FTSE -12 points at 7259
DAX -32 points at 11915
CAC -7 points at 4884
Euro Stoxx -7 points at 3326
The risk-off trading pulled the Asian stocks lower on Friday, although the major Asian stock indices are set for a positive weekly close for the fifth straight week. MSCI Asia Pacific index advanced to the highest levels since June 2015.
This being said, Nikkei (-0.45%) and TOPIX (-0.39%) closed the week on a negative daily note, as the yen breached an important technical level against the greenback. The USD/JPY slipped below the 100-day moving average (112.98) for the first time since Donald Trump won the presidential election on November 9. The pair is now testing the key mid-term support at112.50 (major 38.2% retracement on Trump rally), if broken, should suggest a mid-term bearish reversal for a deeper sell-off to 110.60 (50% level) before the 110.00 mark.
Gold extended gains to $1250 for the first time since November 9. The stronger positive momentum suggest a further recovery toward $1255 / $1262 range (major 61.8% retracement on post-Trump decline / 200-day moving average).
Likewise, silver is set for the ninth consecutive week of gains, as apparently investors are taking safety measures against the surprising, unprecedented rally on the US stock markets.
Meanwhile, the US stocks continue testing the top of the range, yet an increasing number of traders are getting ready to sell the top. On Thursday, the S&P 500 traded at a fresh all-time high of $2368.26 as the WTI crude ticked up to $54.94 after the most recent weekly data showed a much slower than expected rise in the US oil inventories. Yet, unable to build on the positive momentum, the index rapidly bounced back to the day low of $2355.09. The Dow Jones advanced to $20840.70, a fresh all-time high as well, yet closed the day 30 points below that level.
Fresh record highs in the US stock markets are no longer surprising, in contrary, they gradually increase the anxiety in the market. Nobody knows when and how the reflation story would end.
As mentioned above, the US oil inventories increased by only 600’000 barrels last week, versus 3.4 million expected and 9.5 million barrels a week earlier.
Nevertheless, even a slower global supply glut couldn’t trigger a break through the thick wall of $55 offers. Oil traded flat in Asia and could attempt a deeper downside correction on the back of eventual profit taking before the weekly closing bell.
Cable is gathering positive momentum to test the critical 1.2575 (minor 23.6% retracement on post-Brexit decline). A positive breakout should encourage a further rise toward 1.2690 (200-day moving average).
Of course, the stronger pound is taking its toll on the FTSE. The FTSE 100 slid 0.42% on Thursday, as the rising pound dented the interest in fresh longs. Combined to the broad-based deterioration in the risk appetite, the FTSE is set to open below the 200-day moving average (7262p) and challenge last week’s low of 7250p.
Finally, it has been a busy week for the UK’s banking sector. RBS (LON:RBS) and Standard Chartered (LON:STAN) announced fourth quarter results to wrap up the week. RBS’ full-year revenue beat estimates. The full year adjusted operating profit came in better than estimated at £3.67bn versus £3.10bn. Despite a potential uptick in the banking stocks, the sentiment remains subdued.
The European stock markets are set for a negative open.