European Open: Futures turn higher, 7200 remains in focus for FTSE traders

Asian Indices:

• Australia's ASX 200 index rose by 85.8 points (1.21%) and currently trades at 7,149.40
• Japan's Nikkei 225 index has risen by 242.38 points (0.96%) and currently trades at 24,405.16
• Hong Kong's Hang Seng index has fallen by -698.18 points (-3.4%) and currently trades at 19,855.61
• China's A50 Index has fallen by -299.16 points (-2.16%) and currently trades at 13,547.30

UK and Europe:

• UK's FTSE 100 futures are currently up 31.5 points (0.44%), the cash market is currently estimated to open at 7,187.14
• Euro STOXX 50 futures are currently up 26.5 points (0.72%), the cash market is currently estimated to open at 3,713.28
• Germany's DAX futures are currently up 109 points (0.8%), the cash market is currently estimated to open at 13,737.11

US Futures:

• DJI futures are currently up 249 points (0.76%)
• S&P 500 futures are currently up 69.25 points (0.52%)
• Nasdaq 100 futures are currently up 31 points (0.74%)

Headlines from the Ukraine crisis continue to dominate sentiment, and traders are reacting to the weekend’s news flow. Reports that Russia requested military assistance from China weighed on sentiment at the open, as did the weekend reports that Russia bombed a military complex right near Poland’s border – a NATO ally. The US has since said there will be “consequences” if China decides to help Russia, and a spokesman for China has denied this is the case. Yet hopes of another ceasefire talk are on the cards again (despite continued fighting in Ukraine) which has helped US and European futures trade higher near the end of the Asian session.

China’s equity markets led the way lower, with news of a lockdown in Shenzhen also adding to selling pressure. The Nikkei and ASX 200 posted gains, with the latter closing back above its 20-day eMA and its 4^th day above 7,000.

FTSE’s rally foiled at the 200-day eMA

By Friday’s high, the FTSE 100 had rebounded over 7% as part of its countertrend rally. Yet it was unable to keep hold of most of the day’s gains and reversed lower to form a bearish hammer. But what makes this of greater interest is that it closed back below the 200-day eMA and 7200 level after a failed break above it. Furthermore, trading volumes declined during the rebound which suggests the move is corrective. A break of Thursday’s low could be taken as a sign that this supposed next leg lower is underway. But early in today’s session we’ll keep an eye on how prices reaction around 7200 as it clearly remains to be a pivotal level.

FTSE 350: Market Internals

FTSE 350: 4017.16 (0.80%) 11 March 2022

• 269 (76.64%) stocks advanced and 74 (21.08%) declined
• 3 stocks rose to a new 52-week high, 1 fell to new lows
• 25.07% of stocks closed above their 200-day average
• 30.48% of stocks closed above their 50-day average
• 10.54% of stocks closed above their 20-day average

Outperformers:

• + 18.01% - Pearson PLC (PSON.L)
• + 12.07% - Polymetal International PLC (POLYP.L)
• + 7.71% - PureTech Health PLC (PRTC.L)

Underperformers:

• -6.34% - Hochschild Mining PLC (HOCM.L)
• -4.70% - Fresnillo PLC (FRES.L)
• -3.50% - Energean PLC (ENOG.L)

USD retains its strength ahead of this week’s FOMC meeting

We’ve seen a resurgence back into the US dollar after inflation reached a 40-year high last week, and Fed members reassured traders that hikes will commence regardless of tensions in Ukraine. Markets are now pricing in up to 7 hikes this year from the Fed, and that has seen traders return to bid the dollar in full force. USD/JPY came close to touching 118 as it tracked yield differentials higher. AUD/USD tested last week’s low after closing beneath its 200-day eMA on Friday.