European Open: RBNZ Hike Rates by 25 bps

Asian Indices:

Australia's ASX 200 index fell by -45.6 points (-0.63%) and currently trades at 7,202.80
Japan's Nikkei 225 index has fallen by -458.48 points (-1.65%) and currently trades at 27,363.64
Hong Kong's Hang Seng index has fallen by -111.16 points (-0.46%) and currently trades at 23,992.99

UK and Europe:

UK's FTSE 100 futures are currently down -45.5 points (-0.65%), the cash market is currently estimated to open at 7,031.60
Euro STOXX 50 futures are currently down -34 points (-0.84%), the cash market is currently estimated to open at 4,031.43
Germany's DAX futures are currently down -107 points (-0.7%), the cash market is currently estimated to open at 15,087.49

US Futures:

DJI futures are currently up 311.75 points (0.92%)
S&P 500 futures are currently down -81 points (-0.55%)
Nasdaq 100 futures are currently down -19 points (-0.44%)

Asian equities (ex-China) turn lower

We didn’t see the rebound we had hoped for during Asian trade for equity markets overall. The ASX 200 stalled at yesterday’s high and quickly reversed and is not on track for a bearish outside day. Japan’s equity markets continued to slide and were some of the weakest of the session. Although China’s share markets remained buoyant with the CSI 300 the strongest of the session.

Rising oil prices remains a concern across the region, and a hike by RBNZ also signalled there could be other hikes (from other central banks) should inflation not actually be transitory at all. But there is also the general feeling that the fallout from Evergrande will sting overseas investors, whilst any intervention from Beijing will cushion the blow of onshore investors. (Well, it has happened before so it can happen again).

FTSE 350: Market Internals

FTSE 350: 4059.89 (0.94%) 05 October 2021

215 (61.25%) stocks advanced and 126 (35.90%) declined
8 stocks rose to a new 52-week high, 14 fell to new lows
57.26% of stocks closed above their 200-day average
41.88% of stocks closed above their 50-day average
9.12% of stocks closed above their 20-day average

Outperformers:

+ 11.1%-Greggs PLC(GRG.L)
+ 6.33%-Darktrace PLC(DARK.L)
+ 5.40%-Restaurant Group PLC(RTN.L)

Underperformers:

·-4.00%-Elementis PLC(ELM.L)
·-3.55%-Endeavour Mining PLC(EDV.L)
·-3.48%-Babcock International Group PLC(BAB.L)

Forex:

RBNZ hiked by 25 bps, a first for the central bank since 2014. Their outlook was positive for the medium-term which points to further hikes from here. Markets are currently pricing in another hike next month but (personally) do not see it as a given. In today’s statement, they said of their awareness of the impact the latest lockdowns had on many businesses. Moreover, their forecast rate from the August MPS (Monetary Policy Statement) is 0.6% by December, below the 0.75% expected by November by some. I’m not saying it will not happen, but we saw RBNZ hold off-from an ‘all-but-given’ hike the day prior to their September meeting. And these points likely help explain why NZD is weaker following the event. Basically, the situation is fluid.

German industrial orders at 07:00 BST, construction PMI at 08:30 and UK PMI’s at 09:30 are the main economic data sets in today’s European session. Although the highlight of the day is likely to be September’s ADP employment set at 13:15. It will be taken as an early proxy for Friday’s highly anticipated NFP report, which itself is a proxy as to whether the Fed will taper at their next meeting or not. Should it come in weaker than expected we would expect the US dollar to take a knock and make our 112 target for USD/JPY seem a little further away.

Should sentiment remain buoyant and oil prices continue to rally, CAD/JPY remains of interest for bullish setups. The daily chart shows it has broken above a retracement line on the daily chart, after twice failing to break below 85.00. A minor retracement last week confirmed the broken retracement line as support and momentum points higher. The daily trend remains bullish above 87.18 although we’d be keen to see any volatility dips towards 88.00 as part of a larger move north.

Commodities:

WTI is coiling up in a nice bull flag on the hourly chart, and momentum suggests traders want to take it to $80. But with it being such a round psychological number then it’s a likely area for traders to book profits and bearish momentum shows its face (even if only temporarily).

Silver is trying to turn lower after printing a small inside day / hanging man reversal candle. A break of 22.29 confirms a near-term reversal although $22 could provide support initially. Should prices continue to chop around ahead of NFP (plausible) then we’d consider bearish setups below $23.

Up Next (Times in BST)

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.