Asian Open Omicron spreads to its 29th country (including the US)

A fully vaccinated traveller returning from South Africa to the US tested positive upon arrival to the states, just hours after airlines were told to provide names of passengers from southern Africa who had known Omicron outbreaks. According to the World Health Organisation (WHO) the variant has now spread to 29 countries.

US equities were predictably lower, with the Russel 2000 and Dow Jones transportation stocks leading the way and the VIX rising to just shy of 30, its highest level since March. The Dow Jones is below its 200-day SMA for the first time since June 2020 and the Nasdaq 100 has formed a head and shoulders top on the daily chart.

Supply chain issues persist in US manufacturing

The ISM report reiterated what we have come to expect, with the manufacturing sector remaining within a “demand-driven, supply-constrained environment” with slight improvements in labour and supplier deliveries. Record-long lead times for raw materials and capital equipment and high commodity prices continue to dampen all sub-sectors.

Nice. And there is little chance of this improving with the new variant making its rounds and forcing tighter restrictions the globe over. And whilst prices paid moved lower we need to factor in this survey doesn’t capture the potential impact of Omicron so inflation is not looking very transitory right now, not that it ever was really.

113 remains an important battleground for USD/JPY

Equities lower, yen higher remains to be the theme of the week. 113 remains an important battleground on USD/JPY as price action has whipsawed violently around it over the past 48 hours. Yet its inability to close to new lows should not go unnoticed, whilst a daily close above it this week may result in a strong reaction like seen on November 10^th the last time 113 was a battle ground. We just need risk-off to ease a little and yield differentials should support it once more.

NZD/CAD coils up into a potential bearish wedge ahead of OPEC

The commodity FX cross is coiling up on the four-hour chart into a potential bearish wedge formation. It saw an aggressively bearish move into the pattern, hence the bias for an eventual downside breakout from it. Such patterns can continue to grind away before breaking out suddenly to the red lines need to be taken with a pinch of salt and adjusted accordingly, but we’d be interested in short opportunities below the resistance zone.

Commodities lower on demand concerns

With rising cases comes concerns of travel restrictions and lockdowns. And with that comes demand concerns, which has weighed broadly on commodities. The Thomson Reuters CRB index fell to a 6-week low of 218 and is now down around -9.5% from its highs.

WTI failed to retest $70 before giving way to the downside and is holding just above Tuesday’s low ahead of today’s OPEC meeting. There is a decent chance OPEC will hold off from increasing their oil output and traders could even be prepared for the chance of a cut, in hopes of supporting prices.

Gold appears confused as it makes mild attempts to behave as a safe-haven with its marginal gains, yet concerns over the economic recovery and hawkish comments from the Fed mean investors may be selling their gold to fund losses elsewhere or simply move to cash.

ASX 200 Market Internals:

ASX 200: 7235.9 (-0.28%), 01 December 2021

Materials (0.57%) was the strongest sector and Consumer Staples (-1.87%) was the weakest
8 out of the 11 sectors closed lower
4 out of the 11 sectors outperformed the index
41 (20.50%) stocks advanced, 149 (74.50%) stocks declined
55% of stocks closed above their 200-day average
31% of stocks closed above their 50-day average
23% of stocks closed above their 20-day average

Outperformers:

+ 3.97%-South32 Ltd(S32.AX)
+ 3.11%-Waypoint REIT Ltd(WPR.AX)
+ 2.71%-Lynas Rare Earths Ltd(LYC.AX)

Underperformers:

-7.58%-GUD Holdings Ltd(GUD.AX)
-7.39%-Pro Medicus Ltd(PME.AX)
-6.00%-IDP Education Ltd(IEL.AX)

Up Next (Times in AEDT)

This content will only appear on City Index websites!

How to trade with City Index

You can 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

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.