US stock futures are trading higher as investors continue to digest economic data. This month we have seen much weaker employment numbers and other economic readings have also shown weakness. The biggest worry among investors and traders is that the Fed may make another mistake and this time their current monetary policy stance is overly hawkish.
Another factor that traders are also focused on this week is the upcoming earnings. Wall Street giants will begin their reporting later this week. Traders are hoping that these banks will be able to paint a much brighter picture because now the Fed wants to increase the interest rate more aggressively.
Oil prices are also soaring today and on track to post some solid gains for the week. Oil traders are confident that they will see some strong gains for the oil prices going in 2022 as well as the fact that Omicron is likely to impose only short-term threats to oil supply. It is likely that we may see the Brent oil price going towards the 100-dollar mark.
The dollar index continues to stay in an uptrend as traders are very much pricing in the possibility of an aggressive monetary policy from the Fed. The Fed chairman has said that they will bring inflation under control under all circumstances. The Fed has already reduced the asset purchase programme and it wants to increase the interest rates three times this year. Wall Street banks such as JP Morgan and other believe that the Fed may actually increase the interest rates more than three times this year. This is influencing the dollar index’s uptrend.
The Asian stock market traded mostly mixed. The Nikkei index plunged 0.40%. The Shanghai index increased by 0.43%, while the HSI index increased by 1.24%. The ASX index decreased by 0.92%.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth gained a bit more momentum during the last session. 71% of the Dow Jones stocks traded above their 200-day moving average.
The S&P 500 stock breadth also confirmed strong momentum. 72% of the shares traded above their 200-day moving average.
Dow Jones Futures Today
The Dow Jones futures are trading flat today. In terms of economic data, investors will be looking at the US inflation number. The forecast for the CPI m/m is 0.4% while the previous number was at 0.8%. The core CPI m/m is also due at 13:30 GMT and the forecast is for 0.5% which is the same as the previous number.
The US 30, also known as the Dow Jones Industrial Average, is trading firmly in a downtrend on the daily time frame. The Dow violated below the 50-day simple moving average earlier this week which is a matter of concern as it shows weakness in the price action. Traders are keeping a close eye on Tuesday’s low of 35, 519. As for the RSI, it has pulled away from the overbought area and now trending towards the oversold area. Although it is still quite far from reaching that level as the current reading is at 52.