European Open: Sentiment remains buoyant, bear flag on GBP/AUD

Asian Indices:

Australia's ASX 200 index rose by 34.7 points (0.49%) and currently trades at 7,151.40
Japan's Nikkei 225 index has risen by 184.24 points (0.7%) and currently trades at 26,577.27
Hong Kong's Hang Seng index has risen by 102.1 points (0.46%) and currently trades at 22,446.02
China's A50 Index has fallen by -76.55 points (-0.52%) and currently trades at 14,687.58

UK and Europe:

UK's FTSE 100 futures are currently down -1 points (-0.01%), the cash market is currently estimated to open at 7,428.56
Euro STOXX 50 futures are currently up 7.5 points (0.2%), the cash market is currently estimated to open at 3,828.09
Germany's DAX futures are currently up 11 points (0.08%), the cash market is currently estimated to open at 14,011.11

US Futures:

DJI futures are currently up 74 points (0.22%)
S&P 500 futures are currently up 9.5 points (0.07%)
Nasdaq 100 futures are currently up 9.5 points (0.22%)

Ultimately Jerome Powell made two clear points regarding rates. He'll vote for a 25 bps hike at their upcoming meeting, and the Fed intend to continue raising rates whilst treading "carefully". If the Fed are less aggressive, it also alleviates pressure from Asian central banks to also lift their own benchmark rates. Yet the downside to knowing this is that it removes some of the fun from incoming economic data such as ADP and NDP employment reports. The KOSI and TOPC were top performers, mining shares led the ASX as they benefitted from higher commodity prices. European and US futures have opened higher.

Oil continues its rapid ascent

WTI continued to rise and is now teasing the 2011 high, a break above which will take it to its most bullish level since September 2008. As nice as it is to be long oil for some at present, others are becoming increasingly concerned of its impact on supporting even higher inflation alongside headwinds for growth. $115 is its next pivotal level beyond the 2011 high of 114.83, and its first major sign of weakness against such a strong trend would be a key reversal day around such a level. Bears can only live in hope.

AUD strongest major currency as positive data flows in

Yesterday saw a stronger-than-expected GDP report for Australia, and today presented increasingly expansive PMI’s and a wider trade balance surplus which meant AUD was the strongest major currency. AUD/JPY broke above yesterday’s high which keeps a triangle breakout in play. Ranges were narrow elsewhere.

Potential bear flag on GPP/AUD

We have two schools of thought on GBP/AUD. On one hand, it has had an extended bearish move on the daily chart, reached (and exceeded) our downside target and produced a Doji yesterday which warns of over-extension to the downside. I which case we would take a volatile bullish candle and close (or break) above 1.8400 as a sign that a countertrend move is underway.

However, the hourly trend remains bearish and a potential bear flag is forming below a resistance zone. We are therefore also on the hunt for a breakout of the flag to seek an initial target of the lows. Should prices continue lower then its next decent support zone is around 1.8200.

FTSE 350: Market Internals

FTSE 350: 4164.39 (1.36%) 02 March 2022

249 (70.94%) stocks advanced and 101 (28.77%) declined
7 stocks rose to a new 52-week high, 42 fell to new lows
26.5% of stocks closed above their 200-day average
18.8% of stocks closed above their 50-day average
21.08% of stocks closed above their 20-day average

Outperformers:

+ 18.54% - Polymetal International PLC (POLYP.L)
+ 10.39% - Weir Group PLC (WEIR.L)
+ 8.56% - Syncona Ltd (SYNCS.L)

Underperformers:

-59.76% - Petropavlovsk PLC (POG.L)
-41.66% - EVRAZ plc (EVRE.L)
-7.43% - Royal Mail PLC (RMG.L)

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