EQUITIES: FTSE-100 Stands Out in Soft Europe Trade
The trend condition in S&P E-Minis remains bullish and the contract is trading above support at the 50-day EMA. The average, currently at 6627.92, has been pierced but remains intact - for now. Note that the Oct 10 low of 6540.25 marks the key short-term support. The trend direction in Eurostoxx 50 futures is up and This week’s gains reinforce this theme. The breach of 5689.00, the Oct 2 high and bull trigger, confirms a resumption of the uptrend.
- Japan's NIKKEI closed lower by 8.27 pts or -0.02% at 49307.79 and the TOPIX ended 16.93 pts higher or +0.52% at 3266.43.
- Elsewhere, in China the SHANGHAI closed lower by 2.574 pts or -0.07% at 3913.758 and the HANG SENG ended 245.78 pts lower or -0.94% at 25781.77.
- Across Europe, Germany's DAX trades lower by 64.63 pts or -0.27% at 24263.12, FTSE 100 higher by 60.69 pts or +0.64% at 9487.18, CAC 40 down 43.81 pts or -0.53% at 8214.14 and Euro Stoxx 50 down 22.8 pts or -0.4% at 5663.71.
- Dow Jones mini down 22 pts or -0.05% at 47120, S&P 500 mini up 0.5 pts or +0.01% at 6774.25, NASDAQ mini down 31.5 pts or -0.12% at 25265.75.
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EGBS: Sovereign Rating Divergence Between Italy & France Underscored On Friday
Modest EGB/Bund spread widening seen alongside a downtick in European equity index futures, although both moves are fairly contained, with Stoxx 50 futures already recovering from session lows.
- EGB/Bund spreads little changed to ~1bp wider, OATs the marginal underperformer after the once-notch sovereign rating downgrade of France from Morningstar DBRS underscored the fiscal & ratings headwinds for OATs. OAT/Bund spread consolidates above 80bp.
- BTPs don’t see much of a lasting tailwind after Italy received the (at least partially expected) one-notch rating upgrade from Fitch, with the rating agency noting “increased confidence in Italy's fiscal trajectory, underpinned by a growing record of fiscal prudence and strong commitment to meeting short- and medium-term fiscal targets under the new EU fiscal framework”. BTP/Bunds trades ~0.5bp wider on the day.
- Weekend comments from Italian Economy Minister Giorgetti were relatively upbeat, as he outlined the potential for the deficit/GDP ratio to print below 3% come the end of the current fiscal year.
- Commerzbank suggest that “the pressure on OATs and simultaneous support for BTPs looks set to continue with the rating changes. While the budget consolidation process in France looks set to become particularly difficult after latest remarks from Bardella ("If Lecornu continues Macron policies, he'll fail"), Budget/supply headwinds thus look set to continue to take their toll on OATs, while it is noteworthy that the 10-Year z-spreads have not yet fully converged. We stick with our view of full BTP/OAT convergence, also in tenors beyond 10-Year”.
MONTH-END EXTENSIONS: Early Projections
Bloomberg Bonds projection:
- US Tsys: +0.06yr (small).
- EU Govies: +0.08yr (average).
- UK Govies: 0.00yr (non event).
FOREX: FX OPTION EXPIRY
Of note:
EURUSD 4.97bn between 1.1700/1.1800.
EURUSD 1.66bn at 1.1750 (tue).
EURUSD ~1bn at 1.1750 (wed).
GBPUSD 1.28bn at 1.3500 (wed).
EURUSD 1.3bn at 1.1740/1.1750 (thu).
USDCAD 1.3bn at 1.3795/1.3800 (thu).
EURUSD 1.7bn at 1.1750 (fri).
- EURUSD; 1.1700 (583mln), 1.1720 (626mln), 1.1730 (630mln), 1.1745 (559mln), 1.1770 (461mln), 1.1775 (260mln), 1.1780 (245mln), 1.1790 (465mln), 1.1800 (1.14bn).
- GBPUSD: 1.3500 (393mln).
- USDJPY; 148.35 (350mln).
- USDCAD: 1.3800 (519mln).
- AUDUSD: 0.6600 (547mln).
