Opening Bell: U.S. Futures Slip After Record Highs; Oil Rises Ahead Of OPEC+

Key Events/h2

US futures on the Dow, S&P, NASDAQ and Russell 2000, as well as European markets slid into the red on Wednesday after strong gains the previous day. Markets are keenly awaiting a number of US economic data releases over the coming days including today's ADP Nonfarm Employment Change, as it's a crucial time for monetary policy, especially with the coronavirus appearing to be threatening a comeback.

The dollar recovered while yields remained lower.

Global Financial Affairs/h2

Tuesday’s fresh records for the S&P 500 and the NASDAQ indices were aided by yesterday's US consumer confidence data release. The Conference Board’s index escalated to 127.3—the highest pandemic level—from an upwardly revised 120 in May. The read beat all estimates, after vaccines allowed people to reduce social restrictions which helped drive an economic recovery and overshadow inflation fears.

Growth sectors extended their advance, at the expense of value shares, handing new all-time highs to the indices with technology stocks as a significant component. With a weighting of 27.6%, technology accounts for over a quarter of the S&P 500 index. The S&P Tech sector jumped 0.73%, outperforming the second-best performer Consumer Discretionary (+0.25%) by a multiple of three. Financials were 0.35% deep in the red, even after some of the largest Wall Street banks increased their dividend payouts.

So, tech boosted the S&P enough to eke out a 0.03% gain, enough to extend a string of records for the fourth straight day. The S&P 500 is now on track for its fifth straight monthly advance, its longest continuous monthly advance since August last year. 

In Europe today, the STOXX 600 Index fluctuated between small gains and losses, due to persistent regional inflation concerns as well as a resurgence of COVID-19 as the Delta variant spread. The biggest losers were travel firms and cruise operators.

Earlier, Asian benchmarks followed yesterday's US session higher, despite weaker than expected industrial production data from Japan and continued virus outbreaks disrupting Chinese ports.

The 10-year Treasury yield pared a two-day drop, but was still below 1.5%, indicating a lack of worry about inflation, as shown by the consumer confidence release. 

Yields are testing the bottom of a bearish triangle, whose downside breakout may accentuate the rate of decline of rates.

After fluctuating, the dollar regained its advance which began when the Fed shocked markets by predicting at least two rate hikes by the end of 2023.

The dollar may be developing a bullish pennant on top of the 200 DMA, whose upside breakout would signal a repeat of the preceding rally, necessary to complete a double-bottom.

Dollar strength helped sap demand for gold, both on economic optimism, as well as the fact that a strong dollar makes gold more expensive.

The yellow metal extended a downside breakout of a bearish pennant, sucking it into a falling channel since the 2020 record peak.

The optimism over the economy and dollar strength had a similar effect on Bitcoin.

The digital token continued developing a H&S continuation pattern, especially bearish, forming below a Death Cross.

WTI crude oil climbed for a second day, back above $73 a barrel, as stockpiles fell, ahead of Thursday's OPEC+ meeting that’s expected to lead to an increase in supply.

Oil has been struggling with the $74 level since the Monday before last, after it cleared an Evening Star (red oval). We have been warning of a potential of a return-move to a bullish triangle. The RSI is struggling to maintain its height as momentum is tested.

Up Ahead/h2

• On Thursday, China’s President Xi Jinping will deliver a speech as the nation marks the 100th anniversary of the founding of the Chinese Communist Party.
• On Friday ECB President Christine Lagarde speaks.
• The US jobs report is due for release on Friday.

Market Moves/h2

Stocks/h3

• The STOXX 600 fell 0.1%
• Futures on the S&P 500 were little changed
• Futures on the NASDAQ 100 rose 0.1%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index was little changed

Currencies/h3

• The Dollar Index was little changed
• The euro was little changed at $1.1899
• The Japanese yen was little changed at 110.50 per dollar
• The offshore yuan was little changed at 6.4617 per dollar
• The British pound was little changed at $1.3823

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Bonds

• The yield on 10-year Treasuries was little changed at 1.47%
• Germany’s 10-year yield was little changed at -0.19%
• Britain’s 10-year yield was little changed at -0.72%

Commodities

• Brent crude was little changed
• Spot gold was little changed