EQUITIES: Short-Term Weakness in E-Mini S&P Considered Corrective
Eurostoxx 50 futures have traded lower this week. Yesterday’s sell-off resulted in a breach of support at 4914.00, the Oct 16 low. Note that 4884.06, 38.2% of the Aug 5 - Sep 30 bull cycle, has been pierced. A clear break of it would signal scope for an extension towards 4815.50, the 50.0% retracement point. Initial firm resistance has been defined at 5015.00, the Oct 29 high, where a break is required to highlight a reversal. S&P E-Minis continue to trade below their recent highs. Short-term weakness is - for now - considered corrective and the uptrend remains intact. Price has again traded through support at the 20-day EMA, at 5841.37. A clear breach of this EMA would open 5765.76, the 50-day EMA. For bulls, a stronger resumption of gains would refocus attention on 5961.00, a Fibonacci projection. The bull trigger is at 5927.25, the Oct 17 high.
- Japan's NIKKEI closed lower by 196.14 pts or -0.5% at 39081.25 and the TOPIX ended 8.21 pts lower or -0.3% at 2695.51.
- Elsewhere, in China the SHANGHAI closed higher by 13.586 pts or +0.42% at 3279.824 and the HANG SENG ended 63.31 pts lower or -0.31% at 20317.33.
- Across Europe, Germany's DAX trades lower by 114.26 pts or -0.59% at 19142.26, FTSE 100 lower by 51.52 pts or -0.63% at 8108.52, CAC 40 down 51.83 pts or -0.7% at 7376.53 and Euro Stoxx 50 down 38.28 pts or -0.78% at 4847.47.
- Dow Jones mini down 196 pts or -0.46% at 42167, S&P 500 mini down 44.5 pts or -0.76% at 5807.5, NASDAQ mini down 212.5 pts or -1.03% at 20323.75.
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**MNI: EUROZONE SEP FLASH HICP +1.8% Y/Y
- MNI: EUROZONE SEP FLASH HICP +1.8% Y/Y
- MNI: EUROZONE SEP FLASH CORE HICP +2.7% Y/Y
GILTS: Short 20-Year Supply Expected to Go Smoothly
The result of the DMO’s first auction of the new fiscal quarter is due shortly, with GBP2.25bln nominal of the short 20-year 4.75% Oct-43 gilt on offer
- No real signs of intraday pre-auction concession for 20s on the 10-/20-/30-Year gilt fly, although last week saw 20s hit the cheapest closing level since February on that structure.
- Elsewhere, Gilts hit fresh cycle closing cheaps vs. swaps on Monday.
- In terms of the auction history, the gilt was launched via syndication in November 2023 and has been reopened twice per quarter via auction since which auction sizes ranging from GBP2.00-2.25bln.
- Every auction has seen strong demand with bid-to-covers ranging from 3.29-3.67x and tails ranging from 0.1-0.4bp.
- We expect another strong auction this time out.
- The line will be auctioned again on on 12 November.
COMMODITIES: WTI Futures Close to Recent Lows, MA Studies in Bear Mode
WTI futures have reversed a large part of their recent gains. This affirms the strength of resistance at the 50-day EMA of $71.77, which remains the key upside hurdle for bulls. The latest sell-off also highlights the fact that the recovery since Sep 9 is likely a correction. Note that moving average studies are in a bear-mode set-up, highlighting a dominant downtrend. A continuation lower would refocus attention on $64.61, the Sep 10 low and bear trigger. Gold bulls remain in the driver’s seat and the yellow metal is trading just below its recent all-time high. Recent gains confirm a resumption of the primary uptrend and maintain the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull-mode set-up, highlighting a clear uptrend and positive market sentiment. The focus is on $2690.2 next, a Fibonacci projection. Firm support lies at $2589.8, the 20-day EMA.
- WTI Crude down $1.52 or -2.23% at $66.7
- Natural Gas down $0.03 or -0.89% at $2.896
- Gold spot up $10.11 or +0.38% at $2644.6
- Copper down $0.45 or -0.1% at $454.8
- Silver up $0.2 or +0.64% at $31.3597
- Platinum up $3.02 or +0.31% at $984.38
