Stocks Rally on Peace Talk Hopes

Stocks are set to rally and oil drops amid growing optimism surrounding the latest Russia, Ukraine peace talks.

US futures

  • Dow futures +0.63% at 35183
  • S&P futures +0.66% at 4607
  • Nasdaq futures +0.8% at 15125

In Europe

  • FTSE +1.1% at 7566
  • Dax +1.5% at 14600
  • Euro Stoxx +1.2% at 3945

Stocks jump, oil drops

Stocks on Wall Street are set to open higher on Tuesday amid growing optimism surrounding the peace talks which are taking place in Turkey. These are the first peace talks to take place in almost here weeks.

The Russian invasion OF Ukraine has sent energy, oil and more broadly commodity prices surging higher, exasperating concerns over high inflation. As hopes rise of at least a cease-fire, commodity prices are falling and global indices are bounding higher.

Looking ahead attention will also shift to US data with the release of Consumer confidence, which is expected to fall to 107 in March, down from 110.5.

US JOLTS job openings data is expected to show that there are still over 11 million vacancies in the US, more than the 5 million unemployed Americans that there were in January. The data could highlight the tightness in the labor market ahead of Friday’s non-farm payroll report.

In corporate news:

Tesla continues to drive high in the pre-market on Tuesday, after reporting gains of 8% yesterday on plans for a stock split.

FedEx is trading up 2.7% premarket after announcing a change of leadership. Raj Subramaniam the Chief Operating Officer will take over as CEO from June 1.

Where next for the S&P500?

The S&P500 has extended its rebound from 4140 the mid-March low, recapturing the 50 and 100 sma. The move above 4600, in addition to the bullish RSI, are keeping the buyers optimistic of further gains. Buyers will look towards resistance at 4675 the mid-January high, ahead of 4750 the January 12th high. On the downside, support can be seen at the 100 sma at 4540 ahead of 4500 round number and 4410 the March 3 high.

FX markets USD drops, EUR surges

USD is trading sharply lower after booking solid gains in the previous session. The improved mood in the market is hurting demand for the safe haven USD.

The euro is outperforming its peers amid growing optimism surrounding the Russia, Ukraine peace talks. Aside from Ukraine, Europe has the most to gain from cooling tensions in Ukraine, and a cease-fire. German consumer confidence plunged in April to -15.5, down from -8.5 in March and well below the -12 forecast.

GBP/USD has rebounded after a softer start. The pair is rising thanks to USD weakness, recouping losses from the previous session when BoE’s Andrew Bailey warned of slowing economic growth and the ongoing inflation shock.

  • GBP/USD +0.31% at 1.3130
  • EUR/USD +0.9% at 1.1080

Oil falls further after 7% falls

Oil prices are falling after steep declines in the previous session. Oil prices tumbled on the news that Shanghai went into a partial 9-day lockdown raising fears over the demand outlook. Today those fears have calm and optimism surrounding peace talks is dragging on the price of oil. Any cease-fire could drag oil prices lower, even if sanctions are unlikely to be removed immediately.

API inventory data is due later and OPEC+ will meet on Thursday. The OPEC+ group are not expected to increase output more than the already agreed 400,000 barrels. OPEC+ doesn’t see the current rise in price as a result of a supply problem, instead, it is a geopolitical problem, which they are not positioned to resolve.

  • WTI crude trades -5.07% at $100.33
  • Brent trades 4.7.4% at $104.00

Looking ahead

  • 14:00 US JOLTS job openings
  • 14:00 US Consumer confidence
  • 20:30 API oil inventory data

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