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Stocks are heading higher but are heading for a flat finish.

US futures

Dow futures +0.34% at 33423

S&P futures +0.18% at 4143

Nasdaq futures +0.18% at 13411

In Europe

FTSE +0.24% at 7745

Dax +0.4% at 15891

• Michigan confidence set to ease to 63
• Debt ceiling talks pushed back
• GBP/USD rises after Q1 GDP +0.1%
• Oil is set for a weekly decline 
   

Stocks rise but are flat across the week

US stocks are pointing to a stronger open after a mixed close in the previous session. Trading this week has been choppy and lacking any firm direction.

Investors have had plenty to weigh up this week, with headline inflation unexpectedly cooling, jobless claims rising to its highest level in 1.5 years, and no progress on an agreement to lift the US debt ceiling.

The market seems rather perky despite a key meeting between congressional leaders to continue negotiations being pushed to next week. Expectations are still that the two sides will reach an agreement before the early June X-date, but time is ticking.

On a more positive note, tech stocks have held up better than their peers on optimism that the Fed will pause rate hikes at the June meeting and on news from Alphabet-owned Google that it will bring AI features to its signature search product. Alphabet, which is heavily weighed within the S&P 500 has rallied over 10% so far this week.

Looking ahead, attention will shift to University of Michigan consumer sentiment which is expected to ease to 63 in May from 63.5 after the Federal Reserve raised interest rates again, keeping household incomes under pressure.

Federal Reserve Governor Philip Jefferson is also due to speak. Any comments on inflation or monetary policy could drive the market.
 

Corporate news

Tesla rises after Eon Musk announces that he has hired a new CEO for Twitter. The news means that she should be able to refocus his energies on the EV manufacturer.
 

S&P500 outlook – technical analysis

The S&P500 has been trading range bound since early April, capped on the upside by 4200 and on the lower side by 4050. There could be a double-bottom bullish reversal pattern forming at 4150, with a rose above 4200 need to confirm this. A rise above here opens the door to 4325 the August high. Sellers will look for a break below 4050, opening the door to 4000 and 3975 the 200 sma.
 

FX markets – USD rises, EUR falls

The USD is and is looking to book gains of 1% across the week as investors rein in expectations of several interest rate cuts by the end of the year. The market had been pricing in several cuts des[ite the Fed pushing back against these expectations.

EUR/USD is falling as it struggles against rebounding USD strength and is set to book losses of over 1% across this week. The losses come despite a hawkish message from the ECB last week after it raised interest rates by 25 basis points.

GBP/USD is holding above 1.25 after UK GDP data showed that the UK economy grew in Q1 by 0.1%. The data comes after the BoE upwardly revised the growth outlook for the year, saying that they no longer see the UK falling into a recession this year.

EUR/USD -0.22% at 1.0890

GBP/USD +0.02% at 1.2510
 

Oil is set for a weekly decline

Oil is rising modestly but is set to fall across the week, marking the fourth consecutive weekly loss on rising demand concerns. Economic data this week from both the US and China has indicated that economic growth could be cooling.

Falling new loans to businesses is the latest in a series of softer China data, raising concerns over the country’s recovery from strict pandemic restrictions and weighing on the oil demand outlook.

Oil prices are finding some support from comments from the US energy secretary that the US could repurchase oil for Strategic Petroleum Reserves (SPR) from June.

However, worries over the US debt ceiling could keep pressure on oil prices after a key meeting was pushed back to next week.

WTI crude trades +0.3% at $72.30

Brent trades at +0.3% at $76.12

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