EQUITIES: Medium-Term Bull Trend in Eurostoxx 50 Futures Remains Intact
A medium-term bull trend in Eurostoxx 50 futures remains intact and this week’s gains reinforce bullish conditions. The contract has traded through resistance at 5742.00, the Oct 29 high to confirm a resumption of the uptrend. Attention is on 5818.00 next, a Fibonacci projection. Clearance of this hurdle would open 5848.00, a bull channel top drawn from the Aug 1 low. On the downside, initial firm support is seen at 5669.13, the 20-day EMA. The trend condition in S&P E-Minis remains bullish and the bear leg since the Oct 30 high appears to have been a correction. The contract has managed to find support below the 50-day EMA, currently at 6728.13, and a key level. Activity on Nov 7 highlights a potential reversal signal - a bullish doji candle. This defines key support at 6655.50, the Oct 7 low. Sights are on 6953.75, Oct 30 high and bull trigger.
- Japan's NIKKEI closed higher by 218.52 pts or +0.43% at 51281.83 and the TOPIX ended 22.39 pts higher or +0.67% at 3381.72.
- Elsewhere, in China the SHANGHAI closed higher by 29.361 pts or +0.73% at 4029.501 and the HANG SENG ended 150.3 pts higher or +0.56% at 27073.03.
- Across Europe, Germany's DAX trades lower by 67.52 pts or -0.28% at 24312.88, FTSE 100 lower by 28.57 pts or -0.29% at 9883.03, CAC 40 up 41.56 pts or +0.5% at 8282.8 and Euro Stoxx 50 up 10.39 pts or +0.18% at 5797.7.
- Dow Jones mini up 9 pts or +0.02% at 48376, S&P 500 mini down 9.25 pts or -0.13% at 6865.75, NASDAQ mini down 49.75 pts or -0.19% at 25571.25.
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BOE: ILTR Usage Sees Another Notable Pickup
- The ILTR take up this week was GBP6.344bln - surpassing the GBP5.085bln seen two weeks ago - and the highest level since the week of the first Covid lockdown. This is also the largest net weekly increase in ILTR usage in that time - increasing by GBP5.004bln. All bids were accepted by the BOE with no increase in clearing spreads above the minimum levels.
- Assuming unchanged STR usage on Thursday (which cannot be assured after 3 of the last 4 weeks saw drops in usage), this would put repo balances at a new record high for the week of GBP124.4bln.
- We think that ahead of the change to the ILTR spread for Level A collateral changing from Bank Rate +0bp to Bank Rate +3bp in November (date still TBC) that 6-month repo rates are getting locked in now.
