European Open: Markets on ‘Inflationary’ Edge Ahead of Today’s PPI
Matt Simpson May 13, 2021 12:43 PM
With markets likely suffering from confirmation bias after yesterday’s strong CPI print, we could see an extension of yesterday’s moves if PPI delivers and the Fed remain quiet.
- Australia's ASX 200 index fell by -36.3 points (-0.52%) and currently trades at 7,008.60
- Japan's Nikkei 225 index has fallen by -549.83 points (-1.92%) and currently trades at 28,058.77
- Hong Kong's Hang Seng index has fallen by -260.26 points (-0.92%) and currently trades at 27,970.78
UK and Europe:
- UK's FTSE 100 futures are currently down -28 points (-0.4%), the cash market is currently estimated to open at 6,976.63
- Euro STOXX 50 futures are currently down -22 points (-0.56%), the cash market is currently estimated to open at 3,925.43
- Germany's DAX futures are currently down -51 points (-0.34%), the cash market is currently estimated to open at 15,099.22
Wednesday US Close:
- DJI futures are currently up 104 points (0.31%), the cash market is currently estimated to open at 33,691.66
- S&P 500 futures are currently up 55 points (0.42%), the cash market is currently estimated to open at 4,118.04
- Nasdaq 100 futures are currently up 13.25 points (0.33%), the cash market is currently estimated to open at 13,014.88
And by an extension of yesterday’s moves we mean a stronger US dollar and yields, alongside weaker equities. Moreover, a stronger than expected jobless claims could exacerbate the excitement, given the Fed also need to see employment gravitate towards maximum potential before they publicly admit they have spoken above tapering or even hiking.
Asian equities tracked Wall Street lower, with the Hang Seng Enterprise Index (HSCE) and CSI300 falling -0.95% and 0.8% respectively, and the ASX 200 down -0.4% (but holding just above yesterday’s low around 7,000).
Still, US futures have opened higher with Nasdaq E-minis adding 54.5 points (0.43%, the S&P 500 E-minis are up 14.5 points (0.36% and the Dow E-minis are up 115 point (0.34%).
FTS100 clambers back above 7000 (just)
The FTSE 100 closed back above 7000 yesterday after suffering its worst single day loss in 10-weeks on Tuesday. But the jury is out as to whether global equity sentiment (and therefore the FTSE 100) will continue to slide today. However, yesterday’s small bullish inside candle provides hopes for bulls, as a similar pattern emerged on the 1st of April after shedding over 2% the prior session. So, if history is to repeat on this occasion, a break of yesterday’s high looks appealing to bulls. However, if prices break beneath 6900 is also clears two swing lows and could signal the FTSE’s next move lower. But, before that can happen, bears should take note of the potential bearish wedge forming on the four-hour chart.
FTSE 350: Market Internals
FTSE 350: 7004.63 (0.82%) 12 May 2021
- 146 (41.60%) stocks advanced and 193 (54.99%) declined
- 7 stocks rose to a new 52-week high, 10 fell to new lows
- 80.06% of stocks closed above their 200-day average
- 17.66% of stocks closed above their 20-day average
- + 20.7% - UDG Healthcare plc (UDG.L)
- + 6.85% - Redde Northgate PLC (REDD.L)
- + 5.18% - Chemring Group PLC (CHG.L)
- -8.32% - Just Eat Takeaway.com NV (TKWY.AS)
- -4.46% - Flutter Entertainment PLC (FLTRF.I)
- -3.60% - Hammerson PLC (HMSO.L)
Learn how to trade indices
Forex: Dollar holds onto ‘inflationary’ gains
It was quiet ranges overnight, although NZD and CAD are currently the strongest majors and JPY is the weakest.
- EUR/GBP produced a bullish pinbar yesterday and closed on the 0.8580 support level, warning of the potential for a minor bounce today. Regardless, the bias remains bearish beneath the 0.8620/30 resistance zone (but is equally useful as a near-term bullish target, if prices break above yesterday’s high).
- GBP/JPY didn’t rip higher yesterday as hoped, but it is holding above 153.88 support and momentum has turned higher overnight.
- GBP/USD fell to a two-day low yesterday and prices are coiling up on the four-hour chart. A break beneath yesterday’s low brings the 1.4000/17 support zone into focus for bears, at which point we’d see if a support level could build and reconsider potential bullish setups.
- The US dollar index (DXY) is holding steady around 90.74 just off yesterday’s high, and the overnight low found support at the March 3rd low.
- Conversely, the stronger dollar yesterday saw EUR/USD make light work of crashing through 1.2100, and our bias remains bearish beneath that key level today, with its next support level sitting at 1.2035/42.
Learn how to trade forex
Commodities: Colonial Pipeline turn on the taps
News that Colonial’s pipeline is slowly beginning to revert back to normal operation weighed on energy prices overnight. WTI crude futures were down -0.8% with the front month trading at 65.56, whilst brent futures fell -0.75% and now trade at 0.76%. Gasoline futures were also off by -0.9%.
Gold and silver look set to extend their retracements after a momentum shift at recent highs. Gold trades around 1817 but anchored to yesterday’s lows, a break of which brings 1800 into focus over the near-term.
Silver is also in a corrective phase yet within a bullish channel, therefore a break beneath 26.95 brings 26.63 support into focus, or the lower trendline of its bullish channel.
Up Next (Times in BST)
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.