European Open: Index futures cautiously higher, German ifo up next
Whilst US and European futures are up around 0.7% - 1.2%, gains appear cautious relative to last week’s declines.
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Asian Indices:
- Australia's ASX 200 index fell by -1.1 points (-0.02%) and currently trades at 7,144.50
- Japan's Nikkei 225 index has risen by 320.99 points (1.22%) and currently trades at 26,723.83
- Hong Kong's Hang Seng index has fallen by -389.96 points (-1.88%) and currently trades at 20,327.28
- China's A50 Index has fallen by -169.86 points (-1.26%) and currently trades at 13,358.19
UK and Europe:
- UK's FTSE 100 futures are currently up 51.5 points (0.7%), the cash market is currently estimated to open at 7,441.48
- Euro STOXX 50 futures are currently up 42 points (1.15%), the cash market is currently estimated to open at 3,699.03
- Germany's DAX futures are currently up 169 points (1.21%), the cash market is currently estimated to open at 14,150.91
US Futures:
- DJI futures are currently up 227 points (0.73%)
- S&P 500 futures are currently up 149.5 points (1.26%)
- Nasdaq 100 futures are currently up 38 points (0.97%)
News that China are considering relaxing hotel quarantine rules and Friday’s PBOC rate cut helped equity futures markets rise overnight. On a typical day a rise of 0.7 – 1.2% is admirable for European or US futures but, compared to recent levels of volatility, the gains look cautious at best. NZD and AUD were the strongest majors, USD was the weakest. Key data points this week for the US include inflation, GDP and FOMC minutes. Therefore, we may find volatility to be on the low side leading into these events.
German ifo up next
The German ifo business climate report is released at 09:00 BST. Last month saw a modest rise in sentiment but from 2-year lows. Still, it is the first indication of stability since the invasion of Ukraine. The probability of an economic expansion rose from 1.2% to March to 20%, and export expectations also rose for the first time since the invasion. We’ll keep an eye on these two metrics to see if it can continue higher, but of course the uncertainty surrounding supply chains due to the war in Ukraine remains a potential downer on sentiment in general. As traders are keen to hear if the ECB will hike up to 100 bps over the next few months, they’ll keep a close eye on such sentiment reports and potentially bid the euro if they come in above expectations.
DAX falters at resistance once more
Last Tuesday we outlined a potential bullish case for the DAX on the monthly and weekly timeframes, although kept an open mind as to where it could travel over the near-term on the daily chart. Since then, trend resistance and the 50-day eMA capped any upside and the market rolled over to a 5-day low on Thursday, before printing a bearish pinbar at resistance on Friday. A break of Friday’s low assumes another dip lower. However, as DAX futures are around 1.3% higher ahead of the open, we’re hopeful we may finally see a bullish breakout above 14,300 – should the German IFO business report surprise to the upside.
FTSE: Market Internals
FTSE 350: 4116.05 (1.19%) 20 May 2022
- 256 (73.14%) stocks advanced and 83 (23.71%) declined
- 2 stocks rose to a new 52-week high, 2 fell to new lows
- 24.29% of stocks closed above their 200-day average
- 100% of stocks closed above their 50-day average
- 11.71% of stocks closed above their 20-day average
Outperformers:
- + 6.86% - Countryside Partnerships PLC (CSPC.L)
- + 6.79% - Darktrace PLC (DARK.L)
- + 6.73% - Playtech PLC (PTEC.L)
Underperformers:
- -4.05% - discoverIE Group plc (DSCV.L)
- -3.83% - Coats Group PLC (COA.L)
- -3.68% - TUI AG (TUIGn.DE)
Up Next (Times in BST)
- ECB member Holzmann speaks about inflation at 12:45 BST.
- Canadian exchanges are closed today due to the public holiday (Victoria Day).
- The Fed’s Bostic speaks at 17:00.
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