Sun, Dec 05, 2021 @ 17:12 GMT
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Wall Street Steady with Earnings, Supply Chains in Focus

Wall Street is set for a steady start with earnings in focus and distracting from stagflation fears.

US futures

  • Dow futures -0.06% at 35442
  • S&P futures +0.01% at 4520
  • Nasdaq futures +0.07% at 15422

In Europe

  • FTSE -0.15% at 7213
  • Dax -0.17% at 15500
  • Euro Stoxx +0.03% at 4169

Supply chains issues reflected in results

US stocks are expected to hold steady on the open as investors digest earnings and the impact of supply chain disruptions on corporate America. The latest releases have helped to distract from stagflation fears but have diverted attention towards supply chain bottlenecks which look set to plague Q3 earnings. Whilst the banks impressed, this is one of the sectors least affected by supply chain bottlenecks. This week have seen more evidence of supply chain issues feeding through into results. For example, Proctor & Gamble yesterday and Accrol today.

Netflix is set to open lower despite beating subscriber numbers and on earnings. Thanks to the draw of “Squid Games” subscribers topped 4.4 million and EPS came in at $3.19 ahead of $2.56 forecast. However, EPS for the current quarter was $0.80 below forecasts and 32% lower YoY. The stock trades lower pre-market.

Looking ahead

Tesla is due to report after the close and show supply chain resilience. The EV makers is poised for a record quarter with deliveries already announced at 241,300.

The economic calendar is quiet. However, Fed speakers will be under the spotlight for further clues and insight as to when the Fed could move to tighten policy.

Where next for the Dow Jones?

The bullish RIS combined with the break above 4500 resistance is keeping the bulls optimistic of a move towards 4550 and fresh all time highs. Sellers could look for a move below the 50 sma at 4445 to negate the near term uptrend towards 4400.

FX – USD steady, GBP pares losses after CPI miss

The US Dollar is steadying after losses across the week. The greenback has been out of favour amid expectations that the Fed could be outpaced by other central banks with hiking interest rates.

GBP/USD has pared earlier losses after UK CPI came in slightly weaker than forecast at 3.1% in September, down from 3.3%. This is unlikely to deter the BoE from their more hawkish path given that inflation is set to rise further.

  • GBP/USD -0.13% at 1.3777
  • EUR/USD +0.4% at 1.1640

Oil eases as China considers taming coal market

Oil prices are coming under mild pressure after a higher than expected rise in crude stocks and as the Chinese government looks to tame the coal market.

The Chinese government is reportedly considering stepping up efforts to control coal prices which has spiraled higher, showing few signs of slowing. The China National Development and Reform Commission said it would bring coal prices back within a reasonable range. Any such move by Chinese authorities would likely to reverse the fuel switch to oil which has bolstered oil demand in recent weeks.

Data from API revealed that crude stock piles rose by 3.3 million barrels

EIA inventory data is due later today.

  • WTI crude trades -1.04% at $81.50
  • Brent trades -0.94% at $83.80

Looking ahead

  • 15:30 EIA Crude oil inventories
  • 16:00 Fed Evans Speaks
  • 18:00 Fed Quarles Speaks
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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