The US kicked 2022 off with a nice rally featuring gains of 0.7% for the Dow to 1.2% for the NASDAQ. Investors returned from the holiday season in a good mood and responded positively Tesla Motors’ Q4 (308K vs street 267K) and full year (936K vs street 897K) deliveries numbers, both of which beat street expectations.
This morning the New Years Rally continues with US index futures all up about 0.2%. Markets are higher overseas as well with the Nikkei soaring 1.7%, the FTSE jumping 1.4% and the Dax gaining 0.7%. US treasury yields continue to climb, and are trading above 1.65% this morning suggesting that investors continue to anticipate a strengthening economy, high inflation and rising interest rates. Commodity and currency action is mixed. WTI crude oil is up 0.1% trading above $76.00/bbl, while natural gas is up 2.6%. Metals, on the other hand, are struggling with copper down 0.7% and gold flat sitting just below $1,800/oz.
OPEC+ is meeting today with media reports suggesting the cartel is expected to continue restoring production at a rate of 400K bbl/d per month. An acceleration of production increases could potentially weigh on the price which a decrease to planned production increases could give oil even more of a possible tailwind.
UK manufacturing PMI came out this morning above expectations (57.9 vs street 57.6), building on yesterday’s generally positive European numbers. The focus now turns to North America with Canadian manufacturing PMI due at 9:30 am EDT (street 57.5 vs previous 57.2). US ISM manufacturing PMI is due at 10:00 am EDT (street 60.2 vs previous 61.1). Investors may also be keeping an eye on the prices paid (street 79.5 vs previous 82.4), and new orders (street 60.7 vs previous 61.5) components.