Friday Focus Dow Jones points higher after another bear attack FTSE strengthens
Equity investors are on alert on Friday morning.
Share this:
Déjà vu
Equity investors are on alert on Friday morning. Last night’s U.S. session saw a spot of weakness that left the Dow Jones Industrial Average almost 100 points lower after the latest bear attack on major indices that are inarguably overbought. A spot of delayed déjà vu may be in order though. Thursday’s close was quite like Tuesday’s when markets closed lower, but immediately bounced via futures. A massive rally then ensued in the next cash session. Right now Nasdaq, Dow and S&P contracts are 0.2%-0.4% better.
When, not if
The watch is on as to whether another advance can be eked out though any rallies here face diminishing returns relative to earlier this month. Consolidation looks necessary, though macroeconomic signals elsewhere are offering impetus across the global shares on Friday—see below.
Markets still rising in the East
Asian stock markets may be at a slightly earlier stage in their momentum cycle. Their run of record highs continued overnight. MSCI APAC (excluding Japan) eked out another incremental advance on top of Thursday's peak for a total move of 1.3% this week as the remarkable pace of world shares at the start of 2018 looks to maintain momentum into a third week.
Asian stock markets may be at a slightly earlier stage in their momentum cycle. Their run of record highs continued overnight. MSCI APAC (excluding Japan) eked out another incremental advance on top of Thursday's peak for a total move of 1.3% this week as the remarkable pace of world shares at the start of 2018 looks to maintain momentum into a third week.
China data helps
Per Thursday, Asian equities saw a bonus tailwind from Chinese economic releases. A breakdown of quarterly growth data out a day ago showed service industries in the lead. The sector grew 8.3% year-to-year accelerating from Q3's 8% pace. Services accounted for almost half the economy's quarterly growth, underscoring robust conditions for technology and consumer businesses that are supportive of Asian stock markets. Shanghai, Seoul and Tokyo indices all inched ahead.
Europe takes the batonHence Europe picks up the baton, with FTSE, DAX, Spain’s Ibex, Italy’s FTSE MIB and the broader STOXX gauge all in the black. The DAX has snapped higher the most as continuing strong earnings underpin its economy fuelled advance, whilst the FTSE is aided by miners that routinely perk up when China data does.
Key Technicals
FTSE/DAX
FTSE prospects may be favoured by plenty of room on the oscillators that have fully unwound during the benchmark’s drift lower since 12th January into support holding on 5th, 8th and 9th at 7690s. DAX is charging into the same top from earlier this month at 13425.GBPUSD/EURGBP
The pound is a good place to start in currencies. One of the worst retail sales readings since December 2010 has not sapped much strength of GBP/USD near recent 18-month highs, mostly shrugging off a 1.5% m/m fall vs 0.6% forecast. With a glaring absence of further attempts on those highs though – after a thin spike to 1.3942, cable looks heavy. The pound has outperformed itself against the euro in recent days, pushing to the lower bound of a 89.28p-87.99p channel last night, where the euro found support. Watch if the pound can do the same at Thursday’s 88.37p high for the euro.
USD/JPY
The yen is a tell-tale sign. A solid 46 sen higher against the dollar at time of writing shows the greenback’s long malaise has further to run. The 38.2% Fibonacci (¥111.18) of the pair’s 2016 advance is still very live, though observe any tendency for circa ¥111.30 to support as per this week.EUR/USD
The euro complex is buoyant elsewhere, on expectations of a more hawkish ECB, which meets next week, with possible changes in forward guidance that shift the focus to rates on the agenda. If that occurs, it would implicitly spell the end of QE. EUR/USD saw 1.2231-65 in Asia, holding off from the 1.2323 trend high on 17th January.
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/CAD shooting star puts September surge on notice
USD/CAD has printed a clear bearish reversal pattern after an extraordinary September surge, but confirmation may depend heavily on how US Treasury yields react to Friday’s payrolls report.
USD/CHF Reverses as Swiss Franc Surges amid Bond Carnage
USD/CHF reverses from channel resistance as bond volatility surges and broad Swiss franc strength points to a possible carry-trade unwind.
USD/MXN Analysis: Is Super Peso Starting to Fade?
Over recent trading sessions, the Mexican peso has continued to show signs of weakness against the U.S. dollar. This can already be seen in USD/MXN, which has gained more than 1.7% over the last three sessions, highlighting sustained buying pressure in favor of the dollar in the short term.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.