All trading involves risk. Ensure you understand those risks before trading.
Open account
☰
All trading involves risk. Ensure you understand those risks before trading.
Open account
✖

European Open: Volatility Subsides Ahead of Today’s FOMC Meeting

Article By: ,  Market Analyst
November 3, 2021 4:38 PM

Asian Indices:

  • Australia's ASX 200 index rose by 68.4 points (0.93%) and currently trades at 7,392.70
  • Japan's Nikkei 225 index has risen by 126.18 points (0.43%) and currently trades at 29,520.90
  • Hong Kong's Hang Seng index has fallen by -242.63 points (-0.97%) and currently trades at 24,857.04
  • China's A50 Index has fallen by -102.59 points (-0.66%) and currently trades at 15,443.87

 

UK and Europe:

  • UK's FTSE 100 futures are currently down -7 points (-0.1%), the cash market is currently estimated to open at 7,267.81
  • Euro STOXX 50 futures are currently down -2 points (-0.05%), the cash market is currently estimated to open at 4,294.22
  • Germany's DAX futures are currently down -3 points (-0.02%), the cash market is currently estimated to open at 15,951.45

 

US Futures:

  • DJI futures are currently up 138.79 points (0.39%)
  • S&P 500 futures are currently down -3.75 points (-0.02%)
  • Nasdaq 100 futures are currently down -5.25 points (-0.11%)

 

 

Indices

Asian equity markets were mixed despite the strong lead from Wall Street as traders appear cautious ahead of today’s FOMC meeting.

Futures markets are a touch lower pointing to a marginally softer open, although not by a wide enough margin to cause concern. The FTSE 100 extend Monday’s rally, instead printing a bearish hammer candle which almost spanned Monday’s range. The lower close on high volume suggests all is not well at these highs. The STOXX 50 however has risen to a fresh 13-year high, and our bias remains bullish above gap support around 4250.

 

FTSE 350: Market Internals

FTSE 350: 4166.17 (-0.19%) 02 November 2021

  • 150 (42.74%) stocks advanced and 184 (52.42%) declined
  • 18 stocks rose to a new 52-week high, 8 fell to new lows
  • 60.68% of stocks closed above their 200-day average
  • 46.44% of stocks closed above their 50-day average
  • 24.79% of stocks closed above their 20-day average

 

Outperformers:

  • + 3.16%-AstraZeneca PLC(AZN.L)
  • + 2.94%-Bridgepoint Group PLC(BPTB.L)
  • + 2.94%-Volution Group PLC(FAN.L)

 

Underperformers:

  • ·-10.92%-TP ICAP Group PLC(TCAPI.L)
  • ·-9.25%-Diversified Energy Company PLC(DEC.L)
  • ·-7.85%-Standard Chartered PLC(STAN.L)

 

 

Forex:

NZD was the strongest major, but not by much considering its stonking employment report. Unemployment fell to a record low of 3.4%, down from 4% and far exceeding the 3.9% expected. Jobs grew by 2% in Q3, up from Q1 previously. Which is not bad considering NZ were in lockdown. Yet the Kiwi dollar could only muster a 0.17% rise as traders are already expecting a 50 bps hike this month and traders are seemingly reluctant to commit to risk ahead of today’s FOMC meeting.

NZD/USD is trading just below 0.7130 resistance. Should it be deemed a hawkish meeting (firm tapering plan, perhaps even hints of a rate rise sooner than later) then NZD/USD could get comfortably below 0.7100. Yet a ‘lame taper’ plan with no hiking clues could see traders embrace NZ’s employment report and send it towards 0.7200.

 

As we’re leaning towards a hawkish meeting, we think AUD/USD may make the better short given RBA’s dovish meeting yesterday. Bearish momentum accelerated from the RS (right shoulder) of its head and shoulders top. It closed the day beneath 0.7450 support and we’re hoping it will cap as resistance. A potential bear flag is forming at the lows, but support has been found at the monthly pivot. So from here we’re hoping a hawkish Fed and provide the catalyst required for AUD to head below 0.7400.

The ISM services PMI is released at 14:00 BST. Like the manufacturing PMI, it remains historically high yet down from its record high printed earlier this year. Being a gauge for inflation, the prices paid component will be closely watched. It sits at 77.5, down from its peak at 83.5 but above its long-term average of 59.

BOE Governor Andrew Bailey speaks at the COP26 Summit at 16:00 GMT, in a speech titled ‘Laying The Foundations for a Net Zero Financial System”.

And we should probably discuss today’s FOMC meeting. They are fully expected to announce tapering, so the focus is on by how much and when. Consensus is for a December start and, as Powell has already indicated they could be fully unwound by mid-2022, estimates are for tapering to sit around $15 billion per month across their securities.

 

Commodities:

Platinum appears to be one of the stronger metals (no pun intended), and prices are holding above Thursday’s high. Should we see a weak USD scenario today it remains our favoured long for any metals trade, given its strong rally on Monday.

 

Up Next (Times in BST)

 

How to trade with City Index

You can trade easily trade with City Index by using these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    • Open an account in the UK
    • Open an account in Australia
    • Open an account in Singapore

  2. Search for the company you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

 

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

© City Index 2024