U.S. Opening Bell: Futures Mixed, Europe Slides Ahead Of Key Inflation Data

Key Financials

Having rallied during the Asian session, futures on the NASDAQ retreated, along with European shares on Thursday ahead of the US open. The Dow, S&P and Russell 2000 futures were all trading slightly higher.

Treasuries and the dollar gained ahead of the key US inflation report, which may help traders gauge the Fed’s next move.

Global Financial Affairs

US contracts were topping out on the hourly charts, which can be clearly seen for the NASDAQ futures.

NASDAQ contracts completed an upsloping H&S top.

Energy and automakers pulled European shares lower, ending a winning streak, ahead of the European Central Bank meeting and press conference today when the bank will outline its outlook on the currently economic recovery and inflation. The STOXX 600 Index declined 0.1% on Wednesday, capping a four day long rally.

The pan-European benchmark opened higher before retreating. Investors are clearly in a wait-and-see mode. From a technical perspective, the stock is squeezed between Tuesday’s shooting star—on the highest volume in over a week—and the uptrend line’s support. Meanwhile, volume has been diminishing as the price moved higher.

A 2.2% hike in shares of BT (LON:BT) helped push the FTSE 100 into positive territory. US broadband provider Altice (NYSE:ATUS) announced that it has bought a 12.1% stake in the UK's largest broadband and mobile operator.

Sterling fell 0.3% following a three-day selloff for a total loss of 0.7%. A weaker pound renders UK exports cheaper for overseas buyers which is important for the UK as exports slumped after Brexit in January and are slowly recovering.

The UK currency appears to be forming a small rounding top, which could be part of a larger, double top.

French digital music company Believe (PA:BLV), which helps to distribute music via deals with platforms, such as, Spotify (NYSE:SPOT) and Apple (NASDAQ:AAPL), dropped 10.2% in its stock market debut.

All Asian benchmarks except for Hong Kong’s Hang Seng (-0.1%) climbed, amid talks between the US and China.

In their first phone meeting since President Joseph Biden assumed office, American and Chinese commerce ministers agreed to promote trade and investment ties. The call came after the President ordered a review of Chinese software apps, TikTok and WeChat, revoking former President Donald Trump’s bans. The move may have helped to improve relations between the US and China.

The rangebound trading that has characterized the start of June may be about to get some direction as investors seek clues about fiscal and monetary stimulus from key meetings. In addition to the US inflation report and ECB meeting today, leaders of the Group of Seven (G7) nations are gathering in the British seaside village of St. Ives, Cornwall, many of them for the first time since the coronavirus pandemic started.

The 10-year Treasury yield remained below 1.5%, signaling support for the view that the rebound from the pandemic will stoke only a transient bout of elevated inflation.

While rates fell below 1.5% for the first time since Mar. 3, they rebounded off the support of a descending triangle. If yields continue along their falling channel, they will complete the descending triangle, suggesting a drop to 1.2%.

The dollar gained for the third day within a narrow rising channel, which has the potential of turning into a bearish flag with a downside breakout. A break below 89.00 will turn us bearish. Except for the bearish moving averages, the other indicators are bullish, suggesting the recent, small wedge is down, and the greenback can follow through with an uptrend after the massive falling wedge since the 2020 peak.

Gold is retesting the bottom of a rising channel, supported by the 200 DMA.

The remaining indicators are bearish.

Bitcoin rallied.

The cryptocurrency again found resistance at the top of a potentially bearish pennant after jumping right back into it.

Oil slipped amid an increase in US fuel stockpiles. Although oil prices have been moving higher recently, traders are closely watching the ongoing talks between the US and Iran as additional supply from Iran may impact prices.

We consider the decline as the aftermath of a bullish breakout to an ascending triangle.

Up Ahead

• Iran nuclear deal talks reconvene in Vienna today.
• US initial jobless claims are released ahead of the US open today at 8.30am EST.

Market Moves

Stocks

• The FTSE 100 rose 0.3%
• The STOXX 600 was little changed
• Futures on the S&P 500 were little changed
• Futures on the NASDAQ 100 fell 0.2%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index rose 0.3%
• The MSCI Emerging Markets Index rose 0.4%

Currencies

• The Dollar Index rose 0.1%
• The British pound fell 0.2% to $1.4085
• The euro fell 0.2% to $1.2161
• The Japanese yen was little changed at 109.53 per dollar
• The offshore yuan was little changed at 6.3863 per dollar

Bonds

• The yield on 10-year Treasuries was little changed at 1.49%
• Britain’s 10-year yield was little changed at 0.73%
• Germany’s 10-year yield was little changed at -0.24%

Commodities

• Brent crude fell 0.2% to $72 a barrel
• Spot gold fell 0.5% to $1,880 an ounce