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Opening Bell: U.S. Futures, Stocks Slide On Energy And Inflation Worries; Oil Up

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewOct 11, 2021 07:33AM ET
www.investing.com/analysis/opening-bell-us-futures-stocks-slide-on-energy-and-inflation-worries-oil-up-200604627
Opening Bell: U.S. Futures, Stocks Slide On Energy And Inflation Worries; Oil Up
By Investing.com (Pinchas Cohen/Investing.com)   |  Oct 11, 2021 07:33AM ET
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  • Market sentiment contradictions 
  • Europe STOXX 600 Index developing H&S top
  • Oil trades over $80

Key Financials 

US stock futures on the Dow, S&P, NASDAQ and Russell 2000 as well as European equities were trading lower on Monday ahead of the US open, as persistent inflation worries were exacerbated by concerns that the global energy crunch will disrupt the economic recovery and that upcoming earnings results may show signs of a slowdown. 

Gold continued to slide.

Global Financial Affairs

In Europe, the STOXX 600 declined with travel and leisure, while commodity related stocks, including energy and mining, dug in their heels, mitigating losses. 

STOXX 600 Daily
STOXX 600 Daily

The pan-European benchmark is trading along a H&S top.

The apparent contradiction of the energy sector rising, while travel and leisure stocks are being sold off is unusual. Typically these sectors correlate, as energy is a vital component of travel. Another potential anomaly is the drop in the bank sector as the market narrative is blaming the current selloff on the inflation outlook.

Perhaps banks are climbing because along with higher inflation, there is an expectation of higher interest rates, the bread-and-butter of banks. 

Sure enough, yields on the 10-year Treasury note are increasing, signaling investors' expectations of rising rates.

10-year Treasuries Daily
10-year Treasuries Daily

Yields are repeating the previous jump out of an ascending triangle-bottom, after completing a falling flag, bullish after the preceding surge.

Another incongruity in the market is rising yields while stocks fall. Generally, the two are positively correlated, as investors rotate between risk and havens.

So where are investors putting their cash after selling stocks? In shorter-dated bonds. The 1-month Treasury yield was flat, while the 3-month Treasury yield fell, as investors increased demand.

The dollar rose along with the 10-year yield, even after Goldman Sachs reduced its outlook for US growth for this year and next, due to a slower than anticipated recovery in consumer spending.

Dollar Index Daily
Dollar Index Daily

The greenback has been developing a bullish pennant, whose completion will signal a resumption of the rally after completing a massive double-bottom.

Gold was lower for the third straight day. The price has been depressed for some time amid the strong dollar rally. However, technically, it can still turn around.

Gold Daily
Gold Daily

The yellow metal is developing the right shoulder of a small H&S bottom, itself making up the left shoulder of a larger H&S bottom.

Bitcoin jumped to its highest level since May.

Oil traded over $80 for the first time since Oct. 31, 2014, amid a global energy crisis, due to stagnant production during the coronavirus pandemic.

Up Ahead

  • US Jolts Job Openings are announced on Tuesday.
  • FOMC member RIchard Clarida is speaking on Tuesday.
  • On Wednesday, the US CPI figures are published.

Market Moves

Stocks

  • The STOXX 600 fell 0.5%
  • Futures on the S&P 500 fell 0.6%
  • Futures on the NASDAQ 100 fell 0.7%
  • Futures on the Dow Jones Industrial Average fell 0.5%

Currencies

Bonds

  • The yield on 10-year Treasuries advanced two basis points 1.612!
  • Germany’s 10-year rose two basis points to at -0.1195%
  • Britain’s 10-year yield advanced one basis point to 1.22%

Commodities

  • Brent crude surged 2.1%
  • WTI crude jumped 2.6%
  • Gold futures fell 0.2% 
Opening Bell: U.S. Futures, Stocks Slide On Energy And Inflation Worries; Oil Up
 

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Opening Bell: U.S. Futures, Stocks Slide On Energy And Inflation Worries; Oil Up

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Comments (8)
Donon Azur
Donon Azur Oct 12, 2021 7:37AM ET
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Hello Doctor, I kindly wanted to ask you what you think about these Stocks, and what TP do you see in the medium term? Thank you very much . -ChemoCentryx - Dutch Bros - Aehr Test Systems
Mehmet Dutlu
Mehmet Dutlu Oct 11, 2021 3:58PM ET
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I cannot agree that stocks and bond yields are positively correlated, but stocks and bond prices.
Theara horng
Theara horng Oct 11, 2021 9:44AM ET
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1927
Amie Inconnue
Amie Inconnue Oct 11, 2021 8:32AM ET
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Thank you, Pinchas! Markets seem even more short-term illogical than usual, but your technical analysis provides a clear-head perspective.
Pinchas Cohen
Pinchas Cohen Oct 11, 2021 8:32AM ET
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Thanks, Amie!
Hector Mora
Hector Mora Oct 11, 2021 8:32AM ET
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I think is a China Plan..... they had been planned this, 1. Covid , 2. Banned Cryptos...why????.... the world economy is going down, the companies started to look in to the Cryptos for ensure the Assets, so when that happen China will begins to buy companies and Cryptos
Tobby Olumba
Tobby Olumba Oct 11, 2021 8:03AM ET
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Thank you very much
Rubielyn Queruela
Rubielyn Queruela Oct 11, 2021 6:27AM ET
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OK chat allows you
Waqar Aslam
Waqar Aslam Oct 11, 2021 6:20AM ET
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Thanx
 
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