European Open China PMI Beats Equities Rise Ahead of NFP

Asian Indices:

Australia's ASX 200 index rose by 22.1 points (0.31%) and currently trades at 7,083.80
Japan's Nikkei 225 index has risen by 62.08 points (0.21%) and currently trades at 29,053.67
Hong Kong's Hang Seng index has risen by 143.58 points (0.5%) and currently trades at 28,781.04

UK and Europe:

UK's FTSE 100 futures are currently up 39 points (0.55%), the cash market is currently estimated to open at 7,115.17
Euro STOXX 50 futures are currently up 28 points (0.71%), the cash market is currently estimated to open at 4,027.44
Germany's DAX futures are currently up 88 points (0.58%), the cash market is currently estimated to open at 15,284.74

Thursday US Close:

The Dow Jones Industrial rose 318.19 points (0.93%) to close at 34,548.53
The S&P 500 index rose 34.03 points (0.816539%) to close at 4,201.62
The Nasdaq 100 index rose 110.361 points (0.82%) to close at 13,613.73

Global indices remain firm ahead of Nonfarms

Caixin’s service PMI for China beat expectations, which rose to 56.3 and at is fastest pace in four months. This simply added to the positive sentiment going into today’s NFP print where expectations are for a punchy data set. That said, expectations need fulfilling to avoid disappointment, so should employment growth and / or wage growth fall short, we may see the markets jolt as positions get reversed.

The FTSE 100 is on track for a bullish outside week. Closing at its high yesterday, it trades less than a day’s range from 7131 resistance, a level which is likely to provoke profit taking should it make it there today.

FTSE 350: Market Internals

FTSE 350: 7076.17 (0.52%) 06 May 2021

228 (65.33%) stocks advanced and 118 (33.81%) declined
30 stocks rose to a new 52-week high, 5 fell to new lows
85.67% of stocks closed above their 200-day average
24.07% of stocks closed above their 20-day average

Outperformers

+ 19.6% - John Laing Group PLC (JLG.L)
+ 14.2% - Morgan Advanced Materials PLC (MGAMM.L)
+ 6.24% - Fresnillo PLC (FRES.L)

Underperformers:

-6.92% - Trainline PLC (TRNT.L)
-4.31% - Baillie Gifford US Growth Trust PLC (USAB.L)
-4.00% - Admiral Group PLC (ADML.L)

Forex: All eyes on the dollar for NFP

As is usually the case ahead of NFP, forex markets are trading in tight ranges. It all hinges around the US dollar which goes into this report on the back ropes. If we’re to see a higher dollar today, USD/JPY would be our preferred weapon of choice for longs. Against its peers however, EUR and CHF are looking particularly favourable for a weak dollar outcome.

USD/CHF closed fractionally beneath its 200-day sMA yesterday. Whilst we prefer our breaks with more conviction, the daily trend structure remains firmly bearish below 0.9164. Next support is closer than we’d like at 0.9045, but beneath here clears the way for a run to 0.9000.

EUR/USD is hovering around yesterday’s highs, after rising 0.47% and confirming a breakout from a bullish wedge pattern. A small Doji had formed around 1.2000 on Wednesday, which coincided with the US dollar index (DXY) stalling at 91.40 resistance. Now both markets have respected their respective key levels, we’re looing for momentum to continue. If we find that NFP is strong overall (with employment and wage growth moving higher) then we may well see a pullback on EUR/USD. However, given the stream of stronger-than-expected data coming out of Europe, we suspect EUR/USD may retest the 1.2150 target before it trades back beneath the 1.1984 low.

Switching to the hourly chart:

Our bias is bullish today above the 1.2035/42 support zone (100-hr eMA, daily pivot and swig low)
A break above today’s high assumes bullish continuation, whilst we’d still consider bullish setups above the support zone if the retracement is low volatility and a basing pattern forms
Target is for a run towards the 1.2093/1.2000 resistance zone

Learn how to trade forex

Metals rise to the occasion

Copper futures continue to scream higher and have probed the February 2011 high in overnight trade. The industrial metal has rallied over 16% since its trough around $4.00 and is, as of yet at least, to send any signs of exhaustion. Clearly the US dollar will be a factor today around NFP but, as things stand, e don’t see why this couldn’t break above 4.70 should the dollar continue to fall. Of course, should the dollar strengthen and cause copper futures to print (say) a bearish hammer below key resistance, it may be on the back ropes early next week.

Gold extended its lead to 1820 overnight after its convincing break above 1800. The bias remains bullish above 1800 wit a target of 1835 projected form the 1676 double bottom.

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.

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.