Sat, May 08, 2021 @ 16:53 GMT
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US Open: Wall Street Heads Higher on Strong Earnings, Blowout Data

After a strong start to earnings season yesterday, earnings continue to impress. US retail sales & jobless claims smash forecasts lifting stocks higher.

US futures

  • Dow futures +0.4% at 33900
  • S&P futures +0.5% at 4150
  • Nasdaq futures +0.85% at 13934

In Europe

  • FTSE +0.6% at 6976
  • Dax +0.18% at 15241
  • Euro Stoxx +0.3% at 3990

US stocks charge higher

A strong start to the US earning season is set to send stocks higher on the open. Yesterday US banks reported very strong results which has been replicated by Bank of America today. Citigroup are set to report before the open.

US banks are considered proxies for the US economy, therefore strong earnings boost sentiment lifting the broader market.

Upbeat earnings from PepsiCo and Blackrock are also boosting futures.

Retail sales & jobless claims smash forecasts

In addition to earnings there has been plenty of impressive data to digest indicating that the US economy is firing up. With a strong vaccine rollout in addition to fiscal stimulus and lose monetary policy the recovery is picking up pace.

Retail sales rebounded impressively in March after a weak showing in February. Retail sales jumped 9.8% MoM, up firmly from a -2.2% decline in February and well ahead of forecasts of 5.9%. Improved weather conditions in addition to the disbursement of stimulus checks underpinned sales.

After a disappointing jobless claims report last week this week’s jobs data was a significant improvement.

Jobless claims dropped to a fresh post pandemic low of 576k, against 769k from the previous week and better than the 700k forecast.

Despite the blowout data, US treasury yields are heading lower suggesting investors have bought into the Fed’s low rates for longer mantra.

FX – US Dollar flat post data, AUD out-performs

The US Dollar is edging lower, tracing yields southwards despite strong data. The Fed’s soothing dovish calls appear to be sinking in.

Both the Pound and the Euro are trading in a muted fashion amid a lack of fresh catalysts.

German inflation data printed in line with forecasts rising 1.7% YoY in March, up from 1.4% in February. CPI rose 0.5% MoM in March, down from 0.7% as the ongoing lockdown restricts price increases.

AUD/USD is outperforming peers boosted by a strong jobs report. Australian job creation beat forecasts in March and unemployment declined to a one year low.

  • AUD/USD +0.44% at 0.7742
  • GBP/USD +0.02% at 1.3806
  • EUR/USD +0.1% at 1.1965

Oil consolidates after strong rally

After surging over 4% in the previous session, oil is consolidating around monthly highs.

Stronger than forecast inventory data combined with demand outlook upgrades by both the EIA and OPEC in the previous session was music to the ears of oil traders.

EIA crude oil stock revealed a 5.9 million barrel draw a significantly deeper draw than the 2.9 million barrels forecast.

Expectations of a strong economic recovery in the US and UK is helping the growth outlook picture. Meanwhile news that Germany is still aiming to have 20% of the population vaccinated by the end of April adds to the positive picture.

  • US crude trades -0.25% at $63.04
  • Brent trades -0.2% at $66.24
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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