CROSS ASSET: EUR Outperforms G10 On Russia-Ukraine Headlines

The sharp rebound in EuroStoxx 50 futures from Monday’s low is for now, considered corrective and this is allowing an extreme oversold trend condition to unwind. Key S/T resistance to watch is 5932.54, the 50-day EMA. A clear break of this average is needed to signal a possible reversal. A resumption of the bear leg would suggest scope for an extension towards 5500.00, the Nov 21 ‘25 low. A clear breach of this support would strengthen the bear cycle. A sharp bounce in S&P E-Minis on Monday appears corrective - for now - and this has allowed an oversold trend condition to unwind. The recent breach of 6751.50, the Feb 6 low, confirms a range breakout and highlights a stronger short-term bear threat. A resumption of weakness would open 6583.00, the Nov 21 ‘25 low and a key medium-term support. Initial firm resistance is 6890.53, the 50-day EMA. 

• Japan's NIKKEI closed higher by 776.98 pts or +1.43% at 55025.37 and the TOPIX ended 34.57 pts higher or +0.94% at 3698.85.
• Elsewhere, in China the SHANGHAI closed higher by 10.296 pts or +0.25% at 4133.433 and the HANG SENG ended 61.14 pts lower or -0.24% at 25898.76.
• Across Europe, Germany's DAX trades lower by 384.03 pts or -1.6% at 23572.24, FTSE 100 lower by 105.29 pts or -1.01% at 10301.28, CAC 40 down 76.3 pts or -0.95% at 7976.5 and Euro Stoxx 50 down 74.11 pts or -1.27% at 5760.59.
• Dow Jones mini down 159 pts or -0.33% at 47580, S&P 500 mini down 13.25 pts or -0.2% at 6773, NASDAQ mini down 47.5 pts or -0.19% at 24931.5.

Latest sources update from the WSJ reaffirms that “the International Energy Agency has proposed the largest release of oil reserves in its history to bring down crude prices that have soared during the U.S.-Israel war with Iran”.

• The WSJ sources go on to note that “the release of 400 million barrels of oil would more than double the agency's biggest prior release, when IEA member countries in 2022 put 182 million barrels on the market after Russia launched its full-scale invasion of Ukraine”.
• Meanwhile, BBG’s source reports covering the matter flag the potential for a slightly less aggressive strategic reserve release noting that “the IEA has proposed a release in the range of about 300 million to 400 million barrels”.
• Oil continues to rally despite the reports, which have quantified the likely release size for the first time (prior reporting pointed to the potential for a record release. FI & equities remain under pressure as a result.

"ITALY'S PM MELONI: GOVT CONSIDERING CUTTING EXCISE DUTIES TO SOFTEN FUEL PRICES IN EVENT PRICES INCREASE STEADILY" Reuters

Note the following from our policy team yesterday: 

• "Italy and Slovenia asked for the activation of the General Escape Clause from the EU's fiscal rules at Monday's meeting of euro area finance ministers, MNI was told by a source at the meeting."
• "The call came as ministers discussed policy options to respond to the surge in oil and gas prices, such as energy price caps and the release of emergency oil reserves."
• However, "Economy Commissioner Valdis Dombrovskis told ministers that the legal conditions to apply the escape clause have not been fulfilled"