European Open Australian Inflation Hits a Record Low

Asian Indices:

• Australia's ASX 200 index rose by 32.4 points (0.46%) and currently trades at 7,066.20
• Japan's Nikkei 225 index has risen by 102.27 points (0.01%) and currently trades at 29,094.16
• Hong Kong's Hang Seng index has risen by 36.95 points (0.13%) and currently trades at 28,978.49

UK and Europe:

• UK's FTSE 100 futures are currently up 23.5 points (0.34%), the cash market is currently estimated to open at 6,968.47
• Euro STOXX 50 futures are currently up 8 points (0.2%), the cash market is currently estimated to open at 4,019.91
• Germany's DAX futures are currently up 13 points (0.09%), the cash market is currently estimated to open at 15,262.27

Tuesday US Close:

• The Dow Jones Industrial rose 3.36 points (0.01%) to close at 34,077.63
• The S&P 500 index rose -0.9 points (0.01%) to close at 4,186.72
• The Nasdaq 100 index fell 65.58 points (-0.0047%) to close at 13,960.28

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Conflicting signals on the FTSE 100

The ASX 200 rose +0.4% following today’s CPI report, as traders took the comfort of knowing the RBA are going to keep their easy policies in place for longer. Overall it was mixed across Asia, although ultimately a low-volatile session ahead of today’s FOMC meeting.

The FTSE 100 is trading in a bullish channel on the four-hour chart which could see it retest 7,000 over the coming session/s. So, whilst prices remain above 6926 (or the lower trendline) the near-term bias remains bullish.

However, bullish momentum in the channel is on the light side and has yet to recover losses sustained from its fall from 7,000. And as a bearish engulfing candle formed, should prices fail to retest yesterday’s high then we will be on guard for a downside break of the bullish channel. But, more importantly, it could be part of the ‘right shoulder’ (RS) is a head and shoulders top pattern, which would be confirmed with a break below 6839.10 and project a target around 6650.

• The bias remains bullish inside the bullish channel, and a break above this week’s high puts the highs around 7,000 into focus
• However, a break beneath 6926 invalidates the bullish channel and brings the 6839/63 support zone into focus for bears
• A break beneath this support zone confirms a head and shoulders top pattern (H&S)

FTSE 100: Market Internals

The FTSE 350 was weighed down by metals and mining stocks, with the sector falling -2.3% whilst banking stocks were the strongest performer seeing the sector rise +2.5%. GlaxoSmithKline (GSK) is scheduled to release their earnings report at noon.

FTSE 350: 6944.97 (-0.26%) 27 April 2021

• 83 (23.65%) stocks advanced and 253 (72.08%) declined
• 34 stocks rose to a new 52-week high, 2 fell to new lows
• 85.47% of stocks closed above their 200-day average
• 25.36% of stocks closed above their 20-day average

Outperformers

• + 4.41%   -  Tui AG  (TUIT.L) 
• + 4.18%   -  HSBC Holdings PLC  (HSBA.L) 
• + 3.37%   -  Elementis PLC  (ELM.L) 

Underperformers:

• -5.43%   -  AVEVA Group PLC  (AVV.L) 
• -4.61%   -  SSP Group PLC  (SSPG.L) 
• -4.53%   -  Rolls-Royce Holdings PLC  (RR.L) 

Forex: Record Low Inflation Underwhelms Aussie bulls

The Australian dollar was the weakest major currency overnight after inflation undershot already very low expectations. Trimmed mean CPI (RBA’s preferred gauge) fell to 1.1% YoY from 1.2%, which places it right near the low of RBA’s 1-3% target band. Trimmed mean CPI QoQ also fell to 0.3% from 0.4% prior.

• AUD/JPY remains in its symmetrical triangle highlighted in today’s Asian Open report. A break above 84.60 confirms the triangle but, for now at least, it looks like prices may recycle lower for another leg.
• EUR/JPY pushed higher in overnight trade, after closing at a 2.5 year high. Structurally the trend remains bullish above 129.59 but, if the breakout if legit, we’d prefer to see prices hold above 130.66.
• GBP/USD is -0.2% lower and trades around its 1.3900 resistance level.

The US dollar index (DXY) slightly higher by 0.1% ahead of today’s FOMC meeting. If the Fed reaffirm their position that tight policy is here to stay, it could further weigh on the dollar whilst supporting commodities (particularly metals), along with stock prices.

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Commodities: Gold is losing its lust

Gold has broken beneath its bullish channel and now sits at the top of its 1760/69 support zone. A break below 1760 confirms a bearish reversal and takes price back below their 20 and 50-day eMA. Real yields have edged higher in recent sessions which have helped capped gains on spot gold. And a Reuters poll suggests gold is not expected to reclaim its highs this year.

Up Next (Times in BST)

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