European Open: Mixed lead from Asia, Soft Open for Europe, PMI’s Next

Whilst Asian equities mostly shrugged off Wall Street’s tax-driven turmoil, it seems more of a ‘holding session’ as tight ranges suggest traders are waiting to see if there is any follow-through.

Charts (1)

Asian Indices:

  • Australia's ASX 200 index fell by -7.4 points (-0.1%) and currently trades at 7,048.00
  • Japan's Nikkei 225 index has fallen by -231.1 points (-0.79%) and currently trades at 28,957.07
  • Hong Kong's Hang Seng index has risen by 258.98 points (0.9%) and currently trades at 29,014.32

UK and Europe:

  • UK's FTSE 100 futures are currently down -25.5 points (-0.37%), the cash market is currently estimated to open at 6,912.74
  • Euro STOXX 50 futures are currently down -10 points (-0.25%), the cash market is currently estimated to open at 4,004.80
  • Germany's DAX futures are currently down -58 points (-0.38%), the cash market is currently estimated to open at 15,262.52

Thursday US Close:

  • The Dow Jones Industrial fell -123.04 points (-0.36%) to close at 34,077.63
  • The S&P 500 index fell -38.44 points (-0.93%) to close at 4,134.98
  • The Nasdaq 100 index fell -134.24 points (-0.96%) to close at 13,762.36

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Shares were mixed across Asia, with the Hang Seng China Enterprise and Hang Seng indices trading around 0.94% higher, trailed by China’s CSI 300 rising 0.75%. The ASX 200 was off by -0.2% after failing to break yesterday’s high. European futures are pointing to a softer start, with DAX and futures down -0.4% and the STOXX 50 -0.3% lower.

The FTSE 100 rose to a two-day high yesterday and has recovered around half of its losses sustained during Tuesday’s abrupt sell-off. Wednesday’s low held above the 20-day eMA and yesterday’s session closed at its high, so the bias today is bullish whilst prices hold above yesterday’s low.

However, we feel inclined to remain nimble. Whilst European shares were higher yesterday, volatility was relatively contained so we’re not entirely convinced confidence has been fully restored. From a technical standpoint, should FTSE 100 prices drop sharply enough today then the four-hour chart will have a potential head and shoulders top to contend with (a break below the 6840 neckline confirms it). But so long as prices remain above yesterday’s low ad break yesterday’s high, bullish setups are preferred for intraday setups.

FTSE 350: Market Internals

Midcaps led UK equities higher yesterday, with the FTE 250 rising 1.26% compared with 0.62% for the FTSE 100, and 0.74% for the broader FTSE 350.

FTSE 350: 6938.24 (0.62%) 22 April 2021

  • 285 (81.20%) stocks advanced and 63 (17.95%) declined
  • 24 stocks rose to a new 52-week high, 5 fell to new lows
  • 87.46% of stocks closed above their 200-day average
  • 23.93% of stocks closed above their 20-day average


  • + 19.65%  -  Morgan Sindall Group PLC  (MGNS.L) 
  • + 5.49%   -  SSP Group PLC  (SSPG.L) 
  • + 5.05%   -  TI Fluid Systems PLC  (TIFS.L) 


  • -5.03%   -  BAE Systems PLC  (BAES.L) 
  • -3.60%   -  AJ Bell PLC  (AJBA.L) 
  • -3.24%   -  Rathbone Brothers PLC  (RAT.L) 

Forex pairs retrace yesterday’s moves

AUD, CAD and GBP were the strongest major overnight, having recouped some of yesterday’s losses. But eyes will be on Wall Street for general sentiment in the US session to see if yesterday’s sell-off is simply a blip, or the beginning of a larger, countertrend move.

  • The US dollar index (DXY) remains beneath the 91.30/40 resistance zone, although it was closed to being broken with yesterday’s bullish engulfing candle. So traders should continue to watch XY alongside EUR/USD whilst it probes key support at 1.2000. Lower stocks could drag euro though support, whilst a bounce in risk sentiment could see the level hold as support. Also keep in mind that the main economic date is flash PMI’s for Europe, UK and the US.
  • The short bias on EUR/GBP was never confirmed with a break beneath its ‘hanging man’ candle at 0.8613, and stood little chance as prices pretty much rallied from the open.
  • GBP/USD failed to hold onto its base above 1.3900, making this level an area for bears to consider fading into and brings the 1.3716 low into focus.

CAD/JPY: One to Watch if Sentiment Improves

CAD/JPY is on track for a bullish hammer this week, and currently traders lower for a third consecutive week. It’s therefore plausible its correction from the March high is nearing an end, if not already complete. If risk appetite can somehow pick up this session or next week, it should be enough to help CAD/JPY break to new highs, given BOC (Bank of Canada) signalled they will likely be the first one among developed economic to raise rates.

The daily chart formed a small indecision candle beneath its 20-day eMA yesterday, after posting a strong bullish candle on Wednesday. Yesterday’s low held above the 23rd of March low, and prices are continually testing trendline resistance.

  • A break above 86.79 confirms a bullish breakout, as it clears Wednesday and Thursday’s high and its 20-day eMA.
  • The bias remains bullish if prices do break higher.
  • A break beneath 86.00 invalidates the potential for a breakout (for now).

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Gold to crack 1800?

We think gold will eventually crack 1800, but for today much of it depends on how Wall Street trades around the proposed (but not yet confirmed) tax hikes. As it was this news that weighed on gold yesterday. The 200-day eMA continues to cap as resistance, so if volatility remains low beneath 1800 we’d be inclined to consider counter-trend setups below 1800. Or simply step aside and wait Or simply step aside and wait for a break above it, if or whenever that may be. 

Up Next (Times in BST)

You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.

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