European Open: US ISM manufacturing PMI and OPEC on tap

Charts (6)

Asian Indices:

  • Australia's ASX 200 index rose by 37.9 points (0.56%) to close at 6,828.60
  • Japan's Nikkei 225 index has risen by 215.47 points (0.74%) and currently trades at 29,394.27
  • Hong Kong's Hang Seng index has risen by 321.5 points (1.13%) and currently trades at 28,699.85

UK and Europe:

  • UK's FTSE 100 futures are currently down -2 points (-0.03%), the cash market is currently estimated to open at 6,711.63
  • Euro STOXX 50 futures are currently up 4 points (0.1%), the cash market is currently estimated to open at 3,923.21
  • Germany's DAX futures are currently up 8 points (0.05%), the cash market is currently estimated to open at 15,016.34

Wednesday US Close:

  • The Dow Jones Industrial fell -85.41 points (-0.26%) to close at 32,981.55
  • The S&P 500 index rose 14.34 points (0.37%) to close at 3,972.89
  • The Nasdaq 100 index fell -69.21 points (-0.53%) to close at 13,091.44

Asian indices look past weak China PMI and focus on Biden’s spending spree

Asian equities were higher overnight despite a soft print of China’s manufacturing PMI, and instead took optimism from Biden’s proposal to spend another $2 trillion on the ‘American Jobs Plan’. The Hang Seng and KOSPI 200 led major exchanges higher overnight, rising 1.2% and 0.9% respectively.

As for China’s PMI print, 50.6 it is the lowest headline print is almost a year according to Markit data. It is also the fourth consecutive month that it has expanded at a slower pace. And these numbers differ from China’s official numbers which suggested stronger activity yesterday.

The FTSE 100 fell -0.86% yesterday and closed the session with a bearish outside candle, after faltering at 6800 the prior day. Closing at the low of the session today’s bias is bearish.

Scottish Mortgage Investment Trust (SMT) and Hikma Pharmaceuticals (HIK) were the strongest performers yesterday, rising 3.8% and 3.6% respectively, whilst British Land Company (BLND) and Mondi PLC (MNDI) were the worst performers, falling -3.3%. Lloyds banking (LLOY) and Barclays (BARC) were the most actively traded stocks.


Forex: AUD and NZD fall on weak PMI print

But whilst equities ignored China’s soft PMI, the antipodeans took note and are the weakest currencies overnight.  

  • AUD/USD is breached the head and shoulders (H&S) neckline highlighted in yesterday’s Asian Open report. A convincing break below here brings the lows around 0.7462 and 0.7400 into focus whilst the multi-month H&S reversal projects a target all the way down to 0.7100.
  • NZD/USD fell to yesterday’s lows although slightly above key support at 0.6943. See today’s Asian Open report for look at key levels.
  • EUR/USD produced an inverted hammer (potential bullish reversal candle) at 1.1700. With ISM manufacturing data today and NFP tomorrow, it could see a large move either side of this important level.
  • USD/CAD formed a large bearish bar at its 50-day eMA and trendline resistance. The bias is bearish beneath the trendline and a break of yesterday’s lows assuming bearish continuation. But given the two important data releases, we are also on guard for a break above 1.2650 resistance which would warn of a trend reversal. 
  • GBP/CHF is back above 1.3000 during overnight trade following yesterday’s bullish candle which closed on this key level. A break above yesterday’s high assumes the bullish trend has resumed and the near-term bias remains bullish above 1.2916, although the daily trend is bullish above 1.2793.
  • EUR/GBP touched a fresh low, invalidating our bias for a counter-trend bounce. The daily trend remains bearish beneath 0.8645 and any minor rally beneath this key level could be tempting for bears to fade into. Next major support is around 0.8415.

USD/JPY coiling at its highs

USD/JPY remains in a strong uptrend on the hourly chart. It is holding above its 10-day eMA and has provided shallow retracements. Having stopped just shy of 111.00 yesterday, prices are now coiling in a small triangle / pennant pattern. Given the strength of the trend the bias is for a bullish breakout, yet a surprise downside break can also be an opportunity to explore (especially if few traders are prepared for it).

  • Bulls could seek a break above the triangle or wait for a break above 111.00 to assume bullish continuation.
  • Under this scenario the target is the 111.70 resistance level and the bias remain bullish above 110.38.
  • Conversely, bears could seek a break beneath the triangle or 110.38 support and target 109.85 support.
  • Under this scenario, the bias remains bearish below 111.00.

Commodities: Oil prices lower ahead of today’s OPEC meeting

News that France is to enter a third national lockdown weighed on oil prices overnight, with brent futures currently down -1.5%. Today’s bias remains bearish beneath 64.63 and its next support levels reside around 62.28 (50-day eMA), 61.69 and 60.26. The OPEC meeting is later today although there is little expectation for any changes, after the surprised markets last month by extending supply curbs.

Gold rose 0.2% overnight and saw a strong rebound from 1767 support yesterday. Prices have already broken out, to the upside, of a consolidation pattern on the hourly chart. Today’s bias remains bullish above 170 – 1705 and for a run towards 1720.


Up Next (Times in GMT)

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.


ISM manufacturing data is the highlight of the US session. And it caused a positive stir last month when the headline print rose to its highest level since May 2004, and prices paid (an input for inflation) hit a 13-year high. These may be tough numbers to beat but, unless they come in particularly below expectations, the release should remain supportive of a stronger economy. And that could be supportive for equity markets ahead of tomorrow’s NFP print.

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