Opening Bell: Equities Draw Breath, Yields Advance Ahead Of U.S. Economic Data

Key Events

Futures on the Dow Jones, S&P 500, NASDAQ and Russell 2000 wavered in trading on Thursday ahead of today's key inflation figures, while European stocks wobbled on mixed earnings results.

Yields on US Treasuries started to advance again. 

Global Financial Affairs

Futures on the Dow Jones were almost flat and contracts on the NASDAQ, S&P and Russell 2000 were in negative territory, giving back gains from Wednesday's broad rally led by the technology sector. 

NASDAQ 100 futures were the worst performing contract after yesterday's 5% rebound in Facebook-parent Meta Platforms (NASDAQ:FB) drove the underlying index higher to close up over 2%. FB shares benefited from dip buying as they had erased almost a third of their value following disappointing earnings last week.

Meta Platforms completed a Morning Star—a three-day bullish reversal. While we expect a rally, we see it being short-term as price-gapping provides resistance.

A robust 5% rally in the STOXX 600 ended 15 minutes into the European session on mixed signals from corporate results. Siemens (DE:SIEGn) surged almost 7% after the European industrial manufacturer posted better-than-anticipated corporate results along with AstraZeneca (LON:AZN) and Societe Generale (PA:SOGN).

Meanwhile, shares in Unilever (AS:ULVR) declined after management warned that higher inflation would dent margins for as much as the next two years. And German-based delivery firm, Delivery Hero (DE:DHER) plunged over 16% to its lowest since December 2019 due to disappointing guidance.

US stocks rallied yesterday after the 10-year Treasury yield retreated from its highest level since July 2019, but it has recovered today.

Yields have provided a top-side breakout of a bullish symmetrical triangle, itself a flight of a much larger such pattern. Therefore, we expect rates to break the 2.00% barrier and continue toward 3.00% which will weigh on stocks. Higher rates make equity valuations look stretched as well as offering an attractive investment alternative for investors. 

The dollar was little changed.

The greenback churned between opposing market forces as it is caught between the rising channel and the potentially bearish, rising flag within a short-term falling channel—as prices are stuck between the 50 and 100 DMAs.

Gold declined, ending a four-day rally.

The yellow metal neared the top of a triangle, whose trendline reverts to August 2020 and is therefore expected to be stronger than the triangle bottom, whose trendline has only been since March 2021.

Building on a four-day rally, Bitcoin moved higher. 

The cryptocurrency found resistance by the neckline of an H&S top. That reversal pattern's implied target is below $29K, and if it follows through, it will complete a much larger double-top, whose implied target is multi-year lows. 

Oil moved higher despite reports that talks between the US and Iran on a nuclear deal are entering a critical stage. 

Up Ahead

• On Friday UK GDP figures are published. 
• The US Federal Reserve releases its Monetary Policy Report on Friday. 
• On Friday Michigan Consumer Sentiment figures are printed. 

Market Moves

Stocks

• The STOXX 600 was little changed
• Futures on the S&P 500 fell 0.1%
• Futures on the NASDAQ 100 fell 0.3%
• Futures on the Dow Jones Industrial Average rose 0.1%
• The MSCI Asia Pacific Index rose 0.6%
• The MSCI Emerging Markets Index rose 0.7%

Currencies

• The Dollar Index was little changed
• The euro rose 0.1% to $1.1435
• The Japanese yen rose 0.3% to 115.82 per dollar
• The offshore yuan was little changed at 6.3608 per dollar
• The British pound rose 0.2% to $1.3563

Bonds

• The yield on 10-year Treasuries was little changed at 1.94%
• Germany's 10-year yield advanced three basis points to 0.24%
• Britain's 10-year yield rose three basis points to 1.46%

Commodities

• WTI crude advanced 0.95% to $90.54
• Brent crude rose 0.8% to $92.32 a barrel
• Spot gold fell slightly to $1,832.97 an ounce