European Open: China’s PMI’s beat, Europe and US up next

Asian Indices:

• Australia's ASX 200 index rose by 43.1 points (0.61%) and currently trades at 7,092.20
• Japan's Nikkei 225 index has fallen by -166.15 points (-0.49%) and currently trades at 33,892.60
• Hong Kong's Hang Seng index has fallen by -18.17 points (-0.08%) and currently trades at 22,694.85
• China's A50 Index has risen by 80.98 points (0.55%) and currently trades at 14,814.30

UK and Europe:

• UK's FTSE 100 futures are currently down -44.5 points (-0.6%), the cash market is currently estimated to open at 7,413.75
• Euro STOXX 50 futures are currently down -32.5 points (-0.83%), the cash market is currently estimated to open at 3,891.73
• Germany's DAX futures are currently down -117 points (-0.81%), the cash market is currently estimated to open at 14,344.02

US Futures:

• DJI futures are currently up 17 points (0.05%)
• S&P 500 futures are currently down -18.75 points (-0.13%)
• Nasdaq 100 futures are currently flat (0%)

Asian equity indices were mostly higher overnight with Japan’s TOPIX taking the lead with a 1% gain. The Hang Seng was the only major benchmark to trade lower although it is currently off by a mere -0.1%. Yet European futures have opened lower after talks between the Ukraine and Russia failed to provide a resolution to the conflict. US futures for the Dow and S&P 500 are slightly higher whilst the Nasdaq (yesterday’s top performer) is -0.7% lower form the prior close.

Heavy fighting in Ukraine continued after peace talks with Russia failed to achieve anything. Satellite images show what appears to be a 40-mile convoy of Russian tanks approaching Kiev. And (unverified) reports claim that 70 Ukrainian soldiers have been killed following heavy Russian artillery fire at a military base in Okhtyrka.

FTSE looks set to challenge 7500

The FTSE 100 has once again rallied from its 200-day eMA after a failed intraday attempt to break beneath it. The September and November lows show a similar scenario, although Friday’s rally from the 200-day eMA is notable as it completely reversed the prior day’s losses. A stochastic buy signal and hammer formed yesterday which would be confirmed as a bullish reversal candle is prices break above 7500 today. And that should quickly bring the 7600/19 resistance zone and 7869 high into focus for bulls. Our bias remains bullish above 7365 should prices break above 7500 today.

FTSE 350: Market Internals

FTSE 350: 4187.69 (-0.42%) 28 March 2022

• 226 (64.20%) stocks advanced and 114 (32.39%) declined
• 12 stocks rose to a new 52-week high, 15 fell to new lows

Outperformers:

• + 31.93% - Oxford Instruments PLC (OXIG.L)
• + 13.37% - Chemring Group PLC (CHG.L)
• + 11.18% - Qinetiq Group PLC (QQ.L)

Underperformers:

• -56.01% - Polymetal International PLC (POLYP.L)
• -29.29% - EVRAZ plc (EVRE.L)
• -15.70% - Petropavlovsk PLC (POG.L)

China’s PMI’s come in above expectations

A mixture of state-backed and private PMI data for China’s service and manufacturing sectors expanded in January, according to data from NBS and Caixin. We know that PBOC have been busy easing lending restrictions which could partly explain the positive data set, although it is a bit of a bitter-sweet moment as we’re yet to see what impact, if any, the Ukraine crisis has on these global data sets going forward.

ISM manufacturing data at 15:00 GMT

The ISM is likely one of the longest running data sets used to assess the business cycle. The ISM peaked in March 2021 at a record high of 63.7 but as of January it had fallen to a 14-month low of 57.4 which shows growth potential is hitting headwind. Meanwhile the prices paid index remains historically high at 76.1 and if we are to see any sighs that inflationary pressures are abating, it would show up in the ISM PMI report first.

Gold and oil remain supported

Spot gold prices are showing sighs of stability above 1900, although we’re yet to see a daily close above the November high around 1916.5. Trading conditions are choppy and price action remain well within the $100 range printed last Thursday, so traders would be wise to remain nimble and not ‘marry’ their positions.

WTI is holding above 95.0 and trades around the midway point of a bullish channel on the daily chart. With current levels of volatility it could reach 100 within the next couple of days, should bulls retain control.

USD retraced against yesterday’s losses

Currency markets traded in tight ranges, although essentially retraced slightly against yesterday’s dollar-bearish moves. Markets have effectively binned the idea of a 50 bps hike from the Fed this month, with fewer hike also being priced in due to the Ukraine crisis. But we could see the US dollar weaken further today as Russia are showing no signs of backing off.

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