European Open: GBP Higher Overnight Following Weekend Elections

The British pound was the strongest major overnight following the weekend’s elections in Scotland.

US Election


Asian Indices:

  • Australia's ASX 200 index rose by 68.1 points (0.96%) and currently trades at 7,148.90
  • Japan's Nikkei 225 index has risen by 171.01 points (0.58%) and currently trades at 29,527.25
  • Hong Kong's Hang Seng index has fallen by -93.17 points (-0.33%) and currently trades at 28,517.48

UK and Europe:

  • UK's FTSE 100 futures are currently up 25.5 points (0.36%), the cash market is currently estimated to open at 7,155.21
  • Euro STOXX 50 futures are currently up 17 points (0.42%), the cash market is currently estimated to open at 4,051.25
  • Germany's DAX futures are currently up 46 points (0.3%), the cash market is currently estimated to open at 15,445.65

Friday US Close:

  • The Dow Jones Industrial rose 229.26 points (0.66%) to close at 34,777.76
  • The S&P 500 index rose 30.98 points (0.737335%) to close at 4,232.60
  • The Nasdaq 100 index rose 105.896 points (0.78%) to close at 13,719.63


It was a strong close for European bourses on Friday, thanks for strong earnings reports from Germany. Technology stocks were the best performers, helping the STOXX 600 and STOXX 50 rise to record highs. Basic resource stocks were the strongest performers last week. The DAX is around 100 points from its record high and today’s bias remains bullish above Friday’s low.

The FTSE 100 closed above 7100 for the firt time since February 2020 and is within striking distance of the 7200 handle and 8382 resistance (the January 2020 low). The bias is bullish above Friday’s low but intraday support resides around 7092 – 7100.

Futures markets have opened higher, pointing to a strong start to the week after Friday’s soft NFP print lifted equities to new highs.


FTSE 350: Market Internals


FTSE 350: 7129.71 (0.76%) 07 May 2021

  • 287 (82.00%) stocks advanced and 54 (15.43%) declined
  • 54 stocks rose to a new 52-week high, 3 fell to new lows
  • 88.57% of stocks closed above their 200-day average
  • 22.57% of stocks closed above their 20-day average

Outperformers

  • + 20.0%   -  St Modwen Properties PLC  (SMP.L) 
  • + 8.28%   -  Meggitt PLC  (MGGT.L) 
  • + 8.23%   -  Hill & Smith Holdings PLC  (HILS.L) 

Underperformers:

  • -6.12%   -  Syncona Ltd  (SYNCS.L) 
  • -4.16%   -  John Laing Group PLC  (JLG.L) 
  • -3.90%   -  Morgan Advanced Materials PLC  (MGAMM.L) 

Forex: GBP Higher in Overnight Trade

The British pound is the strongest major overnight, despite Nicola Sturgeon touting another Scottish referendum following the SNP’s fourth consecutive win. One would have expected the pound to suffer with the prospect of a new referendum, yet as the SNP fell just short of an outright majority, traders don’t appear to see it as an issue just yet. Boris Johnson condemned a second referendum, calling it “reckless”.

  • GBP/USD broke marginally above 1.4000, yet volatility of the breakout is a little underwhelming at present.
  • GBP/JPY rose to a five week high, currently trades around 152.60 and is the second strongest major.
  • GBP/CHF is also higher and found support at the pivotal level of 1.2576.


GBP/CHF produced a bearish engulfing month in April, and prices have drifted back to 1.2576 support, making it a pivotal level this week. It may be tempting to go log above this key level, whilst a break beneath it brings the 1.2372 – 1.4000 zone into focus.

USD/CNH is probing a trendline support projected from the February 2014 low. Given the speed at which prices fell to current support, we anticipate a break lower. However, we really need to see prices break beneath the 6.4000 low to confirm any such breakout.

Australia is brimming with confidence, with NAB business confidence rising and conditions both rising to record highs. Retail trade contracted by -0.5% in Q1, down from 5.5% in Q4 although retail sales rose 1.3%. The Australian dollar was little changed, with AUD/USD effectively flat overnight after failing to break above Friday’s high.

Commodities: Cyberattack Closes Key Pipeline in US

A weekend cyberattack forced the largest oil pipeline company in the US to close a key pipeline, and has been described as the most disruptive ransoms schemes to be reported. The US government  has been working around the clock to try and help Colonial Pipeline recover from the attack. Oil prices were little changed although US gasoline futures rose over 3% after the open.  


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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