US open: Stocks rise as Russia's stance softens, Fed in focus

US futures

Dow futures +1.09% at 33924

S&P futures +1.2% at 4315

Nasdaq futures +1.71% at 13670

In Europe

FTSE +1.4% at 7273

Dax +3.1% at 14353

Euro Stoxx  +3.7% at 3875

Truce hopes build, China brings more stimulus

The US is set to bound higher on the open, adding to solid gains in the previous session as investors grow increasingly optimistic of a diplomatic solution in Ukraine. China pledges more support to the economy and ahead of the Federal Reserve rate decision.

The Kremlin appears to be adopting a softer stance towards Ukraine as the two countries try to find a compromise. Russia would now accept neutrality from Ukraine while allowing it to have its own army, marking a significant shift in position and boosting the chances of a truce being reached.

Chinese ADRs are set for a surge higher on the open as the Chinese central bank and government issued a joint pledge to support the economy and financial markets. The news overshadowed concerns over rising covid cases and fears of delisting in the US.

On the data front, US retail sales rose by a less than expected 0.3%, down from an upwardly revised 4.9% in January and missing the 0.4% forecast.

Fed rate decision

The Fed is expected to raise interest rates by 25 basis points later in the session. This would be the first rate hike since 2018. The market has 100% prices in the hike, so the question is, what comes next – will the Fed prioritise inflation or growth? Any signs that the Fed is adopting a slightly more dovish stance in light of the impact of the Ukraine crisis and Western sanctions, the USD could come under pressure, and stocks could have further to run.

Where next for the Nasdaq?

The Nasdaq is extending its rebound from the 12950 low it reached yesterday. It has retaken its 50 sma and is testing the 100 sma. The RSI is supportive of more gains. A move over the 100 sma exposes 13880 the confluence of the falling trendline resistance and 11^th March high. Beyond here, buyers will look for 14000 round number before taking aim at 14400, the March high. On the downside, a move below the 50 SMA at 13470 could negate the near-term uptrend, with support seen at 12950, the 2022 low.

FX markets USD falls, EUR rises, AUD shines

USD is heading lower, tracing yields lower ahead of the Fed rate decision. Falling oil prices are helping to ease inflation fears.

EURUSD is rising amid continued optimism surrounding the Russia, Ukraine cease-fire talks. Progress towards a truce appears to be gathering momentum, boosting the EUR.

AUDUSD the Aussie is rising, outperforming peers, boosted by the improving market mood and on hopes of further stimulus in China. Vice Premier Liu He affirmed that Beijing would bring in more measures to support the Chinese economy.

GBP/USD  +0.4% at 1.3058

EUR/USD  +0.48% at 1.0993

Oil steadies below $100

Oil prices fell 11% over just two days, closing below $100 per barrel for the first time this month. Today prices are holding steady. Hopes of a truce between Russia and Ukraine are helping to ease supply fears.

The price also came under pressure after the International Energy Agency’s monthly report, which showed that it had cut its oil demand forecast for 2022.

Concerns over demand in China are rising as COVID cases spread quickly and 45 million inhabitants are under lockdown restrictions.

The API oil inventory report showed that oil stocks rose by 3.8 million barrels. EIA data is due shortly.

WTI crude trades +0.2% at $95.26

Brent trades +0.2% at $98.70

Looking ahead

15:30 EIA oil inventory

18:00 Fed interest rate decision