European Open: Equities bounce on Omicron fatigue

Asian Indices:

• Australia's ASX 200 index rose by 58.5 points (0.8%) and currently trades at 7,350.70
• Japan's Nikkei 225 index has risen by 555.75 points (1.99%) and currently trades at 28,491.63
• Hong Kong's Hang Seng index has risen by 121.1 points (0.53%) and currently trades at 22,865.96
• China's A50 Index has risen by 15.39 points (0.1%) and currently trades at 15,758.89

UK and Europe:

• UK's FTSE 100 futures are currently up 67 points (0.94%), the cash market is currently estimated to open at 7,265.03
• Euro STOXX 50 futures are currently up 42.5 points (1.04%), the cash market is currently estimated to open at 4,149.63
• Germany's DAX futures are currently up 142 points (0.93%), the cash market is currently estimated to open at 15,381.67

US Futures:

• DJI futures are currently up 192 points (0.55%)
• S&P 500 futures are currently up 138.5 points (0.89%)
• Nasdaq 100 futures are currently up 27.75 points (0.61%)

Asian equities post corrective gains despite weaker sentiment

New Zealand have delayed the reopening of their borers from mid-January to February, due to the rise of Omicron cases globally. The US reported its first Omicron-linked death, Netherlands have imposed a strict lockdown regime over Christmas and Singapore is investigating breakout linked to a gym. In the UK number have never been so dire, and the new variant has been reported in 89 countries. It is certainly what anyone wanted for Christmas, but that is what markets have been responding to this week and why Santa’s rally appeared to be dead in the water. Or is it?

Asian equities are broadly higher overnight in what is assumed to be fuelled by short-covering and / or profit taking. That is not to say we have a risk-on environment, but more of a tired risk-off environment. Following 3-days of heavy selling then perhaps it is time for a bounce, even if it goes against sentiment.

200-day eMA’s key for oil today

And one market to look for risk sentient is oil prices. Like Asian indices, we have seen a corrective bounce on WTI and brent. In both cases they opened beneath their 200da eMA’s yesterday (although WTI also opened below $70) before selling off but then reversing. Brent is currently probing its 200-day eMA from below, so we suspect it will be an important area for traders of both markets to watch.

RBA released their final minutes of 2021

The RBA’s minutes presented three options for how they may alter their QE program at their February meeting, with my colleague Tony Sycamore currently favouring that they will cease it, given the hawkish turn of central banks of late.

The euro firms against antipodean currencies

On today’s Asian report we noted that EUR/NZD had broken out of a compression pattern o the daily chart and that it is carving out a strong bullish trend. We are also keeping an eye on EUR/AUD for a move higher, although it is yet to break key resistance levels to confirm the resumption of its trend.

We can see on the four-hour char that EUR/AUD is forming a consolidation pattern near yesterday’s highs. It met resistance at the weekly R1 pivot, but this resistance would be invalidated if it can break above the 1.5908 high. If it can manage that whilst holding above its recent consolidation lows then our next targets are 1.6000 and the weekly R2 pivot around 1.6030.

FTSE 350: Market Internals

FTSE 350: 4111.24 (-0.99%) 20 December 2021

• 67 (19.09%) stocks advanced and 281 (80.06%) declined
• 3 stocks rose to a new 52-week high, 11 fell to new lows
• 45.58% of stocks closed above their 200-day average
• 35.33% of stocks closed above their 50-day average
• 16.81% of stocks closed above their 20-day average

Outperformers:

• + 6.51% - Rentokil Initial PLC (RTO.L)
• + 5.24% - Oxford BioMedica PLC (OXB.L)
• + 4.31% - Moneysupermarket.Com Group PLC (MONY.L)

Underperformers:

• -7.10% - Cineworld Group PLC (CINE.L)
• -6.83% - Trustpilot Group PLC (TRST.L)
• -5.51% - Antofagasta PLC (ANTO.L)

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