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Stocks are pointing to a mixed start with the US 500 and the Nasdaq 100 underperforming on worries of a US-China chip war and ahead of Federal Reserve Chair Jerome Powell's speech at the ECB Central Banking Forum in Sinatra, Portugal. Will Powell adopt a more hawkish tone after yesterday's stronger-than-expected data?

US futures

Dow futures -0.1% at 33930

S&P futures -0.2% at 4370

Nasdaq futures -0.4% at 14885

In Europe

FTSE +0.6% at 7512

Dax +0.7% at 15966

• Powell, Lagarde, Ueda, and Bailey are due to speak
• The US could restrict exports of AI chips
• USD rises after strong US data yesterday & ahead of Fed Powell
• Oil falls ahead of EIA stockpile data 
   

Central bankers in focus

US stocks are pointing to a mixed start with the Dow set to rise on the open, while the S&P 500 and the Nasdaq 100 are pointing to a weaker open amid concerns of a U S China chip war and as investors await central bank speakers.

After a strong rebound in the previous session after data pointed to strength in the US economy, has turned cautious as investors await further cues from Federal Reserve Jerome Powell. Powell, along with ECB's Christine Lagarde, BoJ’s Kazuo Ueda, and BoE’s Andrew Bailey is due to speak at the ECB's central banking forum in Sinatra, Portugal. Any hints of a more hawkish-sounding Powell after yesterday’s strong data could pull stocks lower.

Despite some weakness in stocks, the rally in growth stocks amid bets that the Federal Reserve will soon end its monetary tightening means that the three main indices are on track for quarterly gains.

Elsewhere chip stocks are in focus after the Wall Street Journal report Washington is considering new restrictions on exports of AI chips China. Nvidia and Advanced Micro Devices are falling over 3% pre-market.
 

Corporate news

General Mills falls almost 4% after mixed fiscal Q4 results. The Cheerios maker posted EPS of $1.12, ahead if the $1.07 forecast. However, revenue missed forecasts at $5.03 billion, against the $5.17 billion forecast.

Pinterest, the social media platform jumped almost 5% premarket after Wells Fargo upwardly revised the stock to overweight from equal weight. They cited a strategic move by Pinterest to outsource monetization to third parties, including creating partnerships with Amazon.
 

S&P500 outlook – technical analysis

The S&P500 rebounded off support at 4325 the August’22 high and the 20 sma and is steadying above 4350. The RSI remains over 50 and the index continues to trade within the ascending channel dating back to early March, keeping buyers hopeful of further gains. Immediate support can be seen at 4385 yesterday’s high, ahead of 4400 round number and 4448 4448, the 2023 high. Sellers will look for a break below support on the 20 sma and August high of 4325. A breakdown here could open the door to 4300, the round number and 4250, the rising trendline support; a break below here would be significant as the price has traded within the ascending channel since early March.

(Click on image to enlarge)

FX markets – USD rises, GBP falls

The USD is rising after a slew of stronger not expected later in the previous session which is recession fears and as investors look ahead to schedule reserve-chattering Powell’s speech at the ECB central banking forum shortly.

EURUSD it's falling after data shows that German consumer sentiment unexpectedly weakened. The GFK consumer confidence index fell to -25.4, down from -24.4 and defying expectations of a rise to -23. This was the first fall in confidence since October and raises concerns that the recession in German could be longer than initially expected.

GBPUSD is falling amid rising recession fears in the UK and amid a lack of economic data. BoE Governor Andrew Bailey is due to speak shortly and the ECB central banking forum. Investors will be watching closely for clues over how high-interest rates may go after the Bank of England surprised the market with a 50 basis point rate hike last week. The market sees the BoE hiking to above 6% which would tip the UK into recession.

EUR/USD -0.17% at 1.0944

GBP/USD -0.7% at 1.2657
 

Oil steady as growth worries offset an inventory draw

Oil prices holding steady as investors weigh up a larger than expected draw in US crude inventory data, against concerns over further interest rate hikes.

According to API data crude stock inventories fell by almost 2.4 million barrels significantly more than expected suggesting that demand remains robust. EIA data is due this afternoon.

However, this is being offset by concerns regarding the demand outlook as central banks remain hawkish and the Federal Reserve looks to continue hiking rates at least twice more.

Weaker than expected Chinese data is also weighing on the price. Chinese industrial profits fell by 12.4% annually raising concerns over momentum of the Chinese economic recovery.

WTI crude trades -0.05% at $67.75

Brent trades at -0.03% at $72.45
 

Looking ahead

14:30 Fed Chair Powell, BoJ’s Ueda, ECB’s Lagarde & BoE’s Bailey to speak

15:30 EIA crude oil inventories

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