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Futures Surge Above 3,800 As Short Squeeze Fizzles; Attention Turns To Stimulus

US equity futures have continued their Monday rally, rising above 3,800 as the collapse in most shorted stocks continued, with European indices firmer following the positive Asian session. While silver slid from an eight-year high as the latest short squeeze reversed.

Sectors are broadly in the green though oil & gas is among the laggards as BP’s update offsets much of the positivity from crude benchmarks themselves. In top geopolitical news, China top diplomat Yang warned the U.S. not to cross the country’s “red line,” in a pointed speech that pushed back against early moves by President Joe Biden to press Beijing on human rights. The Dollar index continues to make ground above 91.00 this morning pressuring major counterparts but particularly so against the EUR which is also hindered via EUR/GBP action in-spite of firmer than expected GDP data. Overnight, the RBA maintained its key rate at 0.10% as expected but unexpectedly announced it is to extend its QE purchases by AUD $100BN. Looking at today’s session highlights include OPEC JTC meeting and speeches from Fed’s Kaplan, Williams, Mester, we also get earnings from Amazon, Exxon, Alphabet.

At 07:00 a.m. ET, Dow E-minis were up 247 points, or 0.82%, S&P 500 E-minis were up 32.5 points, or 0.86% and Nasdaq 100 E-minis were up 109.75 points, or 0.84%, building on the previous session’s momentum, as investors anticipated strong results from Amazon and Google-parent Alphabet while also looking for signs of progress on a pandemic-relief package. Alphabet, which will report the cost and operating profit of its Google Cloud business for the first time, added 1.3% premarket, while retail behemoth Amazon.com Inc gained 1.2%. Both companies, which report Q4 earnings after market close, have jumped more than 7% each after strong earnings from rest of the FAANG group last month. Ford added 2% after the U.S. automaker said it will invest $1.05 billion in its South African manufacturing operations, including upgrades to expand production of its Ranger pickup truck. Shares of Exxon Mobil rose 1.5% ahead of its results scheduled before the bell, which are expected to be marred by a charge of up to $20 billion on the value of its natural gas properties.

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