EQUITY OPTIONS: Estoxx wide Risk Reversal

A bear cycle in WTI futures remains intact and the latest bull phase appears to have been a correction. The pullback from last Tuesday’s high highlights a possible reversal and the end of the corrective phase. Initial resistance to watch is $66.56, the Aug 4 high. Key short-term resistance has been defined at $69.36, the Jul 30 high. A stronger resumption of weakness would pave the way for a move towards $57.71, the May 30 low. Gold remains in a clear bull cycle and last week’s gains reinforce current conditions. The yellow metal has breached a key resistance at $3500.1, the Apr 22 high, delivering a fresh all-time high. The break also confirms a resumption of the primary uptrend and an extension of the sequence of higher highs and higher lows. The next objective is $3623.1, a Fibonacci projection. Initial firm support lies at $3440.0, the 20-day EMA.

• WTI Crude up $1.05 or +1.7% at $62.9
• Natural Gas up $0.1 or +3.15% at $3.142
• Gold spot up $24.34 or +0.68% at $3611.69
• Copper up $1.1 or +0.24% at $456.05
• Silver up $0.16 or +0.4% at $41.1771
• Platinum up $19.42 or +1.41% at $1398.84

A corrective bear cycle in Eurostoxx 50 futures remains in play. Recent weakness resulted in a breach of 5368.74, the 50-day EMA. The clear break of this average strengthens a short-term bearish threat and signals scope for a deeper retracement towards 5166.00, the Aug 1 low and a key support. On the upside, initial resistance to watch is 5378.06, the 20-day EMA. A clear break of it would be a bullish development. A bull cycle in S&P E-Minis remains intact and the latest pullback has once again proved to be a shallow correction. The contract traded to a fresh cycle high last week, breaching the Aug 28 high of 6523.00. This confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Sights are on 6543.75 next, a Fibonacci projection. Initial support to watch is 6447.06, the 20-day EMA.

• Japan's NIKKEI closed higher by 625.06 pts or +1.45% at 43643.81 and the TOPIX ended 32.89 pts higher or +1.06% at 3138.2.
• Elsewhere, in China the SHANGHAI closed higher by 14.327 pts or +0.38% at 3826.841 and the HANG SENG ended 215.93 pts higher or +0.85% at 25633.91.
• Across Europe, Germany's DAX trades higher by 146.27 pts or +0.62% at 23747.65, FTSE 100 higher by 13.83 pts or +0.15% at 9223.21, CAC 40 up 13.66 pts or +0.18% at 7690.56 and Euro Stoxx 50 up 20.81 pts or +0.39% at 5339.49.
• Dow Jones mini up 88 pts or +0.19% at 45541, S&P 500 mini up 14.75 pts or +0.23% at 6504.25, NASDAQ mini up 83.25 pts or +0.35% at 23765.5.

SFIM6 97.25 calls, bought for 2.0 in 2.5k.

• SFIM6 currently trades at 96.405.
• This trade is targeting almost five BOE cuts across the next 12 months, compared to futures which currently price between one and two 25bp cuts.
• A reminder that following the weak KPMG-REC jobs report overnight, we conclude that the probability of a November 25bp cut is increased a little, with it following the DMP survey last week to be another downbeat labour result.
• However, we still need to see continued deterioration in the official labour market statistics and other labour surveys ahead of the November decision (including Agents' survey). And importantly, any earlier indications regarding pay settlements for 2026 will be key to the decision, too.