EQUITIES: E-Mini S&P Corrective Cycle Exposes 50-Day EMA
A bullish trend in Eurostoxx 50 futures remains intact and recent weakness appears to have been corrective. The contract has found support at the 50-day EMA, currently at 5577.05. Support below the EMA lies at 5566.00, the base of a bull channel drawn from the Aug 1 low. A breach of this level and the 50-day EMA, is required to highlight a stronger reversal. Sights are on resistance and the bull trigger at 5742.00, the Oct 29 high. The trend condition in S&P E-Minis is unchanged, it remains bullish and the pullback since the Oct 30 high appears corrective. Support at the 20-day EMA, at 6800.30, has been breached. A clear break of this average signals scope for a deeper retracement and exposes the 50-day EMA at 6708.51 - a key pivot support. The bull trigger has been defined at 6953.75, the Oct 30 high. Clearance of this hurdle would confirm a resumption of the uptrend.
- Japan's NIKKEI closed lower by 607.31 pts or -1.19% at 50276.37 and the TOPIX ended 14.6 pts lower or -0.44% at 3298.85.
- Elsewhere, in China the SHANGHAI closed lower by 10.204 pts or -0.25% at 3997.556 and the HANG SENG ended 244.07 pts lower or -0.92% at 26241.83.
- Across Europe, Germany's DAX trades lower by 93.38 pts or -0.39% at 23643.54, FTSE 100 lower by 50.33 pts or -0.52% at 9685.25, CAC 40 down 13.78 pts or -0.17% at 7951.49 and Euro Stoxx 50 down 18.56 pts or -0.33% at 5592.62.
- Dow Jones mini up 22 pts or +0.05% at 47046, S&P 500 mini up 5.75 pts or +0.09% at 6753, NASDAQ mini up 22 pts or +0.09% at 25265.
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FRANCE: Socialists Ldr-Cannot Back Budget, No Guarantee On Pension Reforms
After a meeting with caretaker PM Sebastien Lecornu at Matignon, First Secretary of the Socialist Party (PS) Olivier Faure says that "our party cannot back the current budget plan", claiming that "at this moment, we have no guarantee that the pension reform will be suspended."
- A rollback of the 2023 reforms had been a key demand of the centre-left PS. As noted earlier (see 'FRANCE: Suspension Of Pension Reform Would Risk Intra-Coalition Rancour', 09:04BST), Education Minister Elisabeth Borne had mooted the idea of suspending the reforms to get a budget passed, but this would be controversial within the governing coalition.
- Le Monde reports that the conservative Les Republicains would oppose any reform. A member of leader Bruno Retailleau's entourage said the suspension would be "a red line for the right,". Add to these the objections of former PM Edouard Philippe's centre-right Horizons, and the gov't would lose more seats (a combined 84) if Horizons and LR vote against such a measure than they would gain with the PS coming on board (68).
- While the far-left La France Insoumise and far-right Rassemblement National (RN) both opposed the pension reforms in 2023, it remains to be seen whether they would vote alongside the gov't to suspend them (throwing President Emmanuel Macron a lifeline) or vote against in order to try and force early elections. Speaking in the Auvergne, RN leader in the National Assembly, Marine Le Pen, said she is minded to "censor everything," lowering the prospect of a vote alongside the gov't.
EURIBOR OPTIONS: Large Position in the Call Condor
- ERM6 98.50/98.625/98.75/98.875c condor, bought for half in 7.5k.
This has been bought in some 50k this Week.
OAT: 10-year OAT/Bund Back At 84bps After Pessimistic Faure Headlines
- "*FRANCE'S FAURE: HAS NO GUARANTEE PENSION REFORM TO BE SUSPENDED" Bloomberg
- "*FRANCE'S FAURE: HAS NO GUARANTEE PENSION REFORM TO BE SUSPENDED" Bloomberg
- 10-year OAT/Bund widening on these headlines. Now back at 84bps (+1bp vs before the news crossed).
