 in order to look towards 16760. Sellers could watch for a move below the 100 sma. It would take a move below 15165 for sellers to gain tracton.

 

FX markets USD falls, GBP rises

The USD is falling for a third straight session. DXY has dropped 1.2% in 3 days even as CPI hits a 40 year high. PPI rises less than expected and jobless claims rise, hurting demand for the greenback.

GBP/USD has risen above 1.37 as senior cabinet ministers have rallied around Boris Johnson, who has so far managed to cling onto power

 

 

Oil eases but remains around its two month high

Oil prices are edging mildly lower but stays close to two-month highs after booking solid gains over the past two sessions. The weaker USD is helping the greenback priced commodity in addition to the improved demand outlook, even as Omicron cases rise. Any impact from Omicron is expected to be short lived.

EIA inventory data revealed that crude oil supplies fell by 4.6 million barrels, significantly more than the 1.6 million decline forecast. This came after the API report reported a 1.1 million barrel decline.

However, the EIA also reported an 8 million barrel increase in gasoline inventory, most likely owing to the Omicron impact.

WTI crude trades -0.3% at $81.73

Brent trades -0.12% at $84.11

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Looking ahead

15:00 Fed Brainard speech