Asian Open Wall Street lower as we approach quarter end

Asian Futures:

• Australia's ASX 200 futures are down -20 points (-0.25%), the cash market is currently estimated to open at 6,758.80
• Japan's Nikkei 225 futures are up 110 points (0.39%), the cash market is currently estimated to open at 28,515.52
• Hong Kong's Hang Seng futures are down -116 points (-0.42%), the cash market is currently estimated to open at 27,802.14

UK and Europe:

• The UK's FTSE 100 futures are down -11.5 points (-0.17%)
• Euro STOXX 50 futures are down -17 points (-0.45%)
• Germany's DAX futures are down -140 points (-0.95%)

Wednesday US Close:

• The Dow Jones Industrial fell -3.09 points (-0.01%) to close at 32,420.06
• The S&P 500 index fell -21.38 points (-0.55%) to close at 3,889.14
• The Nasdaq 100 index fell -218.909 points (-1.68%) to close at 12,798.88

Indices: Investors rotate into value

Strong performers from last year such as Apple, Microsoft, FaceBook, Tesla and Amazon led the S&P 500 lower and investors rotated into value. At the index level, the S&P 500 fell -0.5% and closed at the session low just above a 38.2% Fibonacci ratio at 3889.10. Support also resides at 3850 with the 50-day eMA and 50% retracement level in close proximity. However, its retracement is not too menacing and appears to be a healthy correction as opposed to a top.

The Russell 2000 was the weakest performer again overnight, falling a further -2.4%. Interestingly, yesterday’s high perfectly respected the 50% Marabuzo line of Tuesday's bearish opening Marabuzo candle. The bias remains bearish with 2100 now in focus for bears.

The Nasdaq 100 fell -1.7% to a 3-day low and is back between its 50 and 100-day eMA. A break beneath 12,700 brings the lows around 12,200 into focus.

The Dow Jones was effectively flat and remains relatively firm relative to it peers, having retraced just -2.6% from its highs. If sentiment is to improve and allows equity strength then the Dow may be the place for bulls to look.

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PMI’s are feeling ‘flash’

The US PMI manufacturing and service surveys (purchase managers index) moved higher in March to suggest the broad recovery is still underway. Manufacturing moved to 59.00 from 58.6, just below January’s multi-year peak and services rose to 60.00, up from 59.8. Input prices rose to a 10-year high due to severe supply chain disruptions and is a reason that the Fed expect inflation to be transitory (they’re betting these supply chain issues will be unclogged as international borders are opened as the recovery continues).

PMI’s across Europe were also higher, although the Eurozone PMI service sector is still contracting at 48.8 but from 45.7 previously. Manufacturing rose to 62.4, up from 57.9 and the composite indicator was back above 50 for the first time since September.

Things even appeared optimistic in the UK too, with firms having brighter outlook on the second quarter. And this is mostly due to high volumes of new orders coming through. Still, in this case it should be remembered that PMI’s are effectively a rate of change so they can exaggerate optimism at turning points.

Forex: GBP leads the way lower with antipodeans hot on its heels

NZD, AUD and GBP were again the weakest majors whilst CAD and USD were the strongest. The relentless selling of the Kiwi dollar continued but, as we warned, at a much less aggressive rate. Whilst NZD pairs remain technically bearish we’d urge caution at current (possibly overextended) lows.

Weaker than expected inflation figures and rising jobless claims weighed further on the British pound. GBP/CAD fell to its lowest level since January and is now probing 1.7200 support. The pound was lower against all majors except the New Zealand dollar.  

AUD/USD closed beneath its 100-day eMA for the first time since early November and is close to testing 0.788 support. Given bearish momentum is dominant following its strong bullish run of the past year, a break of said support appears likely at this stage.

AUD/JPY fell to a 17-day low and its fifth consecutive bearish session, but has found support at its 50-day eMA. We may find prices begin to stabilise soon whilst the 81.98 – 82.00 level holds as support.

EUR/AUD closed to a 1-month high and now resides around its 50-day eMA. Whilst the past four bullish days could be part of a corrective move against its established bearish trend on the daily chart it is the second time we have seen a strong rally from 1.5253 support. Perhaps the low is in? Something to consider, at least.

USD/JPY has drifted gently lower from 109.36 these past seven sessions and prices continue to hold above the 108.34 low. The market clearly needed to catch its breath after a solid run this year, but as long as 108.34 holds as support then we should be on guard for bullish momentum to return.

EUR/USD closed to its lowest level since November and trades just above 1.1800 support, with 1.1835 now acting as resistance. A break below 1.1800 brings 1.1750 into focus.

AUD/CHF could be headed for 0.7000

After a solid run towards the April 2019 high, bearish volatility increased ahead of a slow top. A series of bearish pinbars and hammers (which failed to retest its recent high) suggested bullish momentum was waning and prices have now turned lower. We see the potential for prices to extend its bearish move from current levels.

• A break below 0.7088 support brings the lows around 0.7000 into focus
• Bears could seek to enter the break lower or wait fore 0.7088 to be confirmed as resistance.
• With lack of economic data today, we may find support initially holds, but our bias remains bearish below 0.7144.

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Commodities: Oil rebounds, gold bears lack follow-through

Oil prices rebounded and recoupled most of Tuesday’s losses after oil vessels were grounded in the Suez Canal, adding delays and possible supply disruptions. Stronger PMI data and consumer confidence across Europe also0 helped sooth fears of lower demand in H2, despite some parts in Europe now back in lockdown. WTI is back above $60 (just) and posted an impressive +5.3% gain. Given it sliced through 59.24 resistance and its 50-day eMA with apparent ease, our bearish bias has been shelved although we’d want to see a break above 63.13 before assuming bulls had fully regained control.

Brent’s rebound was less impressive, although its sell-off on Monday was also less severe and, unlike WTI, did not close beneath its 50-day eMA. Ultimately price action on oil now appears a little ambiguous on the daily charts so we’ll step aside until the picture becomes clearer.

Gold prices are effectively moving sideways within a tight range. We had been looking for bears to regain control following a bearish engulfing candle seemingly breaking out of a triangle but, due to a lack of bearish follow-through, we’ll also step aside for now as it direction appears fickle.

Silver provided the move we had hope gold would perform; it went down. Now trading around $25 its downside potential may be limited or staggered due to key swing lows residing at 24.07, 24.35 and 24.70.

A small bullish candle has formed on palladium’s daily chart after a brief retracement against its aggressively bullish breakout. A break above 2657.50 assumes bullish continuation.

Up Next (Times in AEDT)

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