EQUITIES: Latest Pullback for E-Mini S&P Corrective, 50-Day EMA Support Holds
A bull cycle in Eurostoxx 50 futures remains intact. Price is trading above the 20- and 50-day EMAs, and has recently cleared 5742.40, 76.4% of the Nov 13 - 21 bear leg. The breach of this latter price point paves the way for an extension towards 5825.00, the Nov 13 high and the bull trigger. First key support to watch lies at 5649.07, the 50-day EMA. A clear break of the EMA would highlight a potential short-term reversal. A bull cycle in S&P E-Minis remains intact and the latest pullback - for now - is considered corrective. Initial support to watch is 6831.93, the 50-day EMA. It has been pierced, a clear break of this average would signal scope for a deeper retracement. Note that the key support and reversal trigger lies at 6583.00, the Nov 21 low. For bulls, a resumption of gains would refocus attention on the key resistance and bull trigger at 7014.00, the Oct 30 high.
- Japan's NIKKEI closed higher by 128.99 pts or +0.26% at 49512.28 and the TOPIX ended 1.11 pts lower or -0.03% at 3369.39.
- Elsewhere, in China the SHANGHAI closed higher by 45.466 pts or +1.19% at 3870.278 and the HANG SENG ended 233.37 pts higher or +0.92% at 25468.78.
- Across Europe, Germany's DAX trades higher by 27.94 pts or +0.12% at 24104.79, FTSE 100 higher by 145.44 pts or +1.5% at 9830.33, CAC 40 down 5.12 pts or -0.06% at 8101.04 and Euro Stoxx 50 up 10.56 pts or +0.18% at 5728.39.
- Dow Jones mini up 70 pts or +0.15% at 48201, S&P 500 mini up 18 pts or +0.26% at 6819.25, NASDAQ mini up 77.5 pts or +0.31% at 25216.5.
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EQUITIES: Eurostoxx Futures Trend Bullish Despite Latest Pullback
A medium-term bull trend in Eurostoxx 50 futures remains intact and last week’s gains reinforce bullish conditions. However, the latest pullback suggests the start of a corrective phase. Price has traded through the 20-day EMA. Attention is on support at the 50-day EMA, at 5604.85, and 5599.00, the base of a bull channel drawn from the Aug 1 low. These two price points represent key support. A break would highlight a stronger reversal. The trend condition in S&P E-Minis remains bullish and the latest selloff appears corrective - for now. Support at the 50-day EMA, at 6730.32, has been pierced, however, price is once again trading above the average. The next key support to watch is 6655.50, the Nov 7 low. Friday’s price pattern is a doji candle - a reversal signal. Initial firm resistance to watch is 6900.50, the Nov 12 high. A breach of this level would be bullish.
- Japan's NIKKEI closed lower by 52.62 pts or -0.1% at 50323.91 and the TOPIX ended 12.28 pts lower or -0.37% at 3347.53.
- Elsewhere, in China the SHANGHAI closed lower by 18.457 pts or -0.46% at 3972.035 and the HANG SENG ended 188.18 pts lower or -0.71% at 26384.28.
- Across Europe, Germany's DAX trades lower by 30.1 pts or -0.13% at 23846.65, FTSE 100 lower by 8.55 pts or -0.09% at 9689.9, CAC 40 down 7.69 pts or -0.09% at 8162.4 and Euro Stoxx 50 down 16.99 pts or -0.3% at 5676.78.
- Dow Jones mini up 63 pts or +0.13% at 47289, S&P 500 mini up 33 pts or +0.49% at 6787.75, NASDAQ mini up 192.5 pts or +0.77% at 25285.5.
EQUITIES: Option Expiry Friday
Equity Option expiry for Friday in Notional Term:
US:
- SPX: $1.36T.
- NDX: $77.92bn.
- Amazon: $16.93bn.
- Apple: $16.97bn.
EU:
- SX5E: €138.74bn.
- SX7E: €4.43bn.
- Dax: €14.05bn.
- FTSE: £14.30bn.
GREECE: Limited Market Impact From Fitch Upgrade; Ratings Trajectory Positive
- The 10-year GGB/Bund spread is marginally, but not materially, tighter versus Friday's close (around -0.5bps at typing). Fitch's rating upgrade to BBB (Outlook Stable) on Friday was in line with our expectations, and mostly in the price already. GGBs now screen as less rich than before on a simple 10-year yield vs ratings chart.
- The base case is for continued positive ratings action in the coming years. Speaking to the MNI Policy Team last week, a Greek Treasury source said that the next surge in [GGB] demand could come in one or two years’ time, and include Asian investors, “when we will be at BBB+ levels or close to BBB+”.
- Fitch expects Greek debt GDP to fall towards 120% by 2030 - in line with the signals provided by the finance minister last week.
- Meanwhile, planned easing measures in the 2026 budget such as personal income tax cuts "will boost real disposable income of primarily middle-income households, which will in turn support growth"
- Fitch continues to view Greece's commitment to fiscal prudence as "highly credible".
- The conditions for further positive ratings action are unchanged relative to the May review: "Further significant decline in general government debt/GDP over the medium term" and "Improvement in medium-term growth potential and performance".
