• Nasdaq leads futs higher
• UK Labor data in line
• Nikkei -0.96% Dax 1.43%
• UST 10Y 1.04
• Oil $52.8
• Gold $1854/oz.
• BTCUSD $31600/oz.

Asia and the EU

• UK GBP Average Earnings 3.6% vs. 3.2%

North America

• USD Consumer Confidence 10:00

Equities were well bid in early European trade with DAX rising by more than 1.4% while Nasdaq futures recovered off earlier Asian session lows to trade just slightly below yesterday’s New York close as investors prepared for a slew of earnings from high tech giants.

Today the earnings week kicks off with Microsoft and markets will be keen to hear forward guidance from the company when it releases earnings after the close. The focus in Nasdaq names will be solely on topline growth. Investors will be far more forgiving of any earnings misses as long revenue growth continues to exceed expectations.

In an ultra low yield environment with GDP growth constrained by deflationary factors, revenue growth has become the primary factor for stock price appreciation. This metric applies equally to well established Nasdaq names as well as the far more speculative stocks like Tesla. That’s why this week’s earnings reports will be so crucial. A bevy of upside forecasts from management could help propel the indices to new all time highs. However if the general message suggests slowdowns ahead, the markets which are already trading at historically high valuations will be ripe for a correction.

In FX, the action was muted but the dollar remained bid with both euro and cable continuing to slip against the greenback. Much of the action is simply profit taking from the relentless anti-dollar rally of the past few weeks, but the shallow correction could quickly turn into a deeper selloff especially if the US vaccination drive continues to outpace the EU measures. Despite the various bottlenecks on the state level the US is already exceeding the 1M/day pace while vaccinations in the EU have barely started. If the gap continues to widen the EURUSD could decline back to the 1.2000 support on investor disappointment.

On the eco calendar today the market only sees US consumer confidence data and price action may be subdued ahead of the earnings avalanche this week. Typically February is seasonally poor month for stocks and with positioning heavily leaning long the market is very vulnerable to a selloff on even a whiff of poor economic guidance.