FTSE -3 points at 7381
DAX +8 points at 12075
CAC flat at 4961
Euro Stoxx 50 -3 points at 3387
The US dollar firmed against its G10 counterparts on the back of the rising hawkish Federal Reserve pricing into the FOMC’s March meeting.
The US stocks renewed record for another day. The Dow Jones (+1.46%) took out the 21K handle and rallied to $21169.11. It was the fastest $1000 gain on record. Financials gained 2.11% in New York; energy and mining stocks advanced 1.23% and 1.49% respectively. The S&P 500 (+1.37%) hit $2400 for the first time.
Snap Inc (NYSE:SNAP) will start trading today. The company sold 200 million shares at £17/share in its IPO (initial public offering), which values the company to $20 billion.
Gold softened to $1236 as money flew into the stocks in Wall Street. The yellow metal traded within $1245/$1250 in Asia. The fact that the core PCE remained steady at 1.7% year-on-year in January waned the US inflationary concerns and kept the inflation hedging trades on the sidelines. Improved US yields are expected to cap the short-term appetite in the safe heaven gold. The key resistance is eyed at $1262 (200-day moving average). A deeper downside correction to $1230 and $1210 (minor 23.6% retracement and major 38.2% retracement on December 14 to February 26 recovery) is possible without compromising the mid-term positive trend.
Most of the Asian stocks joined the global reflation rally on Thursday. Nikkei (+0.88%) and TOPIX (+0.75%) gained on the back of softer yen. The USD/JPY closed above its 100-day moving average (113.42) on Wednesday and extended gains to 114.16 in Tokyo. The stronger US dollar suggests a continuation of the positive trend toward the 115.00/115.00 zone. Japanese Finance Minister Aso reminded that wider US-Japan interest rate differential would cause the USD/JPY to rise further
Hang Seng gained 0.45%, while Shanghai Composite (-0.35%) smirked.
Australian stocks rose for the first time in six sessions on the back of the record rally in Wall Street. ASX 200 surged 1.26%. The AUD/USD weakened (-0.27%) as the unexpected fall from A$3334 to A$1302 in January trade surplus weighed on the mood, meanwhile higher US yields kept the carry traders sideways. Still, buyers are touted at 0.7604 (minor 23.6% retracement on December 22 to February 22 rise) and 0.7545 (200-day moving average). The topside is presumed clear up to 0.7785 /0.7800 mid-term resistance area.
The EUR/USD traded down to 1.0514. The divergence between the Fed and the European Central Bank (ECB) policy outlook is supportive of a cheaper euro against the greenback. The Eurozone’s February inflation estimates are due today. The core inflation is seen steady at 0.9% year-on-year, the headline inflation unchanged at 1.8%y/y. Markets remain seller on euro rallies. It is probably just a matter of time before the EUR/USD slips below the 1.05 mark.
The EUR/GBP recorded a positive breakout as the sell-off in the pound intensified. The cross advanced to 0.8585 (200-day moving averages). Sellers trail below 0.8600 for a potential correction to 0.8555 (100-day moving average) before 0.8500 level, as UK PM Theresa May bumped into Parliament’s opposition. May would be allowed to trigger the Brexit only if she promisses to protect the EU citizens' right to continue living in the UK after the Brexit. News revived hope that the Parliament’s implication would smoothen the EU exiting process and hinted at a softer Brexit.
Yet against a broadly stronger US dollar, the pound extended losses to 1.2262, a stone’s throw above 1.2258 (major 61.8% retracement on January 14 to February 1 recovery). Slipping below this level could encourage further losses to 1.2153 (minor 76.4% retracement).
The FTSE 100 surfed on softer pound and firmer oil and commodity prices. The FTSE rolling index extended gains a touch lower than the 7400p hurdle. Yet, the futures market indicates a softer open in London. We could see a downside correction with decent support at 7300p (200-day moving average).