EQUITIES: Recent Sharp Sell-Off for E-Mini S&P Reinstates Bearish Threat
The medium-term trend condition in EuroStoxx 50 futures remains bullish and this week’s fresh cycle highs reinforce the bull theme. The initial move higher yesterday delivered a print above the 6100.00 handle. A clear breach of this hurdle would open 6134.00, a Fibonacci projection point. Key support to watch lies at the 50-day EMA, at 5901.38. Clearance of this average would highlight a short-term top. For now, a move down is considered corrective. A sharp sell-off yesterday in S&P E-Minis reinstates a potential bearish threat with key resistance at 7043.00 intact, the Jan 28 high and bull trigger. Attention turns to the key support at 6751.50, the Feb 6 low, where a break would highlight a top and a stronger short-term reversal. This would open 6691.56, a Fibonacci retracement point. Initial resistance to watch is at 6922.20, the 50-day EMA.
- Japan's NIKKEI closed lower by 697.87 pts or -1.21% at 56941.97 and the TOPIX ended 63.31 pts lower or -1.63% at 3818.85.
- Elsewhere, in China the SHANGHAI closed lower by 51.945 pts or -1.26% at 4082.073 and the HANG SENG ended 465.42 pts lower or -1.72% at 26567.12.
- Across Europe, Germany's DAX trades lower by 21.88 pts or -0.09% at 24827.16, FTSE 100 higher by 23.97 pts or +0.23% at 10425.45, CAC 40 down 17.01 pts or -0.2% at 8322.76 and Euro Stoxx 50 down 10.4 pts or -0.17% at 5999.89.
- Dow Jones mini down 92 pts or -0.19% at 49433, S&P 500 mini down 2 pts or -0.03% at 6848.75, NASDAQ mini up 14.25 pts or +0.06% at 24781.25.
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JPY: USDJPY Extends Pullback as Top Currency Official Weighs In
- The top currency official at Japan’s MOF Atsushi Mimura has also weighed in on the growing concerns over recent FX moves, notably stating that they are not just looking at moves against the dollar, they are looking at various pairs. Mimura’s comments add to additional warnings from Finance Minister Katayama this morning, highlighting that appropriate responses will be made against speculative moves.
- USDJPY has sold off to a fresh session low in sympathy, at 158.68, with a slightly softer dollar through early European trade assisting the pair’s pullback from overnight highs to around 75 pips.
- As noted earlier, the fact that domestic economic factors have been so influential on the latest Yen slide is likely to keep dips for cross/JPY very well supported, and a test of the BOJ/MOF resolve currently looks to be a growing inevitability.
- Immediate targets for a resumption of USDJPY strength include 159.60 and 160.00, both Fibonacci projection points. Initial support to watch remains much further down at 156.90, the 20-day EMA.
GILT AUCTION RESULTS: Strong 10-year auction
- Today's auction sees the highest bid-to-cover at a 10-year auction since August and the second highest ever volume of bids at a 10-year gilt auction.
- The tail of 0.3bp was respectable (in line with the last auction) while the LAP (lowest accepted price) was above the pre-auction mid-price.
GILT AUCTION RESULTS: 4.75% Oct-35 Gilt
| 4.75% Oct-35 Gilt | Previous | |
| ISIN | GB00BTXS1K06 | |
| Amount | GBP4.50bln | GBP4.50bln |
| Avg yield | 4.456% | 4.613% |
| Bid-to-cover | 3.26x | 3.05x |
| Tail | 0.3bp | 0.3bp |
| Avg price | 102.295 | 101.057 |
| Low price | 102.275 | 101.030 |
| Pre-auction mid | 102.245 | 101.016 |
| Previous date | 10-Dec-25 |
