European Open: Singapore’s CB tightens policy, ECB unlikely to follow suit

Asian Indices:

• Australia's ASX 200 index rose by 43.8 points (0.59%) and currently trades at 7,522.80
• Japan's Nikkei 225 index has risen by 310.28 points (1.16%) and currently trades at 27,153.77
• Hong Kong's Hang Seng index has risen by 65.17 points (0.3%) and currently trades at 21,439.54
• China's A50 Index has risen by 131.5 points (0.95%) and currently trades at 13,953.66

UK and Europe:

• UK's FTSE 100 futures are currently up 12.5 points (0.17%), the cash market is currently estimated to open at 7,593.30
• Euro STOXX 50 futures are currently up 16 points (0.43%), the cash market is currently estimated to open at 3,843.96
• Germany's DAX futures are currently up 62 points (0.44%), the cash market is currently estimated to open at 14,138.44

US Futures:

• DJI futures are currently up 21 points (0.06%)
• S&P 500 futures are currently up 38 points (0.27%)
• Nasdaq 100 futures are currently up 3.75 points (0.08%)

Asian equities continued to move higher for a second day ahead of a 4-day weekend for parts of the West. Given the long weekend traders may want to remain nimble as not to get caught up in what can sometimes be unpredictable news as large traders square up their books. With that said, sentiment appears buoyant with futures markets for European and US indices pointing to a firmer open.

Australia’s unemployment rate remained at 4% although headline employment growth missed the mark to rise just 17.9k, as part-time work fell by -59.5k. The Australian dollar is effectively flat against its major peers.

MAS are the latest bank to tighten policy

Singapore’s central bank tightened policy for the third time in the past six months today, by increasing the NEER (Nominal Effective Exchange Rate) and slightly increased the rate of appreciation of its policy band. It is the first time in a year the central bank has used both these tools as the same time. The Singapore dollar moved higher after the announcement and sent USD/SGD down around -0.6%, which is currently its most bearish session in two years.

ECB and TCMB up next

Turkey’s Central Bank announce their monetary policy decision at 12:00 BST, although we expect no fireworks since the central bank announced their plans for ‘liraization’. They have held rates at 14% for each meeting this year, which is a step in the right direction given they were cutting rates despite 30% inflation in Q4 last year.

And whilst inflationary pressures persist across Europe, don’t expect the ECB to act today either. At last month’s meeting they adjusted its bond purchases for Q2, and their plans for Q3 are yet to be revealed. today’s meeting is really about forward guidance and clarity for when bond purchases may actually stop, as rates cannot rise until bond purchases cease. OIS suggests a 25 bps hike by the end of the year has already been priced in.

Potential head and shoulders top on EUR/CAD

As we’re heading into the ECB meeting ahead of a 4-day weekend, there’s a decent chance we may not see any sustainable breakdown materialise today. In the event of a ‘non-event’, it we’ll keep an eye on the potential for the market to break key support next week, as a break beneath 1.3650 confirms a head and shoulders top on this timeframe and brings 1.3600 into focus.

FTSE: Market Internals

FTSE 350: 4242.5 (0.05%) 13 April 2022

• 157 (44.73%) stocks advanced and 184 (52.42%) declined
• 10 stocks rose to a new 52-week high, 9 fell to new lows
• 33.9% of stocks closed above their 200-day average
• 88.6% of stocks closed above their 50-day average
• 6.27% of stocks closed above their 20-day average

Outperformers:

• + 6.28% - Hochschild Mining PLC (HOCM.L)
• + 5.78% - Oxford Instruments PLC (OXIG.L)
• + 5.45% - Baltic Classifieds Group PLC (BCG.L)

Underperformers:

• -11.65% - Darktrace PLC (DARK.L)
• -6.67% - Dr Martens PLC (DOCS.L)
• -4.96% - Trustpilot Group PLC (TRST.L)

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