European Open: Equities Sell-Off Through Asia, Inflation and BOC in Focus

Asian indices were mostly lower overnight, taking their bearish lead from Wall Street and Europe. Volatility was capped elsewhere, with inflation and a central bank meeting now in focus.

Charts (3)


Asian Indices:

  • Australia's ASX 200 index fell by -60.8 points (-0.87%) and currently trades at 6,957.00
  • Japan's Nikkei 225 index has fallen by -513.58 points (-1.76%) and currently trades at 28,579.80
  • Hong Kong's Hang Seng index has fallen by -474.15 points (-1.63%) and currently trades at 28,661.58

UK and Europe:

  • UK's FTSE 100 futures are currently down -2.5 points (-0.04%), the cash market is currently estimated to open at 6,857.37
  • Euro STOXX 50 futures are currently up 6 points (0.15%), the cash market is currently estimated to open at 3,946.46
  • Germany's DAX futures are currently up 28 points (0.18%), the cash market is currently estimated to open at 15,157.51

Tuesday US Close:

  • The Dow Jones Industrial fell -123.04 points (-0.36%) to close at 34,077.63
  • The S&P 500 index fell -28.32 points (-0.69%) to close at 4,134.94
  • The Nasdaq 100 index fell -134.24 points (-0.96%) to close at 13,809.30


Indices take a dip

As futures markets hinted, cash indices opened lower across Asia and remained under pressure for most of the day. Japan’s shares led the down as they grapple with their own rise in coronavirus cases, with the added pressure of investors now fretting over the rise of cases in India. The Nifty 50 is currently down -0.44% although the Sensex is -1.8% lower. The Hang Seng fell -1.3% from the open and pretty much remained anchored to its lows, whilst the ASX 200 fell -1.6% at the open but later recovered to trade around -0.9% lower.

Still, European futures have just opened mixed and they’re not hinting at an extension of the sell-off. At least not yet anyway.


FTSE 100: Market Internals

The FTSE 100 had its worst session since late February yesterday and bears made light work of breaking the bullish trendline from the 25th March low. Closing just off the lows of the session is never a great sign, so unless sentiment is given one heck of a boost today, we suspect bears will try to fade into intraday rallies and test the next major support level around 6800.


FTSE 100: 6859.87 (-2.00%) 20 April 2021

  • Energy and financial stocks led the FTSE 100 lower yesterday
  • 7 out of the 10 broad sectors closed in the red.
  • 13 (12.87%) stocks advanced and 87 (86.14%) declined
  • 83.17% of stocks closed above their 200-day average
  • 75.25% of stocks closed above their 50-day average
  • 65.35% of stocks closed above their 20-day average

Outperformers

  • + 1.61%   -  SEGRO PLC  (SGRO.L) 
  • + 1.48%   -  Polymetal International PLC  (POLYP.L) 
  • + 1.27%   -  Avast PLC  (AVST.L) 

Underperformers:

  • -8.11%   -  International Consolidated Airlines Group SA  (ICAG.L) 
  • -7.60%   -  British American Tobacco PLC  (BATS.L) 
  • -7.31%   -  Imperial Brands PLC  (IMB.L) 

Learn how to trade indices

Forex: Will BOC talk taper?

This has been the main question leading into today’s meeting, which also has a CPI report as a prelude. Although the likelihood has dwindled recently with the rise of covid cases. However, the OIS curve (overnight index swap) shows markets still expect BOC to lead the way higher in terms of policy alterations. We just don’t really expect it today. Still,

The Canadian dollar was the weakest major yesterday due to weaker oil prices, stemming form a rise of covid cases in India. We may find this theme also dominates its movements today, even if some of the moves yesterday appear to be a little stretched.

  • CAD/CHF fell to a six-week low, after finding resistance at the 0.7316 / 0.7330 zone. We remain bearish beneath this level and for a run towards 0.7200.
  • USD/CAD rallied to a five-day high and formed a higher low this week on the daily chart/ A break above 1.2650 confirms a bullish trend reversal.

UK inflation data also hits our screens at 09:30, with a speech from BOE governor scheduled for 20:30.

  • GBP/USD rolled over from 1.4000 resistance yesterday and is a touch above our bearish target at 1.3900/19. The reward to risk appears unfavourable for bears around current levels until prices break below 1.3900. target zone. However, if a base formed above 1.3900 it may tempt bulls back to the table.
  • Since falling to our initial 0.8600 target on Monday, EUR/GBP has retraced from its lows and now hovers around a key resistance level. Given the amount of noise which today’s data dump may generate, then this could easily lead to whipsaws around 0.8640 resistance before its next move unfolds.

Learn how to trade forex

EUR/USD: All eye on 1.2000

EUR/USD formed a bearish pinbar yesterday, warning of buyer exhaustion after breaking above 1.2000 on Monday. A break beneath 1.2034 confirms the near-term reversal problem, but we will refrain from becoming too bearish for a few technical reasons. Monday’s strong bullish candle is more compelling than yesterday’s bearish candle, prices remain above 1.2000 and the US dollar index (DXY) has stalled just below its own resistance level.

Furthermore, the four-hour chart shows a decent trend is trading within a bullish channel. So, unless we see a catalyst for strong USD buying, its hard to see how bulls won’t be tempted to load up with any dip towards 1.2000.

  • The bias remains whilst prices hold above 1.2000.
  • Bulls could seek ow volatility dips above 1.2000 / bullish channel.
  • A clear break beneath 1.2000 and the bullish channel invalidates the bullish bias.


More from Commodities

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.