European Open Mixed lead from Asia Soft Open for Europe PMIs Next

Asian Indices:

Australia's ASX 200 index fell by -7.4 points (-0.1%) and currently trades at 7,048.00
Japan's Nikkei 225 index has fallen by -231.1 points (-0.79%) and currently trades at 28,957.07
Hong Kong's Hang Seng index has risen by 258.98 points (0.9%) and currently trades at 29,014.32

UK and Europe:

UK's FTSE 100 futures are currently down -25.5 points (-0.37%), the cash market is currently estimated to open at 6,912.74
Euro STOXX 50 futures are currently down -10 points (-0.25%), the cash market is currently estimated to open at 4,004.80
Germany's DAX futures are currently down -58 points (-0.38%), the cash market is currently estimated to open at 15,262.52

Thursday US Close:

The Dow Jones Industrial fell -123.04 points (-0.36%) to close at 34,077.63
The S&P 500 index fell -38.44 points (-0.93%) to close at 4,134.98
The Nasdaq 100 index fell -134.24 points (-0.96%) to close at 13,762.36

Shares were mixed across Asia, with the Hang Seng China Enterprise and Hang Seng indices trading around 0.94% higher, trailed by China’s CSI 300 rising 0.75%. The ASX 200 was off by -0.2% after failing to break yesterday’s high. European futures are pointing to a softer start, with DAX and futures down -0.4% and the STOXX 50 -0.3% lower.

The FTSE 100 rose to a two-day high yesterday and has recovered around half of its losses sustained during Tuesday’s abrupt sell-off. Wednesday’s low held above the 20-day eMA and yesterday’s session closed at its high, so the bias today is bullish whilst prices hold above yesterday’s low.

However, we feel inclined to remain nimble. Whilst European shares were higher yesterday, volatility was relatively contained so we’re not entirely convinced confidence has been fully restored. From a technical standpoint, should FTSE 100 prices drop sharply enough today then the four-hour chart will have a potential head and shoulders top to contend with (a break below the 6840 neckline confirms it). But so long as prices remain above yesterday’s low ad break yesterday’s high, bullish setups are preferred for intraday setups.

FTSE 350: Market Internals

Midcaps led UK equities higher yesterday, with the FTE 250 rising 1.26% compared with 0.62% for the FTSE 100, and 0.74% for the broader FTSE 350.

FTSE 350: 6938.24 (0.62%) 22 April 2021

285 (81.20%) stocks advanced and 63 (17.95%) declined
24 stocks rose to a new 52-week high, 5 fell to new lows
87.46% of stocks closed above their 200-day average
23.93% of stocks closed above their 20-day average

Outperformers

+ 19.65% - Morgan Sindall Group PLC (MGNS.L)
+ 5.49% - SSP Group PLC (SSPG.L)
+ 5.05% - TI Fluid Systems PLC (TIFS.L)

Underperformers:

-5.03% - BAE Systems PLC (BAES.L)
-3.60% - AJ Bell PLC (AJBA.L)
-3.24% - Rathbone Brothers PLC (RAT.L)

Forex pairs retrace yesterday’s moves

AUD, CAD and GBP were the strongest major overnight, having recouped some of yesterday’s losses. But eyes will be on Wall Street for general sentiment in the US session to see if yesterday’s sell-off is simply a blip, or the beginning of a larger, countertrend move.

The US dollar index (DXY) remains beneath the 91.30/40 resistance zone, although it was closed to being broken with yesterday’s bullish engulfing candle. So traders should continue to watch XY alongside EUR/USD whilst it probes key support at 1.2000. Lower stocks could drag euro though support, whilst a bounce in risk sentiment could see the level hold as support. Also keep in mind that the main economic date is flash PMI’s for Europe, UK and the US.
The short bias on EUR/GBP was never confirmed with a break beneath its ‘hanging man’ candle at 0.8613, and stood little chance as prices pretty much rallied from the open.
GBP/USD failed to hold onto its base above 1.3900, making this level an area for bears to consider fading into and brings the 1.3716 low into focus.

CAD/JPY: One to Watch if Sentiment Improves

CAD/JPY is on track for a bullish hammer this week, and currently traders lower for a third consecutive week. It’s therefore plausible its correction from the March high is nearing an end, if not already complete. If risk appetite can somehow pick up this session or next week, it should be enough to help CAD/JPY break to new highs, given BOC (Bank of Canada) signalled they will likely be the first one among developed economic to raise rates.

The daily chart formed a small indecision candle beneath its 20-day eMA yesterday, after posting a strong bullish candle on Wednesday. Yesterday’s low held above the 23^rd of March low, and prices are continually testing trendline resistance.

A break above 86.79 confirms a bullish breakout, as it clears Wednesday and Thursday’s high and its 20-day eMA.
The bias remains bullish if prices do break higher.
A break beneath 86.00 invalidates the potential for a breakout (for now).

Learn how to trade forex

Gold to crack 1800?

We think gold will eventually crack 1800, but for today much of it depends on how Wall Street trades around the proposed (but not yet confirmed) tax hikes. As it was this news that weighed on gold yesterday. The 200-day eMA continues to cap as resistance, so if volatility remains low beneath 1800 we’d be inclined to consider counter-trend setups below 1800. Or simply step aside and wait Or simply step aside and wait for a break above it, if or whenever that may be.

Up Next (Times in BST)

You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. 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. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.