Stocks edge higher on cautious optimism, oil falls and the Japanese yen tumbles.
- Dow futures +0.23% at 34930
- S&P futures +0.3% at 4554
- Nasdaq futures +0.3% at 14800
- FTSE +0.2% at 7532
- Dax +1.5% at 14600
- Euro Stoxx +1.2% at 3945
Are more sanctions coming?
US futures are edging modestly higher in a quiet start in what is set to be a busy week with both US inflation data and jobs figures under the spotlight.
Wall Street is building on gains from last week, with the S&P now trading above where it was Russia invaded Ukraine and despite the Fed sounding increasingly more hawkish.
Russia and Ukraine are to meet for further peace talks in Turkey this week. Ukraine has said that it is willing to accept neutrality. Meanwhile, the Biden administration continues to backtrack on Biden’s comments, insisting that he is not calling for a regime change.
In addition to the latest Ukraine crisis developments, investors will continue to mull over the strength of the US economy and rising inflation. While there is no data due to be released today, there is plenty of data this week with both inflation numbers by way of the PCE index and labor market data from the non-farm payroll.
Falling oil prices is also helping sentiment as Shanghai goes into lockdown.
In corporate news:
Apple is falling pre-market after reports that it will cut iPhone and AirPod production on an expected slowdown in demand, due to the Ukraine crisis and surging inflation.
Tesla is also under the spotlight after the EV market said that it would ask its shareholders to vote at its annual meeting to enable a stock split.
Where next for the Dow Jones?
The Dow Jones extended its rebound from 13350, the early March low, and traded in a holding pattern last week, capped on the upside by the 200 sma at 35000 and on the lower side by the 50 sma at 34300. The RSI is keeping the buyers hopeful of further upside. A move over the 200 sma at 35000 would be significant and could open the door to resistance at 35900 the February high. On the flip side, a fall below 34300, the 50 sma, and 34100, the March 3 low, could negate the near-term upside and send the bears towards 34580, a level which has offered support on several occasions across the past six months .
FX markets USD rises, JPY tumbles
USD is rising, building on gains from last week as treasury yields continue to rise. Expectations of a more hawkish Fed have continued to build after a series of Fed speakers last week.
The Japanese yen trades sharply lower across the board after the BoJ said it would buy an unlimited amount of treasuries at 0.25% to defend the yield curve. The dovish move has seen USDJPY rise to a six-year high above 124.00.
GBP/USD trades lower after BoE’s Andrew Bailey said that the central bank is starting to see evidence of an economic slowdown. He also warned that the inflation shock would still get worse.
- GBP/USD -0.42% at 1.3150
- EUR/USD +0.07% at 1.0990
Oil falls on rising demand fears.
Oil prices are falling steeply on Monday as COVID cases continue to rise in China, the largest importer of oil in the world, and Shanghai goes into lockdown. Shanghai is home to around 25 million people, who have been told to stay at home. Public transport has stopped, and factories have been temporarily closed amid China’s zero COVID policy. Fears over the demand outlook drag on oil.
Despite today’s significant sell-off, the oil prices are still set to rise over 14% across March as the Russian war fuels supply fears. While the US and the UK have applied a ban on Russian oil, the EU, which relies heavily on Russian oil and energy, remains divided over such a move. This helped oil prices fall lower and the start of the week.
- WTI crude trades -4.5% at $108.00
- Brent trades -4.3% at $112.74