European Open: Equities broadly lower, GBP/AUD breaks out

Asian Indices:

• Australia's ASX 200 index fell by -125.9 points (-1.7%) and currently trades at 7,281.40
• Japan's Nikkei 225 index has fallen by -811.71 points (-2.73%) and currently trades at 28,696.71
• Hong Kong's Hang Seng index has fallen by -526.61 points (-2.13%) and currently trades at 24,213.55
• China's A50 Index has fallen by -132.91 points (-0.85%) and currently trades at 15,505.76

UK and Europe:

• UK's FTSE 100 futures are currently down -128.5 points (-1.76%), the cash market is currently estimated to open at 7,181.87
• Euro STOXX 50 futures are currently down -86.5 points (-2.02%), the cash market is currently estimated to open at 4,206.74
• Germany's DAX futures are currently down -284 points (-1.79%), the cash market is currently estimated to open at 15,633.98

US Futures:

• DJI futures are currently down -9.42 points (-0.03%)
• S&P 500 futures are currently down -78.25 points (-0.48%)
• Nasdaq 100 futures are currently down -45.25 points (-0.96%)

Will soured sentiment carry over to the European session?

Asian equities and futures markets are broadly lower whilst gold, the Swiss franc and yen are higher as investors pile into safe havens. We can already see the damage to sentiment seen during the Asian session, so the question for traders now is as to whether this carries over to the European session. We’re guessing it will as traders opt for the ‘panic now, question later’ approach. What’s really got investors spooked is concerns that this new Covid variant can evade vaccinations to do its dirty work. But that also cuts both ways, because it we see confirmation that it is not actually the case, then we’d expect a strong risk-on reaction. We’re clearly not there yet though.

Yen is the king of safety

Whilst CHF and JPY pairs are taking bids, the fact that CHF/JPY is lower tells us that the yen is the preferred safety play for currency traders. USD/JPY is back below 115 during its worst session in seen, so the dollar is clearly not a place to hide today. AUD/JPY is below 82 and is the go-to barometer of risk for currency traders. We expect the pair to remain under pressure as it remains in its bearish channel and is a key pair to watch today.

GBP/AUD breaks out of bull flag pattern overnight

GBP/AUD enjoyed its best week since September last week, and prices have since consolidated below the October high as the trend pauses for breath. We have now seen two higher highs and a higher low on the daily chart, and events overnight has seen GBP/AUD finally break above October’s high.

A decent trend is forming on the four-hour chart and its sideways consolidation found support at the 50-day eMA. A large bullish engulfing candle formed prior to the breakout, so we suspect its corrective low is now in place.

FTSE 350: Market Internals

FTSE 350: 4187.39 (0.33%) 25 November 2021

• 230 (65.53%) stocks advanced and 111 (31.62%) declined
• 6 stocks rose to a new 52-week high, 4 fell to new lows
• 56.98% of stocks closed above their 200-day average
• 58.4% of stocks closed above their 50-day average
• 14.81% of stocks closed above their 20-day average

Outperformers:

• + 18.5%-Vivo Energy PLC(VVO.L)
• + 14.3%-Hochschild Mining PLC(HOCM.L)
• + 9.64%-Capita PLC(CPI.L)

Underperformers:

• -8.57%-Hill & Smith Holdings PLC(HILS.L)
• -4.84%-Renishaw PLC(RSW.L)
• -3.85%-TI Fluid Systems PLC(TIFS.L)

All rise for German inflation

German import prices are scheduled for 07:00 GMT and having increased its rate of expansion for twelve consecutive months there’s little reason to expect them to contract today. Although its rate of ascent is falling with October’s 17.7% y/y print only up 1.2 percentage points from 16.5%, so a rise less than 1.2 would be a small victory. Beyond that there is no major economic data related and US markets close at lunch so it will be a quiet end to the week.

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