13 April 2021

Wall Street Edges Lower Ahead of Inflation Report


News shaping
the markets today


What’s happening: US stocks closed slightly lower on Monday, although S&P 500 continued to hover near record levels.

What happened: Wall Street started the week with tepid trading ahead of the release of much awaited inflation report and the beginning of first quarter earnings season.

Meanwhile, market volatility declined to pre-covid-19 levels, amid growing optimism around the reopening of the economy.

Why it matters: US markets have recently been quiet, with the S&P 500 remaining within the 1% range over the past five consecutive sessions. The Cboe Volatility Index, which is the widely accepted gauge for fear among investors, has traded below 18 in the last four sessions, a level not seen since February last year.

The Q1 earnings season is scheduled to begin this week. Several big banks, including JPMorgan Chase and Goldman Sachs, are set to report quarterly results this week. Market expectations are elevated for earnings across industries, against the backdrop of an economic recovery.

Speeches from various Federal Reserve members will also remain in focus this week. Fed Chair Jerome Powell said on Sunday that the inflation rate would need to remain elevated above the 2% target for an extended period before the central bank moves to lift interest rates.

The S&P 500 slipped less than 1 point to settle at 4,127.99 on Monday, after ending at a record high in the earlier session. The Dow Jones index shed 55.20 points to close at 33,745.40, retreating from a record high. Shares of Intel were among the biggest losers in the 30-stock index, falling more than 4% on Monday.

The Nasdaq 100 declined 0.19% to close at 13,819.35 on Monday. Microsoft’s stock closed almost flat even after the company confirmed the acquisition of Nuance Communications for $19.7 billion. Shares of Nuance Communications climbed around 16% following the news.

What to watch: Investors await data on the NFIB small business optimism index and inflation rate from the US. America’s annual inflation rate, which rose to 1.7% in February, is expected to rise to 2.5% in March.

Markets will also monitor recent developments around President Joe Biden’s proposed infrastructure plan.

The Markets Today


Crude oil will be in focus today ahead of the crude inventories report from the American Petroleum Institute (API).

Context: Oil futures settled higher on Monday, as news of Yemen’s Houthi rebels attacking an oil facility in Saudi Arabia led to supply concerns from the Middle East region.

Details: While the Houthi movement said it had fired drones and missiles at Saudi Arabia’s oil facilities, there is no confirmation from the Saudi government about the attack. Despite this, oil prices responded to the news.

Oil also received some support from progress in Europe’s vaccination efforts and from optimism around a recovery in the US economy. Upbeat comments from Fed’s Chairman Jerome Powell lifted prospects of an increase in America’s demand for energy.

Investors shrugged off news of the surge in covid-19 cases in various countries around the world. Oil prices had settled lower on Friday amid fears of a decline in energy demand due to the steep rise in covid-19 cases in Europe, India and Brazil. After reporting over 168,000 new covid-19 cases on Monday, India became the second-worst infected country after the US.

Traders also kept an eye on the progress of the US-Iran nuclear deal, which will lift oil sanctions on Iran and boost global oil supplies.

WTI (West Texas Intermediate) crude for May delivery gained 0.6% to close at $59.70 per barrel on the NYMEX (New York Mercantile Exchange) on Monday, after hitting an intraday high of $60.77 earlier in the session. Brent crude for June added 0.5% to end at $63.28 per barrel on the ICE Futures Europe, notching the strongest settlement since April 1.

WTI has shed 3.5% last week, while Brent recorded a weekly loss of 2.9%.

What to watch: Markets await API data on crude inventories. Crude stockpiles in the US had fallen 2.62 million barrels in the week ended April 2, versus a 3.91 million rise in the earlier week.

Rising covid-19 cases remain one of the top concerns for markets, with global infections surging past 136.4 million.

Other Markets: European trading indices closed lower on Monday, with the FTSE 100, German DAX 30, French 40 and STOXX Europe 600 down by 0.39%, 0.13%, 0.13% and 0.46%, respectively.

Support & Resistances
for Today


market snapshot


Futures at 0400 (GMT)

What else to watch today


Germany’s wholesale prices and ZEW indicator of economic sentiment, UK’s balance of trade, construction output, gross domestic product, industrial production, manufacturing production and goods trade balance, Turkey’s industrial production, retail sales and motor vehicle production, Italy's industrial production, Eurozone’s ZEW indicator of economic sentiment, South Africa’s mining production and gold output, Brazil’s retail sales as well as the US Redbook Index.


ADS Securities London Limited “ADSS” is an execution-only service provider. This material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or investment objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by ADSS that any particular investment, security, transaction or investment strategy is suitable for any specific person. To the extent that any content in this material is construed as investment research, you must note and accept that the content was not prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.  This material may contain links to third party websites, and any content, or use of your personal data by any third party websites is not the responsibility of ADSS or any member of the ADSS Group.