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Opening Bell: U.S. Futures, Global Stocks Rally; Yields, Dollar, Oil Retreat

By Investing.com (Pinchas Cohen)Market OverviewFeb 09, 2022 13:00
ng.investing.com/analysis/opening-bell-us-futures-global-stocks-rally-yields-dollar-oil-retreat-103887
Opening Bell: U.S. Futures, Global Stocks Rally; Yields, Dollar, Oil Retreat
By Investing.com (Pinchas Cohen)   |  Feb 09, 2022 13:00
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  • Easing yields boost US futures
  • Tech shares lift European stocks
  • Asia jumps with Alibaba

Key Events

On Wednesday, US yields slipped, providing more runway for US futures on the Dow Jones, S&P 500, NASDAQ and Russell 2000 to extend gains after yesterday's strong performance of the underlying indices on Wall Street. In Europe, equities also moved higher, driven by positive earnings from the technology sector.

Bitcoin's recent recovery, however, came to an end as the cryptocurrency stumbled.

Global Financial Affairs

The STOXX 600 Index gained more than 1%, as 18 of 20 industry sectors were trading higher, with technology in the lead. Solid earnings buoyed sentiment. Dutch online-payments firm, Adyen (AS:ADYEN), whose customers include Uber (NYSE:UBER), Meta Platforms (NASDAQ:FB) and Netflix (NASDAQ:NFLX), reported strong second-half revenue growth propelling the stock up by 11%.

Adyen Weekly
Adyen Weekly

ADYEN might be a buying opportunity after losing 41% from its August peak, but even a 35% bounce could still keep shares in a sizeable H&S top.

After outperforming yesterday, basic resources-related shares lagged, tracking iron ore's profit-taking selloff.

Earlier this morning, markets in Asia-Pacific region closed in the green. Hong Kong's Hang Seng was a cut above the rest, surging more than 2%, boosted by Alibaba's (HK:9988) 6.8% vault higher, as investors bought the dip on a two-day slump. The Chinese internet giant's stock rebound followed a statement by Japan's Softbank that Alibaba's recent registration of more American Depository Shares (ADS) was not tied to any specific future deal. Alibaba filed to register an additional billion ADS last week.

The report relieved shareholders' concerns about further restrictions after Alibaba's 60% selloff since its October 2020 high due to China's regulatory clampdown.

During Tuesday's New York session, stocks in the US rallied, with small caps making a comeback. The market narrative attributed the Russell 2000's outperformance to confidence in a growth outlook amid economic reopenings as the Omicron variant of COVID weakens.

The NASDAQ 100 was the second-best performer, as investors bought the dip on Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT). Technology tends to underperform amid the outlook for economic acceleration so some think yesterday's outperformance by small caps was due to technicals.

The yield on the 10-year US Treasury shied away from 1.96%, its highest level since 2019. We expect this retreat was due to bond investors buying the dip on technicals.

10-year Treasuries Daily
10-year Treasuries Daily

Yields are performing a Return Move after completing a symmetrical triangle, itself a breakout of a much larger such pattern. We predict rates will bounce off the recent pattern's top as they cross the 2% mark on their way to the 3% level.

If this scenario follows through, we forecast stocks will sell off, as rising borrowing costs render current valuations untenable, compounded by the increasing attraction of a confirmed bond payout.

The dollar retreated near the bottom of its rising channel (green), supported by the 100 DMA.

Dollar Index Daily
Dollar Index Daily

On the other hand, the increasing congestion could be the making of a bearish flag, following the four-day plunge that preceded it, as bulls struggle against the falling channel (red), aided by the resistance of the 50 DMA. We're betting the longer-term trend will be at the short one.

Gold wavered after its recent rally. The commodity's price is sitting on the fence ahead of Thursday's CPI data release.

Gold Daily
Gold Daily

The yellow metal blew out a rising, bearish flag.

Bitcoin ended a three-day advance.

Bitcoin Daily
Bitcoin Daily

The digital coin retreated from the neckline of an H&S top.

Oil dropped for the third day in a row as traders monitored geopolitics including France's announcement that Russia has given assurances that it will not start any new maneuvers near Ukraine, for now, as well as talks resuming in Vienna to salvage the Iran nuclear deal.

Oil Daily
Oil Daily

WTI's price is forming a second consecutive bearish triangle.

Up Ahead

Market Moves

Stocks

  • The STOXX 600 rose 1%
  • Futures on the S&P 500 rose 0.4%
  • Futures on the NASDAQ 100 rose 0.5%
  • Futures on the Dow Jones Industrial Average rose 0.3%
  • The MSCI Asia Pacific Index rose 1.4%
  • The MSCI Emerging Markets Index rose 1.3%

Currencies

  • The Dollar Index was little changed
  • The euro rose 0.2% to $1.1435
  • The Japanese yen fell 0.1% to 115.43 per dollar
  • The offshore yuan was little changed at 6.3664 per dollar
  • The British pound rose 0.2% to $1.3570

Bonds

  • The yield on 10-year Treasuries declined three basis points to 1.93%
  • Germany's 10-year yield fell to 0.2190%
  • Britain's 10-year yield fell to 1.44%

Commodities

  • WTI crude dropped 1% to $89.00 a barrel
  • Brent crude fell 0.48% to $90.34 a barrel
  • Spot gold was little changed
Opening Bell: U.S. Futures, Global Stocks Rally; Yields, Dollar, Oil Retreat
 

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Opening Bell: U.S. Futures, Global Stocks Rally; Yields, Dollar, Oil Retreat

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