Asian Open: Santa’s Rally Back On Track?

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Asian Futures:

  • Australia’s ASX 200 futures are up 22 points (0.3%), the cash market is currently estimated to open at 7,335.90.
  • Japan’s Nikkei 225 futures are up 310 points (1.09%), the cash market is currently estimated to open at 28,765.60.
  • Hong Kong’s Hang Seng futures are up 62 points (0.26%), the cash market is currently estimated to open at 24,045.66.
  • China’s A50 Index futures are up 13 points (0.08%), the cash market is currently estimated to open at 15,800.21.

UK and Europe:

  • The UK FTSE 100 index rose 107.62 points (1.49%) to close at 7339.90.
  • Europe’s Euro STOXX 50 index rose 139.09 points (3.36%) to close at 4,276.20.
  • Germany’s DAX index rose 433.15 points (2.82%) to close at 15,813.94.
  • France’s CAC 40 index rose 199.61 points (2.91%) to close at 7,065.39.

Tuesday US Closing:

  • The Dow Jones Industrial Average rose 492.4 points (1.4%) to close at 35.719.43.
  • The S&P 500 index rose 95.08 points (2.08%) to close at 4,686.75.
  • The Nasdaq 100 index rose 479,503 points (3.03%) to close at 16,325.66.

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Is Santa’s rally back on track?

More data flows through it, while Omicron is more easily transmitted, its symptoms may be less severe than Delta. The usual risk pattern occurred with global equity markets extending gains, bond yields rising (as investors sold their bonds to take higher risk) and the VIX fell to an 8-day low of 22. In addition, reports emerged near the end of the US session than Republican Leader Mitch McConnell says an agreement has been reached with Chuck Schumer to raise the debt ceiling.

Technical stocks were the clear leaders with the Nasdaq 100 rising 2.7%, the S&P 500 up 2% and the Dow Jones rising 1.3%. Futures markets show another positive session today in Asia and, dare we say it, the Christmas rally could begin as we head into Christmas now as the covetous clouds recede.

Commodity coins dominated the night session

With the decline of coronavirus fears, commodity currencies continued to rebound with AUD, CAD and NZD the only FX major currencies rising on the day. Several CAD pairs have broken key levels highlighted in yesterday’s video, which we suspect are all part of much larger moves.
Given the risky vibration and inflation signs in U.S. data overnight, we would expect the USD / JPY to perform better than it did. However, while it remains above the 112.53 low, our bias remains bullish, but we may need to see a warmer CPI print on Friday for its juices to flow. USD / CHF printed Doji spinning but we expect a higher low now for, above 0.9200 before its next stage higher to 0.9300.

Strong Ivey PMI helps CAD ahead of today’s exchange rate decision

Markets are currently priced at five hikes next year, making them the sharpest central bank among the FX major. While Omicron’s fears are waning, we don’t think they’ll decide to walk away today, but that’s no reason not to guard one, as it could still be very surprising. So we are interested to hear their consideration of the new variant and what effect (if any) it may have on politics next year because if they discard those concerns, then it could be as good as a rise.

Possible bear flag on AUD / CAD

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While there were some great moves on CAD pairs, we chose AUD / CAD for today’s chart because it was the only pair not to look too extended anytime soon. This allowed prices to roll with a possible bear flag pattern after it broke through key support levels in line with our November 26 bias. With such a strong bearish trend on the daily chart we prefer to either relax into small rallies below 0.9060 or wait for a break of its recent lows and keep an open lowering target.

ASX 200 Market Internals:

The ASX 200 hit a 5-day high yesterday and closed within the 7311 – 7337 resistance zone and is expected to open near the top of this zone today. Today’s highs are bullish in line with yesterday’s sentiment, while prices hold above 7270.

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ASX 200: 7313.9 (0.95%), December 7, 2021

  • Energy (2.07%) was the strongest sector and Utilities (-0.08%) was the weakest
  • 10 of the 11 sectors closed higher
  • 5 of the 11 sectors outperformed the index
  • 159 (79.50%) shares progressed, 37 (18.50%) shares declined
  • 57.5% of shares closed above their 200-day average
  • 42.5% of shares closed above their 50-day average
  • 39% of shares closed above their 20-day average

External representatives:

  • + 9.92% – Pointsbet Holdings Ltd (PBH.AX)
  • + 9.91% – Zip Co Ltd (Z1P.AX)
  • + 7.66% – Polynovo Ltd (PNV.AX)

Sub-representatives:

  • -6.37% – Magellan Financial Group Ltd (MFG.AX)
  • -4.30% – Nickel Mines Ltd (NIC.AX)
  • -3.15% – Lynas Rare Earths Ltd (LYC.AX)

Later (Times in AEDT)

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Source

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