European major indices close higher

Both the UK and Italy are closed today but the German, France and Spain markets were open. Spain is closing near unchanged on the day , but Germany and France equity markets are closing with solid gains.

  • German DAX, +1.05%
  • France’s CAC, +1.27%
  • Spain’s Ibex, +0.3%

Looking at the German DAX, the high for the day reached 14492.78. That was just above the 100 day moving average at 14488.69. However the closing level at 14485.18 is just below that level. The last 4 days has seen at 100 day moving average tested. It would take a move above with momentum, to increase the bullish bias. Key level for both buyers and sellers.

The good news (for buyers) is that the index price is back above its 50% midpoint of the move down from the January 2022 high. That midpoint level comes in at 14363.27. Yesterday the price close below that level but rebounded back higher today.

German DAX
German DAX test its 100 day moving average

Russia reportedly may agree to OPEC+ compensating for its drop in oil output

This ties back to the earlier headline here, which suggests that Saudi Arabia and UAE are ready to step up to cover for Russia’s shortfall amid ongoing sanctions. If Russia is on board, that may very well finally see a significant change in stance by OPEC+ for the first time in a while now.

The source also says that any compensation could be approved gradually and that there is no guarantee that it will be approved in full later in the day. For some context, Russia is currently producing roughly 1 mil bpd below its quota.

Eurostoxx futures +0.3% in early European trading

  • German DAX futures +0.2%
  • Spanish IBEX futures +0.4%

I wouldn’t look too much into it as the light advance so far today comes after a poor showing yesterday. US futures are also looking fairly more tepid so risk sentiment isn’t exactly brimming with optimism to start the session.

S&P 500 futures, Nasdaq futures, and Dow futures are all up 0.1% and are keeping little changed mostly since Asia trading.

Swiss inflation, Eurozone producer prices on the agenda in Europe today

A bit of a reminder that London is out today (and also tomorrow) amid the spring bank holiday and Platinum Jubilee holiday. The former typically falls on the final Monday of May but has been moved to stick with the Platinum Jubilee holiday, which will take place tomorrow. With UK markets closed, that may make for thinner and quieter trading in the session ahead.

However, a return to the familiar may see markets act up a little more before we get to US trading later. For now, trading tones are more muted with little change being observed in equities, bonds, and FX.

Oil is a notable mover though, down 2% to just below $113 currently after Saudi Arabia said that they may increase output to make up for Russia’s shortfall amid sanctions. That will keep things interesting going into the OPEC+ meeting later today.

In terms of economic data, there won’t be much in Europe to really shake things up. As such, expect markets to continue to sort out their feet in the new month with the recognisable storm clouds looming large still.

0630 GMT – Switzerland May CPI figures
0900 GMT – Eurozone April PPI figures
1130 GMT – US May Challenger job cuts, layoffs

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

Société Générale says tail risk from Russia’s war on Ukraine make EUR virtually unbuyable

  • EUR/USD is undervalued relative to the current economic data and monetary policies, while the long-term outlook is clearly positive. The war in Ukraine and the coronavirus pandemic are both forcing a rethink in regards to fiscal policy -one that can break the deadlock which has left the ECB as the sole source of economic support over the past decade. A more active fiscal policy and an escape from super-low inflation could allow for a retreat from the negative rates that have anchored the currency. The real effective euro exchange rate has been almost 10%lower on average during the past decade than it was in the one prior to it,”
  • “In a post-war world,EUR/USD is more likely to trade in a 1.10-35 range than the 1.03-1.26 one it has been in since the start of 2015.Despite that,we think the euro is virtually unbuyable because the tail risks from the war are so big.The EUR/USD could fall by as much in a few days if gas supplies were to be cut off,as it would rise if the war were to remain in a stalemate at the end of six months.”
weekly candles eurusd 02 June 2022

US major indices close lower for the 2nd consecutive day

The major US stock  indices  all moved lower for the 2nd consecutive day this week. The shortened week due to the Memorial Day holiday on Monday on pace for declines with 2 days left to go. Much will depend on Friday’s US jobs day, but for now, the sellers are trying to take more control.

Having said that, the S&P index, and the Dow industrial average both traded intraday below their respective 200 hour moving averages, but are closing above those levels after a US afternoon rebound. For the S&P index, the 200 hour moving average comes in at 4086.19. The closing price is at 4101.24.


S&P closes above its 200 hour MA

The Dow industrial average’s 200 hour moving average comes in at 32671.12. It’s closing price is up at 32813.22.

A look at the final numbers are showing:

  • Dow industrial average -176.91 points or -0.54% at 32813.22
  • S&P index -30.92 points or -0.75% at 4101.24
  •  NASDAQ  index -86.92 points or -0.72% at 11994.47
  • Russell 2000-9.218 points or -0.49% at 1854.82

Within the S&P index 10 of the 11 sectors were lower.

  • Financials fell -1.7%.
  • Healthcare was down -1.42%.
  • Consumer stable’s fell -1.32%
  • Real estate fell -1.1%
  • Materials fell -1.03%

The only sector with a gain was energy which rose 1.76%

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