US open: Stocks rise as risk appetite picks up

US futures

Dow futures +0.96% at 35558

S&P futures +1.3% at 4650

Nasdaq futures +1.8% at 16128

In Europe

FTSE +1.01% at 7317

Dax +1.9% at 15700

Euro Stoxx +0.8% at 4110

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Stocks extend the rebound

US stocks are looking to extend gains from the previous session as Omicron fears continue to ease. In the wake of steep losses last week, the market mood has been notably more upbeat this week after several health experts across the globe, including the US’s Dr Anthony Fauci, have said Omicron symptoms appear milder, so far. Whilst it is still early days the encouraging news sparked bargain hunters into action. Who would want to miss out on the possibility that a milder variant could accelerate natural immunity to COVID?

Adding to the upbeat mood in the market, the PBOC loosened monetary policy, whilst the RBA said that they didn’t expect Omicron to derail the economic recovery. The RBA kept monetary policy unchanged.

The tech heavy Nasdaq is set to outperform its peers, making up lost ground. Separately another strong session from energy stocks could be on the cards as oil jumps 8% in two days!

In corporate news:

Intel trades over 7% higher pre-market after announcing plans to take its self-driving unit, Mobileye public, although this most likely won’t be until the middle of next year. The valuation is expected to be in the region of $50 billion.

In corporate news:

Kohls trades up 4% pre-market after reports that an activist investor is prompting the department store to sell or separate from its faster growing e-commerce business.

Where next for the S&P500?

The S&P500 is extending its rebound from 4493 hit on Friday. The recovery has extended above the falling trendline and the 50 sma and is currently testing the 100 sma on the four-hour chart. The RSI is supportive of further upside whilst it remains out of overbought territory. A clear break above the 100 sma at 4650 open the door to 4671 the late November high. Failure to push above the 100sma could see the 50 sma tested at 4606. A move below here could negate the near term uptrend.

FX – USD rises, EUR falls after weak German ZEW current conditions

The USD is heading higher, extending gains for a second straight session, tracing yields higher. Easing Omicron concerns, mean that the Fed’s next move is back in focus.

EUR/USD trades lower after a busy day for economic releases. Eurozone GBP for Q3 saw an upward revision to 3.9% annually, up from 3.7%. QoQ economic growth remained at 2.2%. Separately German XEW economic sentiment beat forecasts, easing to 29,9 from 31.7, suggesting hope for thew outlook. However, the current situation component dropped to -7.4, well down from 12.5 in November and below forecasts of 5. The data suggests that German growth is slowing sharply in Q4.

Oil jumps 8% in two days

Oil prices are charging higher for a second straight session, building on gains of 5% from the previous session. Oil prices are on the rise as concerns ease over the impact of Omicron on the oil demand outlook.

Health experts from several countries including the US and Japan have said that Omicron symptoms tends to be mild. These comments have calmed fears of more lockdowns.

Separately the stalling of indirect talks between the US and Iran means that Iranian oil is unlikely to be hitting the market anytime soon, boosting oil prices further.

API crude oil stockpile data is due later today.

WTI crude trades +3% at $68.30

Brent trades +2.85% at $71.90

Learn more about trading oil here.

 

Looking ahead

15:00 Canada Ivey PMI

21:30 API Crude Oil Stockpiles