EQUITIES: E-Mini S&P Trend Set Up Remains Bullish
The trend needle in EuroStoxx 50 futures continues to point north, however, a sell-off this week highlights a corrective cycle that remains in play for now. The contract has traded through the 20-day EMA and attention turns to the next key support area around the 50-day EMA - at 6159.19. A clear break of the 50-day average would strengthen a bear threat. Key resistance is at 6462.00, the Jul 6 high. The trend condition in S&P E-Minis is unchanged, the set-up remains bullish. Note that moving average studies are in a bull-mode position and this continues to highlight a dominant uptrend. The rally on Jun 29 was a bullish engulfing candle - a reversal signal. It suggests the end of the recent corrective pullback. Key support lies at 7292.25, the Jun 11 low. A continuation higher would open 7693.75, the Jun 2 high and bull trigger.
- Japan's NIKKEI closed higher by 813.88 pts or +1.2% at 68557.73 and the TOPIX ended 15.71 pts higher or +0.39% at 4036.08.
- Elsewhere, in China the SHANGHAI closed lower by 40.426 pts or -1% at 3996.162 and the HANG SENG ended 144.94 pts higher or +0.6% at 24175.12.
- Across Europe, Germany's DAX trades lower by 8.62 pts or -0.03% at 25109.68, FTSE 100 higher by 2.04 pts or +0.02% at 10474.6, CAC 40 up 1.09 pts or +0.01% at 8327.91 and Euro Stoxx 50 down 15.36 pts or -0.24% at 6268.74.
- Dow Jones mini up 22 pts or +0.04% at 52793, S&P 500 mini down 14.25 pts or -0.19% at 7575.5, NASDAQ mini down 154 pts or -0.51% at 29789.75.
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IRAN: Iranian Foreign Ministry Notes That U.S. Talks To Be Reviewed
Full details of earlier comments from Iranian Foreign Ministry spokesperson Baqaei via IRNA:
- "The continuation of the negotiation process will be reviewed considering recent developments"
- "The Foreign Ministry spokesperson, in response to IRNA's question about the latest status of negotiations to end the war between Iran and the United States, said: Considering last night's developments, we need to review the current situation. The diplomatic process does not happen in a vacuum, and to advance any diplomatic process, a minimal space is required to be able to move forward."
- "Diplomacy and the battlefield are not two separate matters; these two together are tools to protect Iran's national interests and security."
- "Wherever necessary, our armed forces respond to the enemy with power."
- "What happened last night showed that Iran's brave armed forces do not hesitate in defending the country."
- "In the field of diplomacy, the pillars of governance are fully coordinated, and wherever necessary, they will use diplomatic tools and wherever required, military force to defend the country."
SWEDEN: New 3-year EUR Benchmark: Final Terms
- Size: E2bln (The NDO aimed to raise SEK19bln from foreign currency issuance as per its May borrowing report. At current EURSEK levels, this would have corresponded to around E1.75bln).
- Books above EU7.5b (including JLM interest): Leads
- Spread: MS-5bps (Guidance was MS-3 Area)
- Maturity: June 18, 2029
- Coupon: Full first
- Settlement: June 18, 2026
- ISIN: XS3408819749
- Bookrunners: BNPP, Danske, SEB, Swedbank
Source; Bloomberg/MNI Colour
IRELAND: Fiscal Advisory Council Takes A Critical Stance On Strong Finances
This morning, the Irish Fiscal Advisory Council released its bi-annual Fiscal Assessment Report
- The report notes that Ireland remains “heavily reliant on corporation tax paid by a handful of foreign-owned multinationals. Excluding excess corporation tax, an underlying deficit of €11 billion (3% of GNI*) is forecast for this year.”
- The Council notes that “the planned pace of net spending growth is faster than the sustainable growth rate of the economy” and that “only €1 out of every €6 collected will be set aside, with the remaining €5 used for ongoing spending commitments”
- The implication of this is a higher borrowing requirement to finance planned contributions to savings funds.
- The report concludes by recommending Ireland adopts a domestic guide/rule to manage medium-term finances.
It’s not too surprising to see a fiscal advisory board take a critical view on public finances, even if Ireland’s headline metrics are extremely strong relative to Eurozone peers. Reliance on corporate tax receipts is a known quantity, so should already be embedded in market pricing.
Although increased borrowing to finance saving seems counter-intuitive, it should be viewed in the context of attractive domestic bond yields relative to German counterparts (the 10-year IRISH/Bund spread is just ~17bps at typing) and the expected return on SWF investments.
Figure 1: Ireland vs Germany Curve (Source: Bloomberg Finance L.P)
