European Open: Sentiment gets another spring in its step ahead of FOMC

Asian Indices:

• Australia's ASX 200 index rose by 70.4 points (0.99%) and currently trades at 7,167.80
• Japan's Nikkei 225 index has risen by 370.7 points (1.46%) and currently trades at 25,717.18
• Hong Kong's Hang Seng index has risen by 460.43 points (2.5%) and currently trades at 18,875.51
• China's A50 Index has risen by 134.11 points (1.05%) and currently trades at 12,847.09

UK and Europe:

• UK's FTSE 100 futures are currently up 28.5 points (0.4%), the cash market is currently estimated to open at 7,204.20
• Euro STOXX 50 futures are currently up 20.5 points (0.55%), the cash market is currently estimated to open at 3,758.61
• Germany's DAX futures are currently up 87 points (0.63%), the cash market is currently estimated to open at 14,004.27

US Futures:

• DJI futures are currently down -14 points (-0.04%)
• S&P 500 futures are currently up 21.25 points (0.16%)
• Nasdaq 100 futures are currently down -1.5 points (-0.04%)

During a late-night video, President Zelensky said the negotiations were “more realistic now”, although the presidential aide was quoted saying “fundamental contradictions remain” but there is “certainly room for compromise”.

US retail sales and Canadian CPI data are released just before lunch, but let’s be honest and admit that it is the FOMC meeting that will capture the most attention. And it’s not the (fully expected) rate hike that counts, but whether we see any significant changes in the dot plot or economic forecasts, as that will reveal whether markets are right to price in so many hikes this year.

Fed fund futures suggest there’s just under a 50% chance of four hikes by the June meeting, and perhaps that is correct given inflation is sizzling right now. But if there’s anything to be learned by previous hike cycles it’s that the market gets ahead of itself, something bad happens, then expectations for multiple hikes come crashing down. And as we’re not even a quarter of the way through this year, there’s plenty of opportunity for the Fed to do a U-turn. Besides, with the dollar rallying ahead of this meeting there appears to be a lot of money on a hawkish hike today. And given the geopolitical landscape, we’re on guard for a cautious hike and for the Fed to make their decisions on a per-meeting basis.

Potential breakout on FTSE in focus

We have repeatedly highlighted the significance of the 7200 area these past few days, and it remains a core focus today. Despite two failed intraday break above it (and the 200-day eMA), prices have so far refused to roll over. And the fact it closed just beneath this resistance zone with a ‘buyers tail’ has us on guard for a bullish breakout today. Due to the higher wicks above 7200, bulls could consider longs with (say) an hourly or 30m candle close above 7200 before deciding if they want to commit. 7300 makes a viable interim target and 7200 would become potential support.

FTSE 350: Market Internals

FTSE 350: 4028.24 (-0.25%) 15 March 2022

• 103 (29.34%) stocks advanced and 240 (68.38%) declined
• 2 stocks rose to a new 52-week high, 6 fell to new lows
• 23.08% of stocks closed above their 200-day average
• 21.08% of stocks closed above their 50-day average
• 6.55% of stocks closed above their 20-day average

Outperformers:

• + 8.65% - Pearson PLC (PSON.L)
• + 6.87% - Redde Northgate PLC (REDD.L)
• + 4.02% - Ashtead Group PLC (AHT.L)

Underperformers:

• ·-26.67% - Petropavlovsk PLC (POG.L)
• ·-22.90% - Polymetal International PLC (POLYP.L)
• ·-15.27% - TP ICAP Group PLC (TCAPI.L)

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