U.S. Opening Bell: Oil Higher; Gold Lower; Dollar Drifts

Key Events

US futures offered up a mixed picture this morning, with S&P 500 barely in the green after initially sliding, though the NASDAQ 100 and Dow looked a bit more robust. Stocks in Europe bounced back from a lower open with enough gusto to turn losses into gains. Shares of auto manufacturers popped, driving the STOXX Europe 600 into positive territory, after China announced it was considering a proposal to cut import duties on passenger cars.

Earlier, during the Asian session, most local indices pared declines, with both South Korea's KOSPI and Japan's TOPIX pushed higher by technology stocks. The South Korean index jumped 1.1 percent on optimism that the upcoming summit between the US and North Korea may yield economic benefits to the southern portion of the peninsula too. Japanese equities gained 0.25 percent, hitting a two-month high.

Chinese shares bucked the trend. They struggled to join the upbeat tech ride after a US probe into Huawei Technology (SZ:002502) exacerbated investor fears of an escalating trade war. The Shanghai Composite and Hong Kong's Hang Seng closed 1.35 percent and 0.9 percent lower respectively.

Global Financial Affairs

S&P 500 Daily Chart

Yesterday, the S&P 500 bounced back from an early loss, climbing 0.18 percent. Energy shares outperformed with a 0.8 percent leap. However, the biggest story was posted by Technology shares, which manage to rebound—albeit by a paltry 0.2 percent—from a slide that had pulled the broader market down. Technically, the SPX price formed a bullish hammer, right on top of the uptrend line since the February 2016 bottom, after bouncing off the 200 DMA.

FB Daily Chart

As had been predicted, Facebook's (NASDAQ:FB) user privacy scandal didn't stop the social media heavyweight from crushing earnings estimates. The tech giant reported a 62.5 percent YoY growth, with a $1.69 EPS against $1.35 forecast.

While it may be understandable that advertisers can't afford to drop the world's largest social media platform, what surprised is that even after the user privacy scandal Facebook is still trying to rectify, user growth met expectations; 70 million users were added in the first quarter, despite the data breech. It may be true that there'ss no such thing as bad publicity. Facebook also announced another stock buyback, to the tune of $9 billion.

Samsung (OTC:SSNLF) also posted record earnings on Wednesday, for a fourth straight quarter; net income rose to $10.7 billion. However, the company warned of softer phone demand, adding fuel to fears that chipmakers may have peaked.

On Thursday morning Barclays (LON:BARC) posted pre-tax profits of £1.7 billion for the first quarter, higher than the £1.4 billion forecast. Outstanding payments as a result of past misconduct cases led to the UK bank reporting a statutory loss. Shares in Barclays were up 0.3 percent on the day.

The UK's Domino’s Pizza Group (LON:DOM) saw sales increase by 18.3 percent in the first quarter of 2018. Shares in the pizza delivery company were up by 3.5 per cent following the earnings release on Thursday.

Cash flow concerns for Royal Dutch Shell (LON:RDSa) saw the firm drop 2.1 percent despite posting better than expected Q1 results on Thursday. Shell reported its highest profits for three years with an increase of 42 percent in Q1.

On Thursday fin-tech firm Revolut became the UK’s first digital-only banking firm to achieve unicorn status after reporting a valuation of $1.7 billion.

10-Year Chart

After closing above 3 percent for the first time in four years yesterday, yields on US 10-year Treasurys retreated, though they held above that key level. Meanwhile, the dollar trimmed an earlier decline and advanced.

DXY Daily Chart

In the short term, the general perception of rising interest rates and softer European growth is boosting the greenback. However, if one looks at the bigger picture, the global de-dollarization of central bank reserves threatens to severely squeeze demand for the US currency.

At present, the euro is the preferred reserve currency for central banks, as an alternative to the USD. As well, the yuan may also become a strong contestant if China's efforts in that direction, including the recent launch of yuan-denominated oil contracts, succeed.

The euro extended a decline ahead of the European Central Bank rate decision, as German 10-year bund yields tumbled more than 3 percent—far more than the 0.25 percent decline seen in their US counterparts.

WTI crude pushed further above $68 a barrel after French President Emmanuel Macron said he believes US President Donald Trump will withdraw from the Iran nuclear deal, casting a cloud over Middle East geopolitics.

Up Ahead

• UK GDP from the first quarter will be released at 08:30 GMT on Friday, the US GDP data is also due Friday.
• Amazon (NASDAQ:AMZN) releases its corporate results after the close today, for the quarter ending March, with a $1.22 EPS forecast, versus $1.48 for the same quarter last year.
• After today's ECB rate decision, investors will watching for any sign during Mario Draghi's press conference that officials are preparing a shift in stimulus plans.
• The Bank of Japan announces its latest policy decision on Friday and releases updated economic projections.
• The leaders of North and South Korea meet on Friday.

• A non-binding vote on whether the UK should remain in a customs union with the European Union following Brexit will take place in the House of Commons on Thursday afternoon.

• The Royal Bank of Scotland (LON:RBS) is due to release its Q1 trading update on Friday.

Market Moves

Stocks

• The UK’s FTSE 100 rebounded from morning lows to edge up 0.1 percent.
• The STOXX Europe 600 jumped 0.2 percent.
• Futures on the S&P 500 climbed less than 0.05 percent.
• The MSCI All-Country World Index gained less than 0.05 percent, the first advance in more than a week.
• Germany’s DAX dropped 0.3 percent, the largest climb in more than a week.
• The MSCI Emerging Market Index jumped 0.1 percent, the first advance in a week.
• The MSCI Asia Pacific Index slid less than 0.05 percent to the lowest level in almost three weeks.

Currencies

• The British pound rebounded and was up 0.2 percent to 1.3962 after dipping to its weakest for more than six weeks in early trade.
• The Dollar Index climbed less than 0.05 percent to the highest since January 15, extending its upside breakout of a bullish ascending triangle, which may turn into a bottom.
• The euro gained less than 0.05 percent to $1.2167.
• The Japanese yen advanced 0.1 percent to 109.31 per dollar, the first advance in more than a week.

Bonds

• Britain’s 10-year yield decreased one basis point to 1.525 percent.

• The yield on 10-year Treasuries decreased two basis points to 3.01 percent, the first retreat in more than a week and the biggest tumble in more than two weeks.
• Germany’s 10-year yield declined two basis points to 0.62 percent, the largest decrease in more than a week.

Commodities

• WTI crude increased 0.1 percent to $68.14 a barrel.
• Copper declined 0.4 percent to $3.15 a pound.
• Gold increased 0.1 percent to $1,324.99 an ounce.