European Open: Cable to have another crack at breaking above 1.20?

Research
Matt Simpson financial analyst
By :  ,  Market Analyst

Asian Indices:

  • Australia's ASX 200 index fell by -40 points (-0.6%) and currently trades at 6,647.10
  • Japan's Nikkei 225 index has risen by 167.08 points (0.62%) and currently trades at 26,954.76
  • Hong Kong's Hang Seng index has fallen by -271.23 points (-1.3%) and currently trades at 20,574.95
  • China's A50 Index has fallen by -178.03 points (-1.25%) and currently trades at 14,055.25

 

UK and Europe:

  • UK's FTSE 100 futures are currently down -36 points (-0.5%), the cash market is currently estimated to open at 7,187.24
  • Euro STOXX 50 futures are currently down -29 points (-0.83%), the cash market is currently estimated to open at 3,482.86
  • Germany's DAX futures are currently down -87 points (-0.67%), the cash market is currently estimated to open at 12,872.81

 

US Futures:

  • DJI futures are currently up 21 points (0.07%)
  • S&P 500 futures are currently up 15 points (0.13%)
  • Nasdaq 100 futures are currently up 6.75 points (0.18%)

 

20220719futuresCI

 

Japan’s growth is expected to grow slower than previously expected according to a Reuters poll – although still projected to remain positive until 2023. The slowdown in the US economy and supply issues are key factors behind the downgrade.

 

Rishi Sunak remains the favourite candidate to replace Boris Johnson as PM, taking 115 votes in the third ballot. Truss is now the favoured runner-up with four candidates remaining, according to bookies.

 

AUD was the strongest currency following hawkish RBA minutes, which stated that interest rates were “still very low” for an economy with such a tight labour market.

 

US homebuilders sentiment hit a more-than 2-year low according to the NAHB, adding more worrying signs to the sector which already points to a slowdown. A slew of weaker earnings and a report that Apple aimed to cut back hiring and spending in 2023 also weighed on sentiment for Wall Street.

 

European futures suggest indices are set to open around -0.6 to -0.9% lower, whilst US futures found some stability overnight and set to open slightly higher.

 

Later today the US release building permits and housing starts, but first we have UK wage data at 07:00 BST and final inflation prints for Europe at 10:00.

 

GBP/USD 4-hour chart:

20220719gbpusdCI

GBP/USD rose to a 5-day high on Monday and briefly traded above 1.2000. Given the maturity of its downtrend on the daily chart, we see the potential for it to bounce higher.

The 4-hour chart shows it has broken its bearish trendline, although a bearish engulfing candle formed around 1.20 and the weekly R1 pivot point. Prices are no pulling back against that initial surge so now looking for a higher low to form above or around the weekly pivot point, which could be of interest to bullish swing traders.



FTSE 350 – Market Internals:

20220719moversFTSEci

FTSE 350: 4011.24 (0.90%) 15 July 2022

  • 284 (80.91%) stocks advanced and 60 (17.09%) declined
  • 8 stocks rose to a new 52-week high, 3 fell to new lows
  • 20.51% of stocks closed above their 200-day average
  • 39.89% of stocks closed above their 50-day average
  • 18.52% of stocks closed above their 20-day average

 

Outperformers:

  • + 32.55% - Aston Martin Lagonda Global Holdings PLC (AML.L)
  • + 9.49% - Euromoney Institutional Investor PLC (ERM.L)
  • + 8.20% - Carnival PLC (CCL.L)

 

Underperformers:

  • -10.51% - Direct Line Insurance Group PLC (DLGD.L)
  • -7.65% - Admiral Group PLC (ADML.L)
  • -6.56% - HALEON PLC (HLN.L)

 

 

 

Economic events up next (Times in BST)

20220719calendarBST

 

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