European Open: RBA Begin to Tighten Policy (Just Not as Quickly as Hoped)

Asian Indices:

Australia's ASX 200 index fell by -46.5 points (-0.63%) and currently trades at 7,324.30
Japan's Nikkei 225 index has risen by 102.99 points (0.43%) and currently trades at 25,262.96
Hong Kong's Hang Seng index has risen by 103.36 points (0.41%) and currently trades at 25,257.68
China's A50 Index has fallen by -293.81 points (-1.86%) and currently trades at 15,474.33

UK and Europe:

UK's FTSE 100 futures are currently down -14.5 points (-0.2%), the cash market is currently estimated to open at 7,274.12
Euro STOXX 50 futures are currently down -11.5 points (-0.27%), the cash market is currently estimated to open at 4,268.97
Germany's DAX futures are currently down -38 points (-0.24%), the cash market is currently estimated to open at 15,768.29

US Futures:

DJI futures are currently up 94.28 points (0.26%)
S&P 500 futures are currently down -23.75 points (-0.15%)
Nasdaq 100 futures are currently down -8.5 points (-0.18%)

Asian indices mixed overnight

Joe Biden’s recently unveiled $1.75 trillion spending package hit another road bump, with Dem Senator Joe Manchin refusing to commit his support for the bill.

Equity markets were mixed overnight as we head towards several central bank meetings. South Korea’s KOSPI 200 index was a top performer and on track for its best session in 4-weeks as tech stocks tracked Wall Street higher. The ASX 200 fell around -0.5% after the RBA began to tight policy and move a step closer towards raising rates sooner than (they) were letting on. China’s equity markets were the weakest of the session with China’s A50 index currently down -1.3% and the CSI300 down around -0.7%.

The STOXX 50 chart closed to a 13-year high, beyond out initial target around 4250/52. If it can stabilise above that key level then perhaps it will prompt another round of bullish activity.

The FTSE broke to a new post-pandemic high following its bullish hammer on Monday. Our bias remains bullish above yesterday’s low. As for equities, Standard Charter (STAN) doubled its pre-tax profits compared with a year ago.

FTSE 350: Market Internals

FTSE 350: 4174.94 (0.71%) 01 November 2021

246 (70.09%) stocks advanced and 92 (26.21%) declined
25 stocks rose to a new 52-week high, 5 fell to new lows
60.97% of stocks closed above their 200-day average
80.06% of stocks closed above their 50-day average
24.22% of stocks closed above their 20-day average

Outperformers:

+ 5.96%-Hochschild Mining PLC(HOCM.L)
+ 5.36%-Micro Focus International PLC(MCRO.L)
+ 4.77%-Cineworld Group PLC(CINE.L)

Underperformers:

-15.1%-Darktrace PLC(DARK.L)
-4.45%-Petropavlovsk PLC(POG.L)
-3.55%-AO World PLC(AO.L)

Forex: RBA begin to tighten (slowly)

It appears the RBA are finally coming in line with markets, after they scrapped their YCC (yield curve control) target of 0.1% and removed any reference to tightening in “2024”. This is a far cry from being hawkish mind, but with a central bank as dovish as the RBA, it will take a long time to turn the slow ship. During the following webinar with the Governor himself said it could be plausible rates could be raised by 2023. Given markets were already pricing in hikes for next year this seems typical of the RBA to drag their heels over a policy change.

The Australian dollar is broadly lower as the RBA were not as hawkish the traders were positioned for. AUD/CHF is teasing key support around the support zone mentioned in today’s Asian Open report.

AUD/JPY fell around -0.6% and appears to be carving out an interim top. Given its extended run to the May high and its inability to break above it, we’re keeping a close eye on the cross as it is showing some classic signs of an inflection point. A bearish engulfing candle on October 21^st slammed prices back below the May high before several Doji’s teased the key level before moving lower today. A daily close around current levels confirms a 3-bar bearish reversal. A break of trend support brings the 84.58 low into focus, with the 38.2% ratio sitting just beneath 84.0 as another viable countertrend target.

GBP/USD touched a 13-day low yesterday, although momentum is waning as we approach the FOMC meeting. Our bias remains bearish beneath the 1.3700/20 zone outlined in yesterday’s report.

Commodities:

Copper futures were slightly lower ahead of tomorrow’s FOMC meeting, with the strong selloff in Iron Ore markets also playing a part.

Silver looks like it wants to break higher after finding support above its 50-day eMA and printing a small inside day. In fact, the potential setup does not look too dissimilar to platinum did yesterday, just before it broke higher.

Up Next (Times in BST)

How to trade with City Index

You can trade easily trade with City Index by using these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

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.