EQUITIES: Eurostoxx 50 Futures Remain in Bull Cycle Following Latest Advance
Eurostoxx 50 futures remain in a bull cycle. The contract traded to a fresh short-term cycle high on Thursday, reinforcing bullish conditions. Note too that price has traded through 5263.01, 76.4% of the Mar 3 - Apr 7 bear leg. A continuation higher would signal scope for a climb towards 5341.00 next, the Mar 27 high. Initial support to watch lies at 5110.14, the 20-day EMA. Clearance of this level would signal a possible reversal. The bullish trend condition in S&P E-Minis remains unchanged. The contract has recently breached the 50-day EMA, at 5626.70. A continuation higher would expose 5837.25 next, the Mar 25 high and a bull trigger. It is still possible that the entire rally since Apr 7 is a correction. A reversal lower would signal the end of this corrective phase and expose initially, support at 5127.25, the Apr 21 low. First support to watch is 5560.62, the 20-day EMA.
- Japan's NIKKEI closed higher by 574.7 pts or +1.56% at 37503.33 and the TOPIX ended 34.77 pts higher or +1.29% at 2733.49.
- Elsewhere, in China the SHANGHAI closed lower by 9.997 pts or -0.3% at 3341.999 and the HANG SENG ended 91.82 pts higher or +0.4% at 22867.74.
- Across Europe, Germany's DAX trades higher by 133.99 pts or +0.57% at 23485.72, FTSE 100 higher by 38.03 pts or +0.45% at 8569.08, CAC 40 up 45.61 pts or +0.59% at 7739.65 and Euro Stoxx 50 up 19.91 pts or +0.38% at 5308.86.
- Dow Jones mini down 53 pts or -0.13% at 41415, S&P 500 mini up 2.75 pts or +0.05% at 5686.75, NASDAQ mini up 37 pts or +0.18% at 20183.5.
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COMMODITIES: Gold Moves Affirm Bullish Case
The trend condition in Gold remains bullish and the latest pull back appears corrective. Moving average studies are unchanged, they remain in a bull-mode position highlighting a dominant uptrend. A bearish theme in WTI futures remains intact following the recent impulsive sell-off and the contract has again traded to a fresh cycle low, today. Recent weakness has resulted in the breach of a number of important support levels.
- WTI Crude down $2.07 or -3.47% at $57.53
- Natural Gas up $0.02 or +0.63% at $3.488
- Gold spot up $60.21 or +2.02% at $3046.08
- Copper up $1 or +0.24% at $415.75
- Silver up $0.45 or +1.5% at $30.2371
- Platinum up $0.5 or +0.05% at $922.51
EQUITIES: S&P 500 Remains on Cusp of Bear Market
A bearish theme in S&P E-Minis remains intact and the cross is approaching its recent lows. Scope is seen for an extension towards the 4800.00 handle next. Note that moving average studies are in a bear-mode position. Eurostoxx 50 futures remain in a bear cycle following the latest impulsive sell-off and the contract is trading just above its recent lows. Monday’s move down resulted in a breach of a key support at 4699.00, the Nov 19 ‘24 low (cont).
- Japan's NIKKEI closed lower by 1298.55 pts or -3.93% at 31714.03 and the TOPIX ended 82.69 pts lower or -3.4% at 2349.33.
- Elsewhere, in China the SHANGHAI closed higher by 41.261 pts or +1.31% at 3186.81 and the HANG SENG ended 136.81 pts higher or +0.68% at 20264.49.
- Across Europe, Germany's DAX trades lower by 668.21 pts or -3.29% at 19612.07, FTSE 100 lower by 235.89 pts or -2.98% at 7675.61, CAC 40 down 210.44 pts or -2.96% at 6889.46 and Euro Stoxx 50 down 145.38 pts or -3.05% at 4628.29.
- Dow Jones mini down 265 pts or -0.7% at 37601, S&P 500 mini down 6.25 pts or -0.12% at 5012, NASDAQ mini up 47 pts or +0.27% at 17285.25.
EGBS: BTPs Underperform As Vol Uptick Weighs On Carry Vehicles
Estoxx 50 futures are off session lows but remain 2.8% below yesterday’s settlement levels, prompting a widening in 10-year EGB spreads to Bunds. BTPs underperform, with the spread to Bunds 7.5bps wider at 130bps (down from an earlier high of 132bps). The ratchet higher in EUR 3m10y swaption vol is likely factoring in here. BTPs are a popular vehicle for carry traders in the EGB complex, and the increase in margin requirements driven by heightened vol can contribute to unwinds in leveraged carry plays.
- Italy is also more exposed to US tariffs than some of its EU peers, and the Government has been lobbying hard with the bloc to limit an escalation of trade tensions with the US.
- Together with France and Ireland, Italy successfully lobbied to remove retaliatory tariffs on US bourbon, wine and dairy imports in a package that will be voted on by the EC today. Meanwhile, Bloomberg reported yesterday that PM Giorgia Meloni will visit Washington, D.C., as early as next week in an effort to press the Trump administration to offer concessions on tariffs.
- The 10-year OAT/Bund spread is 3.5bps wider at 79bps, down from Monday’s intraday multi-month high of 82bps.
- This morning, Budget Minister Montchalin said that France will try and reduce its budget by E5bln to contain debt growth. This E5bln will be “cancelled, postponed or redirected”, with a portion going to “essential defence spending”.
Figure 1: 10-year BTP/Bund Spread vs 3m10y Swaption Vol
