Dow Jones Forecast: Stocks drift lower ahead of the Apple event, tomorrow's CPI

US futures

Dow futures -0.16% at 34611

S&P futures +0.30% at 4474

Nasdaq futures -0.38% at 15407

In Europe

FTSE +0.36% at 7527

Dax -0.55% at 15720

Oracle falls and Apple’s event in focus
Positioning ahead of US inflation data
USD reverses yesterday’s losses
Oil rises on tight supply

Oracle drops, Apple in focus

US stocks are pointing to a modestly lower open, giving back some of yesterday's gains as investors digest disappointing guidance from Oracle and look ahead to Apple's latest launch event, as well as tomorrow’s inflation data.

While optimism surrounding Tesla boosted the Nasdaq over 1% higher yesterday, concerns over Oracle's weak guidance drags on the market mood today. Tesla closed over 10% higher yesterday after a broker upgrade from Morgan Stanley. Analysts there suggested that the company's Dojo supercomputer could give it access to new opportunities beyond selling cars.

The market mood is cautious ahead of the iPhone launch event and as investors await tomorrow's US inflation data which could provide further clues over the future path for interest rates. The data is expected to show that inflation rose, but core inflation cooled further.

Currently, the market is pricing in a 93% probability that the Fed will leave interest rates on hold next week. However, the market is still around 50/50 about whether the Fed will hike rates again in the November meeting.

Corporate news

Apple will be under the spotlight ahead of its annual hardware update in California later today. The tech giant is expected to unveil its new iPhone 15, with new features and potentially a higher price on the pro models. iPhone is still hugely important, making up over half of Apple’s total sales. The iPhone launch comes just days after the Chinese government banned iPhone use by Chinese government officials and state employees.

Oracle has fallen sharply premarket after disappointing current quarter revenue guidance. A tough economic backdrop pressurised cloud spending at business clients. The computer software company expects Q2 revenue growth of between 5% and 7%. This was below analyst estimates of 8.2%. The stock trades down 10% premarket.

Dow Jones forecast – technical analysis.

The Dow Jones rallied for the last three sessions before running into resistance at the 50 sma at 34800 and easing lower test the 20 sma at 34580. The RSI is below 50, supporting further downside. A break below here brings 34285, last week’s low, into play ahead of 34025, the August low. On the upside, should the 20 sma hold, buyers will be looking to clear 34825 and 35100, the August 31 high, to create a higher high.

FX markets – USD rises, GBP falls

The USD is rising, reversing yesterday's losses as traders position themselves ahead of tomorrow's inflation data. Expectations are for headline inflation to increase, but core inflation ticked lower. The cautious market mood is also supporting safe-haven plays to the greenback.

EUR/USD is falling towards 1.07 after German ZEW economic sentiment unexpectedly improved in September for a second month. The index rose to -11.4, up from -12.3 above the -15 forecast. The data points to cautious optimism; however, the current conditions index hit a three-year low at – 79, underscoring growing concerns over Germany's immediate economic landscape.

GBP/USD is falling after UK labour market data showed that unemployment ticked higher to 4.3%, up from 4.2%, marking the highest level of unemployment since 2021. Meanwhile, the number of people in work dropped by 200,000, marking the largest decline in employment outside of a recession. Despite clear signs that the UK labour market is cooling, wage growth ticked higher to a record level of 8.5%, outpacing inflation. This is good news for households as the cost-of-living crisis eases. However, this keeps pressure on the Bank of England to raise interest rates. The falling pound suggests that the market is not expecting the Bank of England to hike rates again beyond 25 basis points at next week's meeting.

EUR/USD -0.33% at 1.0713

GBP/USD -0.33% at 1.2469

Oil rises on tight supply

Oil prices have spiked higher, lifted by the tight supply outlook as investors await further clarity on the inflation picture in US tomorrow.

Last week's news that Saudi Arabia and Russia would extend their voluntary supply cuts totalling 1.3 million barrels per day until the end of the year continues to underpin oil prices.

OPEC is set to release its monthly oil market report later today, followed by the International Energy Agency tomorrow. Investors will be scrutinising these reports for details on the outlook of oil market supply and demand fundamentals.

Looking ahead, API data is expected to show that creative entries fell by around 2 million barrels in the week ending September 8^th.

WTI crude trades +0.8% at $87.55

Brent trades +0.8% at $90.94

Looking ahead

13:55 US Redbook

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