Reality check for risk as China data misses

Data from China clearly pointed the wrong way and knocked sentiment, but news that Shanghai is aiming to reopen threw in a degree of support.

China

Asian Indices:

  • Australia's ASX 200 index rose by 18.3 points (0.26%) and currently trades at 7,093.40
  • Japan's Nikkei 225 index has risen by 167.78 points (0.63%) and currently trades at 26,595.43
  • Hong Kong's Hang Seng index has fallen by -73.65 points (-0.37%) and currently trades at 19,825.12
  • China's A50 Index has fallen by -151.19 points (-1.14%) and currently trades at 13,144.84

 

UK and Europe:

  • UK's FTSE 100 futures are currently down -25 points (-0.34%), the cash market is currently estimated to open at 7,393.15
  • Euro STOXX 50 futures are currently down -13 points (-0.35%), the cash market is currently estimated to open at 3,690.42
  • Germany's DAX futures are currently down -40 points (-0.29%), the cash market is currently estimated to open at 13,987.93

 

US Futures:

  • DJI futures are currently down -128 points (-0.4%)
  • S&P 500 futures are currently down -69 points (-0.56%)
  • Nasdaq 100 futures are currently down -21 points (-0.52%)

 

20220516futuresFX

Data form China today was underwhelming to say the least. We knew it was never going to be great due to lockdowns, but retail sales, industrial production, output and investment all slumped in tandem whilst the unemployment rate rose. This dented sentiment in the region, saw copper hand back early gains, Chinese equities trade lower along with AUD/JPY and US futures.

However, what has helped to soften the blow is a light is at the end of the tunnel for lockdowns. Shanghai announced over the weekend that they would allow restaurants, shops and shopping malls to reopen today, and then revealed their target to open back up is on June the 1st.

  

Yen takes safe-haven inflows

20220516usdjpyFX

Commodity currencies were once again weaker, mirroring the pattern seen through much of last week. The yen stepped up to the safe-haven plate and even outperformed the US dollar, with USD/JPY breaking a key trendline on the hourly chart.

A bearish divergence formed on the stochastic oscillator whilst prices met resistance at the 100-hour eMA, and the trendline break confirmed a rising wedge pattern is in play, which targets the lows at 127.50. For today we’d prefer to fade into weakness below the 129.50 resistance zone, with the 128.30 support zone making an interim target.

 

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