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Opening Bell: U.S. Futures, Stocks Recover; Dollar Steadies

By Investing.com (Pinchas Cohen)Market OverviewFeb 11, 2021 07:44AM ET
www.investing.com/analysis/opening-bell-us-futures-stocks-recover-dollar-steadies-200560039
Opening Bell: U.S. Futures, Stocks Recover; Dollar Steadies
By Investing.com (Pinchas Cohen)   |  Feb 11, 2021 07:44AM ET
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  • Reflation trade unwinds following weak US CPI
  • Twitter nears all-time high
  • Oil takes a breather

Key Events

US contracts on the Dow, S&P, NASDAQ and Russell 2000 as well as global stocks crept higher on Thursday after data showed that US inflation was weaker than expected.

Gold is up for the fifth consecutive day while oil fell, ending its eight-day rally. 

Global Financial Affairs

The soft inflation read unwound the reflation trade on Wall Street on Wednesday. The tech heavy NASDAQ fell just 0.25%, while the Russell 2000 returned to laggard status, down 0.7%. Again, and more and more frequently, the technology sector is leading the recovery. All the major US indices hit all times highs during the session, but Dow was the only major US index to close at an all time high on Wednesday.

In Europe on Thursday, the STOXX 600 Index climbed, ahead of the US open after British postal and courier provider, Royal Mail (LON:RMG) said record parcel volume had boosted earnings. French headquartered, Credit Agricole (PA:CAGR) , the world’s largest cooperative financial institution, reported quarterly results that beat analyst forecasts. The bank also pledged to resume dividends after the ECB partially lifted a ban it had put in place in the early stages of the COVID-19 pandemic. 

Earlier this morning Asian markets closed in the green, except for Australia’s ASX 200, which fell 0.1% on tech losses that mirrored those on Wall Street on Wednesday. China’s Shanghai Composite was the leading performer in Asia, up 1.4% after President Joseph Biden talked with his Chinese counterpart, Xi Jinping for the first time since he became US president.

While there was no policy change, the leaders of the world’s two largest economies appeared to strike a conciliatory tone, according to Oanda’s Jeffrey Halley. Although this is an improvement from President Donald Trump’s trade war, American officials have suggested export restrictions on technology and tariffs will remain in place.

The Japanese and South Korean markets were closed due to holidays.

US trading was volatile yesterday, as the CPI data sparked a debate about the direction of inflation—we think it will just be a slower road to what seems imminent. 

Twitter (NYSE:TWTR) surged 6.7% after the company racked up its second $1 billion quarter.

TWTR Daily
TWTR Daily

The social media stock is nearing its all-time high, the level when the company went public in December 2013. 

The MSCI World Index had a wild day. It developed a spinning top which reflected indecision following its 6% rally since the beginning of the month and eight consecutive days of increases.

MSCI World Index Daily
MSCI World Index Daily

The fact that the potentially bearish candle stick is developing at the top of a broadening pattern intensifies the warning for potential upheaval.

The yield on the 10-year Treasury note rebounded from yesterday’s CPI-induced drop. 

10-year Treasuries Daily
10-year Treasuries Daily

The downward congested pattern, following a sharp upward move, paused at the resistance of the previous high. The chart is exhibiting all the telltale signs of a falling flag which is expected to repeat the preceding rise past the 1.20% level.

The dollar was little changed, following a four-day fall.

Dollar Index Daily
Dollar Index Daily

The greenback appears to have found support at yesterday’s closing, which rebounded well off its lows, right above a purist, conservative interpretation of a trend (dotted) line. Our choice for a trend line, the neckline of a H&S bottom, is being tested, along with the massive wedge since the March high.

Gold is up for the fifth straight day on dollar weakness, as well as in its capacity as an inflation hedge.

Gold Daily
Gold Daily

However, the yellow metal is struggling to climb over the top of its falling channel since its March high, after completing a rising flag, bearish after the preceding drop. We expect it to fall after completing a return move.

Bitcoin found its footing, climbing back above $45,000. The crytocurrency is back in the news after Tesla (NASDAQ:TSLA) announced it had purchased $1.5 billion in Bitcoin. Tesla founder and CEO, Elon Musk has also recently been encouraging the price of another cryptocurrency, Dogecoin

Oil fell, ending its longest advance in two years, which was driven by the prospect of economic recovery boosting the demand outlook.

Oil Daily
Oil Daily

Today’s price gapped down from Wednesday, which opened higher than Tuesday’s level. If today’s price falls below $58.20, it will have completed an Evening Star.

Up Ahead

  • The UK reports GDP on Friday
  • Also on Friday, the Bank of Russia’s policy decision is announced.

Market Moves

Stocks

Currencies

  • The Dollar Index was little changed at 90.40
  • The euro was little changed at $1.2124.
  • The British pound fell 0.1% to $1.3822.
  • The Japanese yen weakened 0.1% to 104.69 per dollar.

Bonds

  • The yield on 10-year Treasuries gained two basis points to 1.14%.
  • The yield on two-year Treasuries was unchanged at 0.11%.
  • Germany’s 10-year yield sank three basis points to -0.47%.
  • Britain’s 10-year yield sank three basis points to 0.458%.

Commodities

  • West Texas Intermediate crude declined 0.1%.
  • Gold was little changed at $1,842.05 an ounce
Opening Bell: U.S. Futures, Stocks Recover; Dollar Steadies
 

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Opening Bell: U.S. Futures, Stocks Recover; Dollar Steadies

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Comments (2)
Freeload Twentytwenty
Freeload Twentytwenty Feb 11, 2021 12:12PM ET
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I reckon that Fed would push yield for more and more . . I don't believe that Biden stimulus money would devalue dollars like what JPM and most investors want it to be . . . people need roofs over their heads and foods to survive day by day before they can finally find jobs . . . pushing investors to buy more bonds would help US economy better than keep bailing out wallstreet crooks. This is my 2 and a half cents b+S opinion.
Pinchas Cohen
Pinchas Cohen Feb 11, 2021 12:12PM ET
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QE - Socialism supporting Capitalism.
Abbas Khan
Abbas Khan Feb 11, 2021 8:24AM ET
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sir what expectations today dollar go up or down
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Mike Lake
Mike Lake Feb 11, 2021 8:24AM ET
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I'd like to know as well
Mike Lake
Mike Lake Feb 11, 2021 8:24AM ET
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I would like to know as well
Mike Lake
Mike Lake Feb 11, 2021 8:24AM ET
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Sorry for repeat comments, app didn't show that I commented
Pinchas Cohen
Pinchas Cohen Feb 11, 2021 8:24AM ET
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I don't know, but if I'd have to guess, I'd say more likely up.
Katie Hollis
Katie Hollis Feb 11, 2021 8:24AM ET
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why ! as we print more paper it's its supply goes up ... Yet the velocity of the dollar going down with upward unemployment at 6.7% and many small businesses closed
 
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