European Open: Sentiment Sours Ahead of the Open, Turkish Rate Decision Up Next

News that Fitch ratings agency placed 29 Chinese property developers under closer scrutiny seemed to see a sudden inflow into the yen, knocking many crosses from their (overextended) highs.


The Japanese yen saw sudden inflows late in the Asian session today

Asian Indices:

  • Australia's ASX 200 index rose by 3.2 points (0.04%) and currently trades at 7,416.90
  • Japan's Nikkei 225 index has fallen by -419.24 points (-1.43%) and currently trades at 28,835.61
  • Hong Kong's Hang Seng index has fallen by -75.76 points (-0.29%) and currently trades at 26,060.26

UK and Europe:

  • UK's FTSE 100 futures are currently down -25.5 points (-0.35%), the cash market is currently estimated to open at 7,197.60
  • Euro STOXX 50 futures are currently down -12.5 points (-0.3%), the cash market is currently estimated to open at 4,159.67
  • Germany's DAX futures are currently down -37 points (-0.24%), the cash market is currently estimated to open at 15,485.92

US Futures:

  • DJI futures are currently up 152.03 points (0.43%)
  • S&P 500 futures are currently down -50.75 points (-0.33%)
  • Nasdaq 100 futures are currently down -11.25 points (-0.25%)



Japan’s equity markets tracked the Nasdaq 100 lower overnight to see the Nikkei and TOPIX as the weakest indices, falling around -1.3% and -1% respectively. The stronger yen also contributed to weakness for the region, after extended rallies have left many currency pairs over-extended.

Although Fitch rating agency may have also played a part, after they placed 29 Chinese property developers under UCO (under criteria observation), as “industry conditions and the funding environment have weakened” since their exposure draft report in August. Evergrande shares also traded for the first time since their halt back on 30th September. Evergrande (3333) opened around -10% lower for the day, and investors are keeping a close eye on them as their 30-day grace period for their bond default is up in 2 days.



FTSE 350: Market Internals

Wood Group has outperformed the FTSE 100 over the past 30 days

FTSE 350: 4136.27 (0.08%) 20 October 2021

  • 155 (44.16%) stocks advanced and 185 (52.71%) declined
  • 6 stocks rose to a new 52-week high, 4 fell to new lows
  • 58.4% of stocks closed above their 200-day average
  • 32.48% of stocks closed above their 50-day average
  • 21.08% of stocks closed above their 20-day average


  • + 4.32%-Hochschild Mining PLC(HOCM.L)
  • + 3.95%-John Wood Group PLC(WG.L)
  • + 3.07%-Syncona Ltd(SYNCS.L)


  • -12.8%-Trustpilot Group PLC(TRST.L)
  • -6.69%-TUI AG(TUIT.L)
  • -4.95%-Draper Esprit PLC(GROW.L)



Forex: Yen catches bid late session

JPY is the strongest major as a tone of risk-off entered the late stages of the Asian session. With no sudden news (other than mentioned with Fitch and Chinese developers) we are currently assuming the announcement has reinforced fears of contagion for traders. USD/JPY looks like it wants to test 114 support and AUD/JPY and NZD/JPY are currently the weakest pairs (a classic sign of risk-off). We shall see how traders react after the open, and is worth noting that recent bouts of risk-off have started in Asia recently.

USD/TRY has retraced for two days ahead of today's rate decision. A rate cut could send it higher.

Turkey’s overnight borrowing rate decision will be announced at 12:00 BST. It’s a sore point for some, particularly the three central bankers that President Erdogan fired last week due to their opposition against rate cuts (which currently sit at 16.5% btw to fend off inflation of around 20%). Last month the central bank lowered rates by 100 bps which sent USD/TRY 1.34% higher on the day, following a 2-day pullback. Incidentally we find the pair has also pulled back for the past 2 days heading into today’s meeting.

In the US session the main calendar event is unemployment claims at 13:30 BST. As they sit at their lowest level in 19-months it would take a particularly large upside miss to spook markets, whereas similar levels of lower simply backs up the previous reads and helps to support sentiment (so the bigger reaction would likely be a upside miss).



WTI rose to $84 overnight although has retreated since yen inflows picked up. If this is the beginning of something bigger than oil prices could finally find themselves under pressure over the next session or two.


Up Next (Times in BST)

Turkey hold their first rate decision today, since President Erdogan fired key central bankers last week

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