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IndicesForexEquity Markets

The Daily Fix – Holiday over, it's back to markets

Chris Weston
Head of Research
27 May 2024
With US cash equity and bonds closed for Memorial Day, S&P500 and NAS100 futures have been a guide, with both markets trading up until 3 am AEST, but closing on their highs, with volumes predictably very poor – futures have just reopened a touch higher from the closing levels, and again this should support for risk.
  • US & EU index flow supportive for Asia  
  • ASX200 to test 7800 on open, can it break and hold the big number?
  • NOK the star of the FX show 
  • Commodities looking strong, notably silver
  • Event risk for the session ahead 

We have also seen a constructive session for the bulls in Europe as well, and US equity futures would have taken direction here – we see short-term trend breaks in the DAX40, and EUSTX50, with the CAC40 also finding better buyers. 

Our 24-Hour US shares reopen at 10 am AEST, so it will be interesting to see any flows/price moves in individual names - Notably Nvidia, which has run hard in the past 3 sessions into $1065, and we’ll see if anyone is prepared to chase this on the open, or whether patience is the better strategy. 


The ASX200 should unwind into 7800, building on the 0.8% gain we saw in the prior session, where a small victory would be if the bulls can push the index to close above the round number. Aus SPI futures (now 7826) really need a push through 7855 to get the momentum buyers interested again, a factor which would increase the potential that we go on to test the 16 May highs. Banks are naturally key when calling the direction of the ASX200, and notably if long the index, I would want CBA to fill the gap and push above $121.30. BHP’s ADR was closed, so making a call on open is tough, but the bulls would want to see the stock break and hold $45.45 to get the resource sector pumping. 

We saw the HK50 supported into 18,500 yesterday, and the index has pushed back towards 18,829 – the price action needs work to get traders chasing and one day’s stability isn’t the swallow that makes their summer, but at least we have a better idea of where the market is happy to step and accumulate. 

While US cash equity and bonds were closed, we’ve seen some pockets of upbeat flow in commodity markets once again – silver has gained 4.5%, with the underlying market closing early at 04:30 AEST – liquidity is clearly a factor in driving the extent of the move, so we’ll see if Asia sees this as a justified rally, or whether traders fade this move into $32.63. Gold sits up 0.7% at $2350, printing a higher high, and again there have been no real catalysts other than just broadly positive flow into commodities – the upside in the session ahead should be capped into $2373, so this is a level for the scalpers to have on the radar. Copper has gained 1.6%, while crude trades 1% firmer. 

In FX, AUDUSD trades firmer into 0.6654, following the HK50/Chinese equity markets higher. It’s the NOK though that has been the powerhouse once again, with USDNOK breaking 10.50 and extending the bear move from 1 May -5.8%. EURNOK breaks 11.4000, where rallies are to be sold. However, it's the NOKJPY that is the flyer with the cross closing higher for a 14th straight day – tactically, this is too extended to chase but too hot to short (on the higher timeframes). 


One consideration for JPY shorts is that there is rising chatter in the local press about Japan’s major electricity companies raising prices in June by as much as 42% - hotter wages and potential energy bill increases could see the rate hike debate ramp up again, and while traders are using the JPY as funding currency (for the carry trade), with JPY shorts building increased talk of hikes from the BoJ may see that position reassessed. 

EURUSD saw some upbeat flow, with intraday dips below 1.0850 well supported by traders. Talk that the ECB could possibly cut in July after the initial cut in June from ECB Governing Council member Villeroy (a centrist) did weigh on the EUR. That said the effect was limited with the EUR swaps market still pricing back-to-back 25bp rate cuts as a very low probability, with just 3bp of cuts priced for July. 

In the session ahead we hear from ECB members Schnable and Centeno, so comments here could move the EUR. The bull flag on the EURUSD daily still stands out and needs work. 

By way of risk events traders need to be aware of and navigate, we get Aussie retail sales (11:30 AEST – consensus +0.2%), ECB 1 & 3-year CPI expectations (18:00 AEST), US CoreLogic house prices (23:00 AEST) and US consumer confidence (00:00 AEST – 96.0 from 97). 

Good luck to all.

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