US futures
- Dow futures +0.4% at 33730
- S&P futures +0.5% at 3955
- Nasdaq futures +0.5% at 11559
In Europe
- FTSE -0.07% at 7579
- Dax -0.02% at 14237
Jobless claims rise as expected
US stocks are set to open modestly higher as investors digest the latest jobless claims figures however the market mood remains cautious and fragile, given rising expectations of a US recession in 2023.
With inflation starting cool, investors are now turning their attention away from inflation, and Federal Reserve rate hikes and are instead focusing on the impact that raised rate could have on the health of the consumer and the broader U S economy heading into next year.
The lag time between rate hikes and the impact on the real economy is usually considered to be around six to nine months. With this in mind, the economic effect of the Fed’s rate hikes is expected to be felt in the first half of 2023. There have been plenty of warnings this week from CEOs of big Wall Street firms regarding the deteriorating economic outlook for the US.
US jobless claims data continues to hold up relatively well. Initial jobless claims rise to 230k, in line with analysts’ estimates and up slightly from 226k in the previous week.
Corporate news:
Tesla falls pre-market on a report that the EV maker plans to shorten sift hours at the Shanghai factory and has delayed recruiting new staff.
Broadcom and Costco will be in focus as the firms are set to report after the closing bell.
Where next for the Nasdaq?
The Nasdaq trades in a holding pattern, capped by 12100 on the upside and by the 50 ma at 11400 on the lower side. The RSI is neutral at 50, giving away few clues. A breakout trade could see sellers look for a move below the 50 sma to 11000 round number and 10600 the November low. Buyers could look for a rise over 12100 to expose the 100 & 200 sma at 12400. A rise above here brings 12900 the September high into focus.
FX markets – USD slips, EUR edges high
The USD is pulling a few ticks lower in relatively rangebound trading. The greenback with unaffected by jobless claims data and appears to be waiting for its next catalyst. With so much important data due next week and the Federal Reserve monetary policy meeting, few traders are looking to take on big positions right now.
EURUSD trades modestly higher, building on gains from the previous session and back above 1.05. the eurozone economic calendar is quiet attention is on ECB president Christine Lagarde who is due to speak ahead of the ECB meeting next week.
GBP/USD trades flat as a lack of fundamental drivers means the pound is lacking direction. There is no UK major economic data due today; in fact, the UK economic calendar has been quiet all week. Attention is now turning to the BoE rate decision next week.
- GBP/USD +0.06% at 1.2227
- EUR/USD +0.2% at 1.0530
Oil jumps on pipeline outage
Oil prices are rebounding from 2022 lows struck yesterday on the news that the Keystone oil pipeline has been closed for repairs owing to a leak. The pipeline transports 622k barrels per day.
Optimism surrounding the reopening of China is also helping to boost the demand outlook and lift the price of oil. On Wednesday, China announced large-scale changes to its zero COVID regime, the largest since the pandemic began.
Meanwhile, oil tankers continue to queue up off Turkey. These queues have been forming since the G7, and European Union price cap came into effect at the start of the week. These queues suggest the supply is being effective by these measures.
However, recession fears and the prospect of further rate hikes in the US are capping gains and the price of oil. A recession and the US, the world’s largest consumer of oil, could hurt the demand outlook
- WTI crude trades +3.4% at $75.00
- Brent trades at +2.3% at $79.25
Looking ahead
- N/A