Futures Fall as Omicron Recovery Rally Pauses, Jobless Claims Beat

Omicron’s 3-day recovery stops as Europe tightens COVID restrictions. Unemployment claims fall below 200k.

American futures

• Dow futures -0.43% at 35606
• S&P futures -0.38% at 4683
• Nasdaq futures -0.44% at 16319

In Europe

• FTSE -0.38% at 7309
• Dax -0.46% at 15628
• Euro Stoxx -0.65% at 4203

COVID restriction is tightening in Europe

US stocks show a lower opening after 3 days of solid gains. While last Friday’s sale was brutal, the recovery has been pretty sensational as there are still so many strangers.

Risk received a boost this week amid early reports that Omicron symptoms appear to be mild and on the news that 3 doses of Pfizer could protect you from the new strain. However, increasing COVID cases and stricter restrictions take away the brightness of that optimism. That said, the lower move is smooth, as investors are confident knowing that an accelerator can offer protection until a new Omicron vaccine is developed.

In the data, U.S. jobless claims fell below 200k to a post-pandemic low of 184k, down from an upward revised 227k the week before.

The data comes after yesterday’s JOLTS jobs showed that there are 11 million jobs in the United States. So, with a lot of demand for jobs, theoretically unemployment claims should continue to fall.

Investors are also looking at tomorrow’s inflation data, which is the other side of the puzzle. CPI is expected to rise to 6.8%

Where next for the S&P 500?

The S&P 500 extended its recovery from 4493 on December 3 low meeting resistance at 4713 yesterday’s high. The bearish crossover on the MACD combined with the 50 sma transition below the 200 sma on the 4-hour chart suggests that there could be some downside to come. Support is visible at 4645 the 200th and 4616 the 50th, a fall below here could negate the imminent uptrend. Sellers would look for a move below 4493 to get traction. Buyers will look for a move above 4713 to target 4744 and fresh all-time highs.

FX – USD rises, EUR falls on dovish ECB

The USD is rising steadily as investors shift their focus to CPI inflation data tomorrow ahead of next week’s Fed meeting. Inflation is expected to exceed the 6.2% seen in October and the Fed is expected to accelerate the decline in bond purchases.

EUR / USD is declining according to reports that the ECB is considering an increase in its asset purchase program at its next monetary policy meeting. This would be for a limited time with frequent reviews. The due diligence reports hurt demand for the Euro.

• GBP / USD -0.16% at 1.3183
• EUR / USD -0.26% at 1.1313

Oil pauses for breath while COVID restrictions tighten.

Oil prices are down slightly after three straight days of gains. Even so, oil prices have risen by more than 8% so far this week due to optimism over the Omicron COVID variant. Early reports suggest that the symptoms are mild, and 3 doses of the Pfizer vaccine will neutralize the virus. These findings helped oil rebound from a 16% drop the previous week.

Today the rally was exhausted as governments in Europe tighten COVID restrictions to curb the spread of the virus. While it will inevitably be a hit to oil demand, this is likely to be less than initially feared, helping oil prices recover at least some of the sharp Omicron-inspired sale.

• WTI crude trades -0.8% at $ 71.70
• Brent is trading at -0.8% for $ 75.15

Looking ahead