US stocks rise. Powell’s testimony, NFP in focus

The news shaping the markets today

Russia’s Wagner private army head Yevgeny Prigozhin accused the country of withholding the ammunition it needs, as it is looking to gain control of Ukraine’s Bakhmut. The safe-haven US dollar index fell this morning.

Australia’s retail sales grew 1.9% to A$35.09 billion in January, following a 4% decline in the prior month, lending support to the AUD/USD forex pair.

UK’s retail sales surged 4.9% from a year ago in February, following 3.9% growth in January, which sent the GBP/USD pair higher in forex trading this morning.

Japan’s average cash earnings rose 0.8% year-over-year in January, missing market estimates of 1.9% growth, which exerted pressure on the JPY/USD forex pair.

South Korea’s economy contracted by 0.4% quarter-over-quarter during the three months to December 2022, compared to a 0.3% expansion in the prior quarter, sending the KRW/USD pair lower in forex trading this morning.

What’s happening: US stocks closed mostly higher on the first trading session of the week.

What happened: The S&P 500 settled just slightly higher on Monday, as Treasury yields rose.

Investors await the testimony from Federal Reserve Chairman Jerome Powell as well as the nonfarm payrolls (NFP) report scheduled for release this week.

Why it matters: The three main US indices had risen sharply on Friday and recorded gains for the week, following comments from some Fed officials indicating a slowdown in the pace of interest rate hikes.

Wall Street stocks began Monday’s session with strong gains. The Nasdaq 100 added over 1%, backed by a steep rise in Apple’s shares after Goldman Sachs initiated coverage on the stock with a Buy rating and announced a $199 price target.

However, US stocks pared gains later during the session, as yields on the 10-year Treasury notes climbed following data on factory orders. Although new orders for US manufactured goods declined by 1.6% in January, following 1.7% growth in the previous month, the figure was better than market expectations of a 1.8% decline.

The commodity-linked materials stocks recorded the biggest losses, with the sector shedding around 1.6% on Monday, after China set a weaker-than-projected economic growth target for 2023 at about 5%.

The Dow Jones index gained 40.47 points, or 0.12%, to settle at 33,431.44 on Monday. The S&P 500 added 0.07% to 4,048.42, while the Nasdaq 100 rose 0.1% to 12,302.48.

What to watch: Investors will monitor comments from Powell when he testifies before the Congress on Tuesday and Wednesday and look for more insight into future rate hikes by the central bank. Traders expect the Fed to raise interest rates at least three more times, but by a lower 25 basis points this year and expect rates peaking at 5.44% by September.

Data on wholesale inventories, due to be released today, will also remain in focus. Wholesale inventories are likely to decline 0.4% from a month ago to $929.7 billion in January, compared to 0.1% growth in the previous month.

The markets today

Oil will be in focus today ahead of API’s (American Petroleum Institute) data on crude stockpiles

Context: Oil futures settled higher on Monday, reversing losses made earlier in the session.

Details: Oil prices had dipped as much as 1.7% in early trading on Monday but closed the session higher. Traders brushed off concerns around China’s National People’s Congress setting a weaker-than-projected economic growth target for 2023 at about 5%, following the end of strict covid-19 restrictions.

The country’s GDP growth had decelerated sharply to 3% last year, significantly short of the government’s target of 5.5%. Oil prices rose on prospects of a surge in energy demand from China, the world’s largest consumer of energy.

Saudi Arabia also signalled a pickup in oil demand in Asia and Europe. Saudi Aramco raised official selling prices for its main Arab Light grade by 50 cents to $2.50 a barrel in Asia.

WTI crude for April delivery gained 1% to close at $80.46 per barrel on the NYMEX on Monday. WTI futures ended the session at their strongest since January 26. May Brent crude added 0.4% to settle at $86.18 per barrel, notching the highest level in three weeks.

In other energy trading, April gasoline climbed 1.7% to $2.7965 a gallon, while April heating oil lost 0.9% to $2.8866 a gallon. April natural gas dipped 14.5% to $2.572 per million British thermal units, after jumping around 18% last week.

What are expectations: Traders await API’s data on crude oil stockpiles today. US crude stockpiles rose by 6.203 million barrels in the week ended February 24, after a rise of 9.895 million barrels in the prior week.

Other Markets: European indices closed mixed on Monday, with the FTSE 100 and STOXX Europe 600 Index down by 0.22% and 0.02%, respectively, and the DAX 40 and CAC 40 up by 0.48% and 0.34%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

South Africa’s foreign exchange reserves and GDP growth rate, Germany’s factory orders, UK’s house price index, France’s foreign exchange reserves, Spain’s industrial production, Singapore’s foreign exchange reserves, Mexico’s consumer confidence, US Redbook index, IBD/TIPP economic optimism index, Logistics Manager’s index, Manheim used vehicle value index, and consumer credit change, Turkey’s treasury cash balance, China’s foreign exchange reserves, as well as Brazil net payrolls.