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U.S. Opening Bell: Futures Struggle To Maintain Rally; Gold Slips, Oil Up

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Mixed cyclical picture in Europe
Asia more optimistic
Treasury yields inch higher

Key Events

Despite uncertainty on the potential economic impact of the Omicron variant of COVID-19, as well as the likelihood of approval of the US’s fiscal stimulus bill, Dow, S&P 500, NASDAQ and Russell 2000 futures edged slightly higher in trading on Wednesday after Tuesday’s strong performance on Wall Street. In Europe markets are up over 1%.

Oil advanced for a second day. 

Global Financial Affairs

All four US benchmark contracts were slightly in the green in early trading this morning though futures on the Russell 2000 opened lower. The small cap index is the only one of the four primary US benchmarks in a daily downtrend. 

Russell 2000 Daily

The Russell 2000 is the only index among the four US majors that’s registered two descending peaks and troughs, which establishes a downtrend.

Conversely, in Europe, the STOXX 600 Index’s gains were due to rising demand for European tech shares. This was not dented by a selloff in cyclical shares amid thin volume—below the 30-day average—ahead of the holidays. 

An exception to the counter-cyclical paradigm was food delivery stocks, led by Dutch multinational Just Eat Takeaway (AS:TKWY), which surged 5.1% after the company announced a deal with One Stop, a UK convenience store chain owned by Tesco (LON:TSCO) (OTC:TSCDY), to manage its orders and deliveries.

Just Eat Weekly

Just Eat Takeaway stock will have an uphill battle, as it is in a downtrend. Yesterday’s trading produced a bullish hammer, perhaps on “informed money.” Technically, the price can bounce back to the falling-channel top and still be in a downtrend. The 50 WMA is about to cross below the 200 WMA, triggering a rare weekly Death Cross. On the other hand, if the short MA finds support above the long MA and turns upward, it’s considered a bullish signal.

In Germany, shares in another online food delivery service, Delivery Hero (DE:DHER) jumped 6% after the company announced it would reduce its operations in the country and sell its Japanese unit Foodpanda in the first quarter of 2022 due to tough competition in the space along with a labour crunch.

On the virus front, Germany announced new COVID restrictions which will start on Dec. 28 including curbing private get-togethers to no more than 10 people, closing all nightclubs and no spectators at sporting fixtures. 

Earlier, Asian investors were more optimistic as most markets advanced, increasing risk toward the year-end.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.25% after paring higher prices earlier. Hong Kong’s Hang Seng outperformed with a 0.57% gain, but this benchmark also gave up earlier gains, as much as 1.2%. China’s Shanghai Composite was the only primary regional index that closed in the red, down 0.07%, as local traders weighed the prospects of supply disruptions that could arise amid restrictions.

JP Morgan analyst Kerry Craig attributed the relative positive market action to numerous optimistic signals, such as household balance sheets, consumption and high corporate profits.

Yields on the 10-year Treasury yield extended a climb above the 200 DMA but stopped short of crossing the 100 DMA. It seems that despite all the recent market volatility, yields remain stubbornly low.

10-Year Treasuries Daily

Rates are currently at 1.48% below the psychological round of 1.5%.

The dollar is little changed.

Dollar Index Daily

Traders are being sucked into the technical vortex of the supply-demand whirlpool that occurs at a pennant, and the greenback has been unable so far to provide a decisive breakout.

Gold was slightly higher after declining for two consecutive days.

Bitcoin is flat after a two-day advance.

Bitcoin Daily

The digital currency leader seems to have found resistance by the top of its falling channel, which will now duke it out with the support of the 200 DMA.

Oil edged higher, extending an advance to its second day, for the first time since Thursday, after the API reported that inventories decreased by 3.6 million barrels and ahead of the EIA stockpile report today.

Oil Daily

Bulls are now attempting to drive back bears after significant profit-taking following the 12% plunge for the day on Nov. 26. We’re betting that this rally is a return move and that bears will drive the price down another leg.

Up Ahead

US initial jobless claims are published on Thursday. 
The University of Michigan consumer sentiment index is reported on Thursday
On Friday US markets are closed and European markets close earlier.

Market Moves

Stocks

The FTSE 100 was little changed 
The STOXX 600 was little changed 
Futures on the S&P 500 fell 0.3%
Futures on the NASDAQ 100 fell 0.5%
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index rose 0.2%
The MSCI Emerging Markets Index rose 0.4%

Currencies

The British pound rose 0.36% to $1.3312
The Dollar Index was little changed
The euro rose 0.1% to $1.1301
The Japanese yen rose 0.14% to 114.24 per dollar
The offshore yuan was little changed at 6.3796 per dollar

Bonds

Britain’s 10-year yield rose two basis points to 0.89%
The yield on 10-year Treasuries was little changed at 1.47%
Germany’s 10-year yield advanced one basis point to -0.30%

Commodities

WTI crude was up 0.5% at $71.48 a barrel
Brent crude rose 0.34% to $74.22 a barrel
Spot gold fell 0.1% to $1,786.88 an ounce

GBP/USD downside seems over

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