US open: Stocks mixed in cautious trade ahead of tomorrow's CPI

US futures

Dow futures -0.03% at 33854

S&P futures +0.1% at 4090

Nasdaq futures +0.38% at 12350

In Europe

FTSE +0.46% at 7908

Dax +0.5% at 153270 

IMF sees reason to be upbeat

After losses last week, US stocks are set to start a crunch week in a mixed but muted fashion, with investors positioning themselves ahead of a busy week on the economic calendar.  Key releases include US inflation retail sales and jobless claims data which will shed more light on where the Fed’s future path of rate hikes could be heading.

Expectations surrounding the Fed’s terminal rate have increased in recent weeks, climbing above 5% after a slew of hawkish commentary from fed speakers last week, including Minneapolis Fed president Neel Kashkari who saw the terminal rate rising to 5.4%.

Upbeat comments from the IMF Managing director Kristina Georgieva are helping to boost the market mood. The IMF chief said that she believes the markets have a good reason to be more upbeat, with optimism rising that US economy could avoid a recession and amid China's reopening post covid. However, she also said that she saw central banks continuing to raise interest rates this year, but she does not expect this to continue way into 2024.

There is no high-impacting US data to be released today. US earnings are also set to slow this week, although there are a scattering of big names still to report, including Marriott International, Kraft Heinz and Coca-Kola later in the week,

Corporate news

Meta is rising pre-market on rumours that the social media giant has delayed setting team budgets as it prepares for another round of layoffs. This comes after Meta slashed 11,000 jobs last year in an attempt to rein in costs.

Where next for the Dow Jones?

The Dow Jones has formed a series of higher lows and higher highs, creating a triangle formation. After a brief fall to 33500, the price has rebounded, which along with and longer lower wick on the candle, suggests that demand was limited at the lower level. The RSI is also pushing above 50, keeping buyers hopeful of further upside. Buyers will look for a rise above 34180 the falling trendline resistance and 34250, the February high, to create a higher high. Sellers could look for a break below 33500 to create a lower low.

FX markets – USD rises, yen falls

The USD is rising as bond yields rally ahead of tomorrow's US inflation report. The move higher in yields comes after US fed speakers sounded notably hawkish last week. Philadelphia Fed president Patrick Harker is the latest Fed policymaker to push back against rate cuts later this year.

EUR/USD is holding steady against the stronger U.S. dollar after encouraging updates from the European Commission. The EC upwardly revised the eurozone growth forecast and lowered the inflation forecast as well. The EC now forecasts GDP growth of 0.9% in 2023, up from 0.3% previously. Inflation is expected to be 5.6% in 2023 before falling to 2.5% in 2024.

USD/JPY is rising as the yen comes under pressure amid speculation that the former Bank of Japan board member Kazuo Ueda is set to become the next governor when Kuroda steps down. in an interview on Friday Ueda said that he considered the current Bank of Japan monetary policy appropriate, pouring cold water on expectations of a less dovish Bank of Japan this year.

EUR/USD -0.01% at 1.0676

USD/JPY +0.95% at 130.80

Oil falls after gains last week

Oil prices are falling as investors focus on near-term demand concerns, overshadowing news on Friday that Russia will cut oil production by 500k bp. Oil rallied over 8% last week.

Investors are jittery ahead of tomorrow’s US inflation report, which could force the Fed to hike interest rates for longer, hurting the growth outlook and the oil demand outlook.

Near-term demand concerns were also raised on Friday after Chinese inflation came in below expectations suggesting that the ramping up of the country’s economy after Covid, could take some time.

The stronger US dollar is also weighing on oil prices as well as the resumption of oil exports from Turkey’s Ceyhan terminal over the weekend.

WTI crude trades -0.8% at $79.26

Brent trades at -1% at $85.87 

Looking ahead

N/A