European Open: ‘Jack In The Box’ Trading Continues

Asian Indices:

• Australia’s ASX 200 index rose 112.3 points (1.54%) and is currently trading at 7,426.20
• Japan’s Nikkei 225 index rose 424.11 points (1.49%) and is currently trading at 28,880.66.
• Hong Kong’s Hang Seng index fell -28.75 points (-0.12%) and is currently trading at 23.954.91.
• China’s A50 Index rose 182.67 points (1.16%) and is currently trading at 15,969.88.

UK and Europe:

• Britain’s FTSE 100 futures are currently up 3 points (0.04%), the cash market is currently estimated to open at 7,342.90.
• Euro STOXX 50 futures are currently up 8 points (0.19%), the cash market is currently estimated to open at 4,284.20
• Germany’s DAX futures are currently up 18 points (0.11%), the cash market is currently estimated to open at 15,831.94.

American Futures:

• DJI futures are currently up 492.4 points (1.4%)
• S&P 500 futures are currently up 86.25 points (0.53%)
• Nasdaq 100 futures are currently up 18.25 points (0.39%)

Asian equities are jumping higher in line with sentiment

Of course, the force that suppressed pricing was the Omicron variant and now there seems to be no shortage of titles suggesting that everything is fine. And that rise in sentiment saw Asian stocks run out of the gates as they tracked Wall Street higher in a similar fashion.

The ASX 200 made its best impression of a telegraph pole opening at the low and now on the way to closing at the high of the day, and currently up around 1.6%. Japanese markets were the leaders with the Nikkei 25 rising above 1.9% and the Chinese A50 around 1.1%. The Hang Seng was submerged slightly, weighed down by Kaisa who missed a debt payment and Evergrande hit a new low.

GBP feels the weight of FX commodities

The US dollar index saw a false break above 96.43 resistance yesterday and closed with an undecided candlestick. Traders seem hesitant to anticipate Friday’s CPI data, and there may be downside risks as the consensus is that already hot inflation should warm further. If so, maybe the euro saw the low for the week yesterday above the 1.1 handle.

The British pound felt the power of commodity FX yesterday, with GBP / AUD hitting a 1-week low yesterday and slipping slightly more today. GBP / NZD printed a bearish external day at its 2-month high, while GBP / CAD fell to our initial 1.6730 target near the November low. We prefer GBP / CAD for more shorts.

GBP / CAD mocks November low

The daily chart remains in a strong downward trend, and momentum was realized with that trend yesterday after repeatedly failing to break above 1.7100. Yesterday’s bearish candle broke trend support with ease and prices are now embracing the lows. We suspect that any high rebound from here could be limited and break back to the March 2020 low (1.6551) to be the path of least resistance.

BOC cup decision is the main event today

It’s their final show of the year and the central bank expects to keep rates at 0.25%. However, with economists expecting a four-year rise in 2022, they will seek some sort of assurance that current expectations are correct. Therefore, the opposite approach is to short CAD if the central bank were not as sharp as expected today, while the biggest bullish surprise (though not likely) would be for an increase at this meeting. And with GBP / CAD at a key support level entering the meeting, it provides a clear pivotal level for markets to trade around.

FTSE 350: Market Internals

FTSE 350: 4199.99 (1.49%) December 7, 2021

• 293 (83.48%) shares progressed and 53 (15.10%) declined
• 18 shares rose to a new 52-week high, 1 fell to new lows
• 55.84% of shares closed above their 200-day average
• 76.35% of shares closed above their 50-day average
• 17.66% of shares closed above their 20-day average

External representatives:

• + 9.26% – Moonpig Group PLC (MOONM.L)
• + 9.10% – Trustpilot Group PLC (TRST.L)
• + 8.10% – Network International Holdings PLC (NETW.L)

Sub-representatives:

• -2.67% – Baltic Classifieds Group PLC (BCG.L)
• -1.94% – B&M European Value Retail SA (BMEB.L)
• -1.90% – Domino’s Pizza Group PLC (DOM.L)

Later (times in GMT)