U.S. Opening Bell: Markets Optimistic Ahead Of Jobs Data; Oil Rebounds

Futures on the Dow, S&P, NASDAQ and Russell 2000 were higher ahead of the US session on Thursday as markets keenly await upcoming US economic data which investors expect will show the recovery is ongoing. 

Surging commodity prices compounded strong bank earnings in fanning the inflation debate.

Global Financial Affairs/h2

Today’s rally, even if cautious, expresses the steadfast optimism of traders. It is reflected at the micro level by strong corporate earnings, and at the macro level by key economic indicators.

All four major US contracts advanced as traders awaited the latest jobless claims data today. The debate continues raging in markets on whether inflation will damage the economic recovery.

Substantial US fiscal aid has helped boost commodity prices, along with the US economy overall, and this has raised concerns that the Fed will have to begin stepping back from its unprecedented support with the stock market is at all-time highs. 

However, Boston Federal Reserve President Eric Rosengren thinks the conditions are not right for the Fed to start tapering its QE program, but that may change by the end of the year.

In Europe, the STOXX 600 index fell slightly despite strong results from banks and automakers. Banks outperformed due to rising rates and automakers were higher as consumers seem to be willing to spend their money on cars they believe they will be able to drive as the economy reopens.

Volkswagen (DE:VOWG) increased its earnings outlook after a strong quarter. While investors cheered a smashing report from Societe Generale (PA:SOGN), pushing the stock to its highest level since the beginning of March—almost reaching its pre-pandemic level. The French bank reported its global markets division recorded its highest revenues since 2015, a sharp rebound, as revenues at the division were nearly wiped out last year. Given that banks perform well in a rising interest rate environment, and investors are forward-looking, banks’ success—to put it mildly—may add angst to any preexisting inflation worries. 

The UK’s FTSE 100 rose 0.3%, despite today's Scottish parliamentary elections. If the Scottish National Party wins a clear majority, it will demand a second vote on Scottish independence, which may weigh on the pound sterling. GBP is already falling ahead of the latest policy decision from the BoE. 

The EUR/GBP is developing a potential H&S bottom.

In yesterday’s New York session, US stocks were dented by an ongoing technology selloff, which stole the thunder from solid corporate earnings and good economic reports.

Yields on the 10-year Treasury note struggled, pushing back against a fourth straight decline.

They seem to have found resistance by a double top, which may broaden into a larger H&S top.

The dollar fell for a second day but still within a possible small H&S bottom.

The slide could confirm the (red) uptrend line, potentially ending the decline that followed the rising wedge and a return to advances, as the aftermath of a massive falling wedge since the 2020 peak.

Gold advanced to its highest level since Feb. 24.

The yellow metal is struggling to move past a falling flag, to retest the top of a falling channel.

Bitcoin was little changed.

The forces of supply and demand in the cryptocurrency are even, amid the development of a H&S top that follows a rising wedge, aiming at the $30,000 levels.

Oil rebounded back above $65 and it seems to be benefiting from a positive economic outlook. 

Up ahead /h2

• The April US employment report is released on Friday 
• On Friday, Canada publishes its change in employment figures.

Market Moves/h2

Stocks/h3

• Futures on the S&P 500 Index advanced 0.3%.
• The FTSE 100 Index increased 0.1%.
• The MSCI Asia Pacific Index jumped 0.6%.
• The MSCI Emerging Markets Index increased 0.2%.

Currencies/h3

• The Dollar Index declined 0.1%.
• The British pound was little changed at $1.3906.
• The euro jumped 0.1% to $1.2023.
• The onshore yuan weakened 0.1% to 6.479 per dollar.
• The Japanese yen weakened 0.1% to 109.30 per dollar.

Bonds/h3

• The yield on 10-year Treasuries increased one basis point to 1.57%.
• The yield on 2-year Treasuries gained less than one basis point to 0.15%.
• Britain’s 10-year yield sank two basis points to 0.802%.
• Germany’s 10-year yield fell one basis point to -0.24%.
• Japan’s 10-year yield decreased one basis point to 0.091%.

Commodities/h3

• West Texas Intermediate crude was little changed at $65.62 a barrel.
• Brent crude increased 0.1% to $69.05 a barrel.
• Gold strengthened 0.3% to $1,793.05 an ounce.