U.S. Opening Bell: Futures Mixed, Europe Flat, Big Earnings Week Ahead; Oil Jumps

Key Events

US contracts for the Dow Jones, S&P, NASDAQ and Russell 2000 were mixed to start Monday trade and European shares were flat ahead of a torrent of Wall Street mega cap earnings reports in the coming week as inflation worries, COVID risks and China real estate jitters continued to weigh on markets.

Oil prices escalated to multi-year highs while the Turkish lira dropped to a record low amid heightened diplomatic tensions.

Global Financial Affairs

Futures were all green in early Monday trade, though contracts on the Russell have reversed lower at time of writing even as contracts on the NASDAQ 100 pushed higher, leading major US index futures. It's noteworthy that each represents opposing outlooks. Domestic small caps stand for an economic recovery, whereas big tech rallies suggest an economic contraction.

European sectors were mixed, leaving the Stoxx Europe 600 Index flat. Basic resources and energy shares rallied, tracking extended gains amid oil and metal outperformance. Conversely, telecoms and consumer stocks underperformed.

Earlier, Asian shares were mixed. Despite risks via Sino property debt woes and geopolitics that may limit foreign investment, China's Shanghai Composite gained 0.75%, outperforming the region.

On the flip side, Japan's Nikkei 225 fell on weak earnings from semi conductor maker Tokyo Electron (T:8035), as chip stocks took the biggest blows following poor earnings results on Friday from such US tech firms as Snap and Intel. 

Treasury yields, including for the 10-year note, rebounded, trimming some of Friday's drop, after Fed Chair Jay Powell grew concerned about inflation, warning it could stay higher for longer after earlier downplaying rising costs as temporary. Powell clarified that the Fed will start paring bond purchases, emphasizing that the central bank is staying put for now on rate hikes.

The dollar fell for a second session and a third week, but seemed to have found support at time of writing.

The greenback rebounded off the neckline of a massive double bottom, which started last November.

Turkey's lira dropped to a new all-time low after President Erdogan ordered the expulsion of ten ambassadors, including from the US, Germany, and France after those countries demanded the release of a Turkish businessman and philanthropist who has been in jail since 2016 without a trial.

Gold climbed for the second day, mirroring the dollar's decline.

We're still concerned, however, that this advance is temporary, as it nears the potential neckline of a huge H&S continuation pattern since the March low.

Bitcoin is rebounding, trading again above $62,000.

Beware of a potential reversal though, as the digital token may be developing a short-term H&S top. However, if the cryptocurrency blows out the pattern, it could jump much higher, extending its all-time high.

Oil climbed for the second day, nearing $85 an ounce after Saudi Arabia said that OPEC+ should stay on its cautious posture regarding managing global supply due to demand risks still posed by COVID-19.

Technically, the WTI price created a rising, breakaway gap, a bullish move that demonstrates there are only buyers at these prices.

Up Ahead

• US CB Consumer Confidence is reported on Tuesday
• Australia releases CPI on Wednesday local time
• US Wholesale Inventories and Durable Goods orders also print on Wednesday
• The Bank of Japan's next monetary policy decision takes place on Thursday
• The ECB's next rate decision followed by President Christine Lagarde's press conference also occurs on Thursday
• US GDP, initial jobless claims are also printed on Thursday

Market Moves

Stocks

• The FTSE 100 was up 0.4%
• The Stoxx Europe 600 was flat
• Futures on the S&P 500 were little changed
• Futures on the NASDAQ 100 rose 0.2%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index was little changed

Currencies

• The British pound rose 0.2% to $1.3783
• The Dollar Index fell 0.1%
• The euro rose 0.2% to $1.1662
• The Japanese yen fell 0.1% to 113.64 per dollar
• The offshore yuan rose 0.1% to 6.3762 per dollar
• The Turkish lira weakened 1.5% to 9.7524 per dollar

Bonds

• Britain's 10-year yield increased two basis points to 1.16%
• The yield on 10-year Treasuries advanced three basis points to 1.66%
• Germany's 10-year yield rose two basis points to -0.09%

Commodities

• Brent crude rose 0.7% to $86.15 a barrel
• Spot gold rose 0.4% to $1,798.96 an ounce