Tue, Jan 31, 2023 @ 22:43 GMT
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Stocks Steady, Twitter, Banks in Focus

US stocks are set for a muted start. Twitter and US banks are in focus after Elon Musk’s hostile bid and as earning seasons steps up a gear.

US futures

  • Dow futures -0.01 % at 34580
  • S&P futures -0.22% at 4437
  • Nasdaq futures -0.18% at 14188

In Europe

  • FTSE +0.24% at 7594
  • Dax +0.55% at 14146
  • Euro Stoxx +0.5% at 3850

Retail sales and jobless claims are a mixed bag

US stocks are heading for a muted start after strong gains in the previous session and as investors digest a series of macros economic and corporate releases.

Stocks jumped yesterday as yields eased lower despite PPI inflation rising to a record high. Hawkish Fed fears turned a corner, lifting stocks, particularly high growth tech, and the Nasdaq closed 2% higher.

Today’s data was a mixed bag, providing little real direction. Jobless claims rose slightly to 185k, up from the more than 50-year low last week. The job market remains tight, with initial claims still well below 200k.

Separately retail sales rose in March but did so by less than forecast, rising 0.5%, against a 0.6% increase expected. However, the February reading was upwardly revised to 0.8%, from -1.2%. Overall, this means that there were net gains across the two months. Solid retail sales suggest that consumers are still out spending despite the rising inflation.

In corporate news:

Twitter trades higher after Elon Musk made a hostile bid to take the social media platform private. In a first and final offer of $54.20 per share, an 18% premium to yesterday’s close, the company is valued at $43 billion. The board will now decide what to do.

US banks beat expectations in the first quarter, which will bring some sense of reassurance to investors after a disappointing start from bellwether JP Morgan

Where next for the Nasdaq?

The Nasdaq faced rejection at the 100 sma, falling lower to support at 13850. The share price has attempted a bounce higher but has run into resistance at the 50 sma. The RSI is giving away few clues at just below neutral. In this case a break-out trade could be best. Buyers could look for a move over the 50 sma, to bring 14650 into play, a level which has offered support and resistance on several occasions across the past 6 months, before exposing the 100 sma at just shy of 15000. Sellers could look for a move below 13850 to bring 13500 into play and 12950 the 2022 low.

FX markets USD rises, EUR falls post ECB

USD is edging a few pips higher, after losses in the previous session.

EURUSD falls after the ECB keep rates on hold as expected, but disappoints with a lack of hawkish adjustments in the statement. Whether ECB Governor Christine Lagarde look to balance this out with a more hawkish press conference remains to be seen

  • GBP/USD +0.03% at 1.3011
  • EUR/USD -0.14% at 1.0874

Oil slips

Oil prices rose after easing after two days of strong gains. Oil prices jumped 10% across Tuesday and Wednesday and today oil bulls are pausing for breath as the marker weighs up mixed signals.

Supply remains tight and is expected to get tighter as the IEA warns that 3 million barrels of oil per day are likely to be absent from the market in May, this is more than the 1.5 million bpd in April. With no signs of the Russia and Ukraine reaching a diplomatic solution to the war, oil supply concerns aren’t likely to ease.

Separately a huge jump in crude stockpiles is adding pressure to the price. Inventories rose by 9 million, as reserves were released. However, gasoline stockpiles fell by more than forecast.

Whilst there are several factors at play here, the outlook remains titled to the upside.

  • WTI crude trades -1.27% at $101.98
  • Brent trades -1.5% at $106.14

Looking ahead

  • 15:00 Michigan consumer confidence
  • 18:00 Baker Hughes rig count
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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