Sat, Oct 23, 2021 @ 23:49 GMT
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Wall Street Mixed as JPM Impresses, CPI Rises

US stocks look to open mixed after JMP earnings top estimates but CPI unexpectedly rises.

US futures

  • Dow futures -0.1% at 34320
  • S&P futures -0.04% at 4346
  • Nasdaq futures +0.08% at 14682

In Europe

  • FTSE -0.06% at 7128
  • Dax +0.6% at 15235
  • Euro Stoxx 0+0.5% at 4075

CPI hits 5.4%

US stocks are set to open mixed after a higher-than-expected inflation print competes with impressive numbers from JP Morgan as earning season kicks off.

JP Morgan posted a larger than expected jump in quarterly profits thanks to the release of more loan reserves and thanks to a global boom in deal making.

JP Morgan’s earnings were unable to sufficiently distract investors from inflation data. Consumer prices rose above forecasts at 5.4% matching the largest annual gain in over a decade.

A perfect storm of shipping challenges, material shortages, rising commodity prices and higher wages have driven input costs steeply higher.

This CPI report has pretty much sealed the deal for the Fed to start tapering assets, particularly as the driving forces behind the rise in inflation show few signs of easing.

Attention will now shift towards the minutes from the September FOMC meeting. The minutes are expected to reflect the more hawkish tone of the policy announcement.

Where next for the S&P500?

The S&P has been trending lower since early September, it trades below its 20 & 50 sma on the daily chart & multi-week falling trendline. The 20 sma crossed below the 50 sma in a bearish signal. The index found support at 4270 and has since been moving higher. A move above the 20 sma and falling trendline at 4380 could signal further upside towards the 50 sma at 4445. Meanwhile bears might look for a move below 4300 to open the door to 4270 again.

FX – USD drifts, GBP rises after solid jobs data

The US Dollar has picked up off session lows but remains in the red following US CPI data. The higher than forecast reading boosts the chances of the Fed raising interest rates

GBPUSD trades higher thanks to US Dollar weakness and despite mixed data. UK economic growth picked up in August to 0.4%, from -0.1%. However, this was weaker than the 0.5% growth expected. Manufacturing production fell by more than forecast to 4.1%, down from 6% as supply chain disruptions bite.

  • GBPUSD +0.1% at 1.3603
  • EURUSD +0.1% at 1.1545

Oil set for 5th straight day of gains

Oil prices are falling lower after 4 straight days on gains. Concerns are growing that oil demand will slow as economies suffer from elevated inflation and supply chain issues. The IMF trimmed its global growth forecast citing inflationary concerns & supply chain disruptions holding back the recovery from the pandemic.

OPEC also revised downwards its 2021 oil demand forecast to 5.8 million bpd, from 5.96 million.

Despite these concerns oil remains supported by tight supply, the ongoing energy crisis and reopening play.

  • WTI crude trades -0.8% at $79.43
  • Brent trades -0.8% at $82.38

Looking ahead

  • 19:00 FOMC minutes
  • 21:30 Fed Bainard
  • 21:30 API Crude oil inventories
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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