EQUITIES: Eurostoxx 50 Futures Continue to Trade in Volatile Manner
The trend in the Eurostoxx 50 futures contract remains bullish and Monday’s strong start to the week reinforces current conditions. However, the contract has traded in a volatile manner this week and pulled back from Monday’s high. Key S/T support at 5394.00, the Feb 28 low, has been pierced. A clear break of it would signal scope for a deeper retracement towards the 50-day EMA at 5281.53. For bulls, a resumption of the trend would open 5600.00. A sharp sell-off in the S&P E-Minis contract this week, reinforces a short-term bear threat. The contract traded to a fresh short-term cycle low yesterday - price has breached support at 5809.00, the Jan 13 low. This highlights a stronger reversal and a double top pattern on the daily scale. A resumption of weakness would open 5698.25, a Fibonacci retracement. Initial firm resistance to watch is 6019.64, the 50-day EMA.
- Japan's NIKKEI closed higher by 87.06 pts or +0.23% at 37418.24 and the TOPIX ended 8.03 pts higher or +0.3% at 2718.21.
- Elsewhere, in China the SHANGHAI closed higher by 17.755 pts or +0.53% at 3341.965 and the HANG SENG ended 652.44 pts higher or +2.84% at 23594.21.
- Across Europe, Germany's DAX trades higher by 767.88 pts or +3.44% at 23084.59, FTSE 100 higher by 58.74 pts or +0.67% at 8818.11, CAC 40 up 175.17 pts or +2.18% at 8221.37 and Euro Stoxx 50 up 126.69 pts or +2.35% at 5512.54.
- Dow Jones mini up 277 pts or +0.65% at 42874, S&P 500 mini up 48 pts or +0.83% at 5837.25, NASDAQ mini up 204.75 pts or +1% at 20603.
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GILTS: Rally Extends Further
A second-round bid in gilts, seemingly delayed vs. wider risk-off price action, given the later open for UK gilts vs. peers, takes gilt futures to session highs of 93.25.
- No fresh headline flow, market continues to balance beta to Tsys vs. broader macro picture/UK sensitivity to tariffs.
- Dec 20 high (93.09) in futures is broken, bulls now eye Fibonacci resistance at 93.64 as the bullish corrective cycle gains more traction.
- Yields now 5-8bp lower, curve bull steepens.
- 2s below 4.15% for the first time since October.
- 10s print below 4.50% for the first time since December, looking to close the opening gap higher from December 17 (4.442% needed to close that gap).
- 2s10s nearly 2bp steeper at 33.5bp, next upside target located at the Oct ‘22 closing high 40.4bp.
- 5s30s within 0.5bp of the July ’21 closing high (~91bp).
- BoE-dated OIS extends the recent run of dovish repricing, showing ~81bp of cuts through ’25.
- ~23.5bp of cuts priced for this week’s meeting and ~46bp of easing priced through May.
- We still look for cuts in both February and May.
- Market pricing looks a lot fairer to us than it did during the hawkish repricing seen in early January (which hit an extreme of ~36bp of cuts priced through ’25).
- We have noted that we need to see much more data before providing a meaningful opinion on the path policy in H225 for some time.
- SONIA futures flat to +6.0. SFIZ5 hits the highest level seen since mid-December.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Feb-25 | 4.467 | -23.4 |
Mar-25 | 4.412 | -28.9 |
May-25 | 4.238 | -46.3 |
Jun-25 | 4.157 | -54.4 |
Aug-25 | 4.032 | -66.9 |
Sep-25 | 3.991 | -71.0 |
Nov-25 | 3.916 | -78.5 |
Dec-25 | 3.892 | -80.9 |
COMMODITIES: WTI Futures Rally Back Above 20-Day EMA
Last week’s move down in WTI futures marked an extension of the current corrective cycle. The 20-day EMA has been breached and attention is on support around the 50-day EMA, at $72.26. A clear break of the 50-day average would suggest scope for a deeper retracement. On the upside, a reversal higher would refocus attention on $79.48, the Apr 12 ‘24 high and a key resistance. A bull cycle in Gold remains in play. Last week’s extension higher resulted in a print above $2790.1, to record a fresh all-time high. The climb confirms a resumption of the primary uptrend and maintains the bullish price sequence of higher highs and higher lows. Attention is on $2817.6 next, a Fibonacci projection. The first key support to watch is $2687.5, the 50-day EMA. The 20-day EMA is at $2728.1.
- WTI Crude up $1.4 or +1.93% at $73.94
- Natural Gas up $0.23 or +7.49% at $3.27
- Gold spot down $0.81 or -0.03% at $2797.67
- Copper down $3.9 or -0.91% at $424.15
- Silver down $0.13 or -0.42% at $31.172
- Platinum down $19.05 or -1.94% at $963.39
EQUITIES: Reversal Lower for Eurostoxx 50 Futures Signals End of Recent Bull Run
A sharp reversal lower in the Eurostoxx 50 futures contract signals the end of the recent bull run - for now - and the start of a corrective cycle. Price has gapped lower and traded through the 20-day EMA, at 5152.76. A continuation lower would pave the way for a move towards the 50-day EMA, at 5050.12, the 50-day EMA. On the upside, key resistance and the bull trigger has been defined at 5327.00, the Jan 31 high. The S&P E-Minis contract has started the week on a bearish note. The gap lower today and a breach of support at 5948.00, the Jan 27 low, strengthens a bearish threat and cancels - for now - a recent bullish theme. An extension down would open 5892.37, a Fibonacci retracement point. Initial resistance is at 6057.75, the Jan 31 low and a gap high on the daily chart. Clearance of this level would reinstate a bullish theme.
- Japan's NIKKEI closed lower by 1052.4 pts or -2.66% at 38520.09 and the TOPIX ended 68.27 pts lower or -2.45% at 2720.39.
- Across Europe, Germany's DAX trades lower by 376.39 pts or -1.73% at 21357.03, FTSE 100 lower by 119.96 pts or -1.38% at 8553.91, CAC 40 down 132.13 pts or -1.66% at 7817.16 and Euro Stoxx 50 down 92.27 pts or -1.75% at 5193.99.
- Dow Jones mini down 601 pts or -1.34% at 44102, S&P 500 mini down 95.75 pts or -1.58% at 5972, NASDAQ mini down 386.25 pts or -1.79% at 21203.
