EQUITIES: Eurostoxx Trend Remains Up Despite Friday's Sharp Pullback
The trend direction in Eurostoxx 50 futures is up and the latest pullback appears to have been a correction. The contract remains above key support at 5487.08, the 50-day EMA. A clear break of the 50-day average is required to highlight a stronger reversal. On the upside, the bull trigger is 5689.00, the Oct 2 high. Clearance of this hurdle would confirm a resumption of the uptrend. A sharp sell-off in S&P E-Minis on Oct 10 appears corrective - for now. Price has found support below the 50-day EMA, currently at 6609.91, and the Oct 10 low of 6540.25 has been defined as a key short-term support. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend and positive market sentiment. The bull trigger is 6812.25, the Oct 9 high. A breach of this hurdle would confirm a resumption of the uptrend.
- Japan's NIKKEI closed higher by 605.07 pts or +1.27% at 48277.74 and the TOPIX ended 19.78 pts higher or +0.62% at 3203.42.
- Elsewhere, in China the SHANGHAI closed higher by 4.019 pts or +0.1% at 3916.228 and the HANG SENG ended 22.09 pts lower or -0.09% at 25888.51.
- Across Europe, Germany's DAX trades lower by 60.79 pts or -0.25% at 24120.76, FTSE 100 lower by 15.19 pts or -0.16% at 9409.12, CAC 40 up 1.57 pts or +0.02% at 8078.57 and Euro Stoxx 50 down 3.07 pts or -0.05% at 5601.96.
- Dow Jones mini up 78 pts or +0.17% at 46570, S&P 500 mini up 14.5 pts or +0.22% at 6729.5, NASDAQ mini up 97.75 pts or +0.39% at 25022.
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GERMAN AUCTION PREVIEW: E4.5bln Of 2.20% Oct-30 Bobl On Offer This Morning
Germany will sell E4.5bln of the 2.20% Oct-30 Bobl this morning, the first re-opening of this line following the August launch. The August launch attracted a 1.93 bid-to-cover ratio and a 1.47x bid-to-issue ratio for the E4.5bln on offer.
- Benchmark Bobl yields have traded in a contained ~15bp range since the end of July, with the 2.20% handle containing downside price action as expectations that the ECB has reached (or is very close to) its terminal rate are cemented.
- Goldman Sachs “expect a migration of bearish pressure from the long-end towards the belly of yield curves with 5y underperforming in EUR and JPY”. In the EUR complex, this view reflects an expectation for markets to gain confidence in Germany’s better growth outlook. As a result, Goldman see “better macro value in 2s5s and 2s10s steepeners vs the hitherto successful 5s30s and 10s30s”.
- Timing: Results will be available shortly after the bidding deadline closes at 1030BST.
SONIA OPTIONS: Ratio Call Spread vs Put
SFIZ6 97.25/97.75cs x5 vs 96.25p x1, bought the cs for 3 in 1.75k (8.75k x 1.75k).
EURIBOR OPTIONS: Put Ladder seller
ERZ5 98.00/97.875/97.75p ladder, sold at 3.75 in 5k.
