European Open: Futures Point Lower, Gold Clings to Trend Support

The bearish sentiment on Wall Street last week has spilled over to Asian trade, with the majority of equity indices trading in the red.

Charts (5)

Asian Indices:

  • Australia's ASX 200 index fell by -60.4 points (-0.82%) and currently trades at 7,287.70
  • Japan's Nikkei 225 index has fallen by -73.7 points (-0.26%) and currently trades at 28,644.43
  • Hong Kong's Hang Seng index has fallen by -450.39 points (-1.61%) and currently trades at 27,554.29

UK and Europe:

  • UK's FTSE 100 futures are currently down -45.5 points (-0.66%), the cash market is currently estimated to open at 6,962.59
  • Euro STOXX 50 futures are currently down -25 points (-0.62%), the cash market is currently estimated to open at 4,010.77
  • Germany's DAX futures are currently down -84 points (-0.54%), the cash market is currently estimated to open at 15,456.31

US Futures:

  • DJI futures are currently down -299.15 points (-0.86%)
  • S&P 500 futures are currently down -27.75 points (-0.19%)
  • Nasdaq 100 futures are currently down -15 points (-0.35%)


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Indices:

The Hang Seng was the worst performer and currently trades -2.00% lower. The ASX 200 fell to a 6-day low but pared early losses just above the 7241.5 low. And the Nikkei 225 fell -1.4% to retested its 200-day eMA for the second time in 7 sessions.

The FTSE 100 closed just above the June low at 7008.09 and printed a small Rikshaw Man Doji which showed a hesitancy to break immediately lower. However, the 20-day eMA capped as resistance on Friday and futures markets are in the red so it’s possible that we could see a break beneath 6948.63.


FTSE 350: Market Internals


FTSE 350: 4019.1 (-0.06%) 16 July 2021

  • 154 (43.87%) stocks advanced and 188 (53.56%) declined
  • 11 stocks rose to a new 52-week high, 13 fell to new lows
  • 75.78% of stocks closed above their 200-day average
  • 45.01% of stocks closed above their 50-day average
  • 16.81% of stocks closed above their 20-day average

Outperformers:

  • + 12.5%   -  GCP Student Living PLC  (DIGS.L) 
  • + 9.81%   -  Cineworld Group PLC  (CINE.L) 
  • + 3.15%   -  HomeServe PLC  (HSV.L) 

Underperformers:

  • -5.23%   -  Clarkson PLC  (CKN.L) 
  • -5.02%   -  Burberry Group PLC  (BRBY.L) 
  • -3.65%   -  Ferrexpo PLC  (FXPO.L) 


Forex:

The economic calendar contains no major market-moving events, but the tone of the session could again be dominated by the rise in covid cases. Friday’s risk-off tone spilled over to the Asian session overnight, with the Japanese yen and US dollar being the strongest currencies and commodity FX (NZD, CAD and AUD) the weakest.  

AUD/JPY broke beneath its 200-day eMA overnight and fell to a 5-month low. CAD/JPY followed suit and now sits at a 3-month low and we continue to monitor EUR/JPY for a break below 129.57.

GBP/AUD found support at its 10-day eMA and after reversing higher in trying to form a bullish engulfing candle o the daily chart. A break above the 1.8662 high assumes bullish continuation.   

EUR/USD is making hard work of lower lows and volatility is subsiding, so we’re open to the potential scenario that 1.1772 is a swing low and the pair could be vulnerable to a bounce higher. However, should the US dollar index (DXY) break above 92.85 then euro should break beneath that low.


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Commodities: OPEC+ Agree on Output Raise

WTI prices fell over -1% on Monday after OPEC+ agreed to increase output. 70.00 and 69.77 are the next major support level for bears to conquer, although that note that a bullish hammer formed above 70.00 on Friday so there is a case for a technical bounce, especially if DXY falls to break above gap resistance.

Gold prices are holding above trend support, making it a pivotal level to monitor as the week progresses. Furthermore, TIPS (a proxy for real yields) are falling and concerns over the rise of cases of the delta variant which could be supportive of gold prices in a risk-off environment.


We can see on the four-hour chart that a bullish trend has been developing since the June low. However, the weekly chart produced a Rikshaw Man Doji and prices failed to hold above 1818.40 following a breakout above that level on Wednesday. We are therefore cognizant of its potential to break lower form current levels, and a break below the 200-day eMA assumes bearish continuation as it invalidates trend support. A break back above 1818.40 could see prices retest last week’s high,

Silver prices are under pressure. See today’s video for our analysis.


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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