European Open: Social Democrats Narrowly Win German Election

After a very close contest, the centre-left Social Democrats (SPD) narrowly won the German election, putting them in power for the first time in 16 years. Well, kind of.

Charts (2)

Asian Indices:

  • Australia's ASX 200 index rose by 39.4 points (0.54%) and currently trades at 7,382.00
  • Japan's Nikkei 225 index has risen by 14.19 points (0.05%) and currently trades at 30,263.71
  • Hong Kong's Hang Seng index has risen by 67.59 points (0.28%) and currently trades at 24,259.75

UK and Europe:

  • UK's FTSE 100 futures are currently up 44.5 points (0.63%), the cash market is currently estimated to open at 7,095.98
  • Euro STOXX 50 futures are currently up 22 points (0.53%), the cash market is currently estimated to open at 4,180.51
  • Germany's DAX futures are currently up 85 points (0.55%), the cash market is currently estimated to open at 15,616.75

US Futures:

  • DJI futures are currently up 33.2 points (0.1%)
  • S&P 500 futures are currently up 48.75 points (0.32%)
  • Nasdaq 100 futures are currently up 15.75 points (0.35%)


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Indices

Olaf Scholz is on track to be the new German Chancellor, marking the end of Angles Merkel’s 16-years in office. Although with the new ruling party on track for 25.7% of the vote (compared with 24.5% for the CDU/CUS) and no major block on track for form a majority government, it appears likely we’ll see a three-way alliance led by the SPD. Yet this could take months to negotiate, which means more uncertainty for investors whilst the details are put together.

Futures suggest we’re in for a stronger open with US and European markets all trading around 0.7% higher from Friday’s close. The release of Huawei’s executive from Canadian custody over the weekend signalled a thawing in tensions between Canada, US and China. China’s CSI300 rose 0.25%. and the ASX200 was up 0.5%.


FTSE 350: Market Internals


FTSE 350: 4075.61 (-0.38%) 24 September 2021

  • 69 (19.66%) stocks advanced and 272 (77.49%) declined
  • 7 stocks rose to a new 52-week high, 5 fell to new lows
  • 69.8% of stocks closed above their 200-day average
  • 47.86% of stocks closed above their 50-day average
  • 17.66% of stocks closed above their 20-day average

Outperformers:

  • + 4.84%   -  Cineworld Group PLC  (CINE.L) 
  • + 4.55%   -  National Express Group PLC  (NEX.L) 
  • + 4.38%   -  Rolls-Royce Holdings PLC  (RR.L) 

Underperformers:

  • -7.72%   -  Darktrace PLC  (DARK.L) 
  • -4.33%   -  Draper Esprit PLC  (GROW.L) 
  • -4.06%   -  Auction Technology Group PLC  (ATG.L) 


Forex:

Commodity currencies were the strongest overnight as they tracked Asian share markets higher. AUD is up around 0.45%, NZD rose 0.38% and CAD rose around 0.18% against the US dollar. CHF and USD are currently the weakest majors.

A bullish trend is developing on the hourly chart of AUD/JPY which is bouncing along the 10 and 20-bar eMA’s. Since printing a low at 78.84, two higher highs and lows have formed, and a break above 80 saw prices then respect that level as support where the monthly and weekly pivot points also reside. Given the positive mood seen across equity markets we think this may try to break above 81, and perhaps test the 81.15 high near the weekly R1 pivot point.

The euro is little changed despite Germany’s election, although the prospects of waiting for months of negotiations to form a likely 3-way coalition government has sapped the fun out of the event somewhat.

Durable goods orders is the main economic calendar event today at 13:30 BST. Business equipment spending was a strong in last month’s report, although new orders fell by -0.1%. Today’s print is forecast to rise 0.1% MoM (-0.1% prior) and for core durables to remain flat at 0% (0.7% previously).

The British pound traded lower against all major commodity currencies, helping GBP/NZD fall to a 9-week low after breaking beneath its 200-day eMA overnight. However, take note of trend support projected from the May low on the daily chart.


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Oil flies high

Oil prices continued higher overnight which saw WTI trade above $75 for the first time in 2-months. Now within its fourth consecutive bullish day since its Doji above $70, prior resistance at 74.23 remains a key level for traders to focus on this session. Brent went one better to reach a near 3-year high and reach $79.00.


Up Next (Times in BST)

You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.


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