EQUITIES: Fresh Cycle Lows in E-Mini S&P Strengthens Bearish Theme
Eurostoxx 50 futures remain in a bear cycle following recent weakness and today’s fresh cycle low strengthens the bearish condition. Recent weakness resulted in a break of support at 5229.00, the Mar 11 low. This signals scope for an extension towards 5079.00, the Feb 3 low. Initial firm resistance is 5325.98, the 20-day EMA. A clear break of this average is required to highlight a reversal. S&P E-Minis are trading in a volatile manner. A bearish theme remains intact and today’s fresh cycle low, strengthens current conditions. A resumption of weakness would signal scope for an extension towards 5396.00, a Fibonacci projection. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. Key short-term resistance has been defined at 5837.25, the Mar 25 high.
- Japan's NIKKEI closed lower by 989.94 pts or -2.77% at 34735.93 and the TOPIX ended 81.68 pts lower or -3.08% at 2568.61.
- Elsewhere, in China the SHANGHAI closed lower by 8.119 pts or -0.24% at 3342.008 and the HANG SENG ended 352.72 pts lower or -1.52% at 22849.81.
- Across Europe, Germany's DAX trades lower by 298.96 pts or -1.34% at 22092.8, FTSE 100 lower by 86.91 pts or -1.01% at 8521.47, CAC 40 down 132.74 pts or -1.69% at 7728.35 and Euro Stoxx 50 down 96.59 pts or -1.82% at 5207.36.
- Dow Jones mini down 993 pts or -2.34% at 41499, S&P 500 mini down 159.25 pts or -2.79% at 5553.25, NASDAQ mini down 596.75 pts or -3.02% at 19162.75.
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EU: Commission President Outlines 'ReArm Europe' Plan
European Commission President Ursula von der Leyen has outlined the Commission's 'ReArm Europe' plan intended to significantly boost defence and security spending at the EU and member state level.
- One proposal is to activate the 'national escape clause' of the Stability and Growth Pact that will allow member states to increase domestic defence spending without entering the excessive deficit procedure.
- Proposes a new instrument that can put forwards EUR150B in loans to member states for defence investment. VdL: 'It will help member states to pool demand and buy together'. Claims that it can be used to the benefit of Ukraine.
- Third proposal seeks to allow member states to decide if they want to use cohesion policy funding to go towards defence spending (this would usually be used for infrastructure spending, or social or business investment).
- VdL also claims that ReArm Europe will seek to increase private sector investment in defence and security.
- Claims that the programme "could mobilise close to EUR800B for a safe and resilient Europe."
The activation of the escape clause and repurposing of cohesion funding was reported on 2 March by MNI's Policy team (see 'MNI: European Commission Eyes EUR100Bln Defence Tool-Source', 2 March, for access contact sales@marketnews.com). EU leaders will meet for a special European Council summit in Brussels on 6 March, with defence, security, and support for Ukraine.
NOK: Oil and Gas Pullback Weighs On NOK
Weaker brent crude and natural gas prices have weighed on the NOK this morning, with EURNOK 0.5% higher on the session.
- The rally in EURNOK sees trendline resistance drawn from the August 5th 2024 high (11.7754 today) pierced, with the Jan 21 high at 11.8260 the next topside target.
- NOKSEK has seen a more modest 0.15% sell-off, with the SEK also under pressure amid today’s pullback in European equities following yesterday’s US tariff implementation on Mexico, Canada and China. However, yesterday’s close below key multi-year support at 0.9500 was an important bearish development, with rallies short of the 20-day EMA at 0.9606 considered corrective.
- Crude markets have extended yesterday’s decline following reports that OPEC will go ahead with its output normalisation from April counter to market expectation. The impact of US tariffs and retaliatory measures on global demand is also weighing on prices.
- Meanwhile, TTF prices are also softer with storage withdrawals falling below normal amid warm weather this week while progress towards peace in the Russia-Ukraine conflict is assessed.
GOLD: Gold gains $25.
- Gold extends decent gains, that's over $25 bucks since Europe has started to Join the session 2 hours ago.
- Silver is now also starting to see some spillover bids, and next immediate resistance in Gold comes at $2920.8/2956.2 - High Feb 27 / 24 and the bull trigger.
