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The FTSE 100 eclipses its all-time high with a 3.1% gain amid UK growth optimism and inflation ease, while the DAX ends its losing streak with a 2.30% rise, ahead of crucial Eurozone data. Source: Getty Indices Inflation Recession Interest rate European Central Bank Eurozone Written by: Tony Sycamore | Market Analyst, Australia Publication date: Tuesday 30 April 2024 06:19 The FTSE made a significant move last week, surging above its all-time 8047 high, and locking in a healthy 3.1% gain for the week. At the same time, the DAX snapped its three-week losing streak to finish the week 2.30% higher. The trigger for the FTSE's burst higher last week was additional signs that the UK growth profile is improving. This is a key factor to watch, as it could potentially influence the FTSE's performance in the coming weeks. Last week's flash PMI came in at 54, beating the 53 expected. At the same time, a softening inflation profile is opening the door for the Bank of England (BoE) to cut interest rate. Finally, after trading sideways for the better part of fourteen months, its valuations are attractive compared to its offshore counterparts. While the German stock market doesn't screen as particularly cheap, it has benefited from improving growth and inflation profiles. Both factors will be scrutinised tonight when Q1 GDP and inflation data for April are released. What is expected from EZ Q1 2024 GDP? Date: Tuesday, 30 April 7pm AEST In the last quarter of 2023 (Q4), the Eurozone unexpectedly avoided recession as firmer growth in Italy and Spain offset contraction in Germany, resulting in a growth rate of 0% following a 0.1% contraction in the third quarter. Anaemic growth in the Eurozone during the second half of 2023 was due to elevated interest rates, high inflation, a slowing global economy and heightened geopolitical tensions. In recent months, the European Central Bank (ECB) has acknowledged that inflation is on the right path to converge on its target and has signalled that it is expecting to ease monetary policy as early as June. The market anticipates imminent ECB interest rate cuts, which, coupled with a resilient global economy, has significantly improved the outlook of business surveys and PMIs in the Eurozone. This improvement will likely be reflected in tonight's GDP release, with the market forecasting a rise of 0.2% QoQ. Euro area GDP annual growth rate chart Source: TradingEconomics Inflation outlook Date: Tuesday, 30 April at 7pm AEST In March, headline CPI fell to 2.4% YoY in March from 2.6% in February. The Core rate cooled to 2.9%, its lowest rate since February 2022. This month (April), the consensus is for headline inflation to fall to 2.4% YoY in April, with core dropping to 2.6% from 2.9% prior. DAX technical analysis In our last update, we noted that a "short covering rally from here would not surprise", which would be viewed as the second wave (or Wave B) of a three-wave ABC correction from the 18,567 high. This remains the case, with the rally from the 17,626 low viewed as Wave B, which should not exceed resistance in the 18,400/550 area and be followed by another leg lower (Wave C) towards the 17,500/300 support zone. We will be looking closely for signs of basing in this area to establish longs. DAX daily chart Source: TradingView FTSE technical analysis We have maintained a bullish stance in the FTSE since it broke above downtrend resistance in mid-March, coming from the February 2023, 8047 high. Last week, we noted that while "the FTSE holds above support at 7760ish, expect a break of the all-time high at 8047 before a push towards 8250." Providing the FTSE remains above support at 8,000 we continue to look for a test of 8250, with scope to 8400. Aware that should the FTSE lose support at 8,000 on a sustained basis, it would warn that a deeper pullback is underway initially to 7800. FTSE daily chart Source: TradingView Source Tradingview. The figures stated are as of 30 April 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation. This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. -
USD/JPY nosedived from 160 to 155 after a Bank of Japan meeting, fueling FX intervention rumors during Japan's Golden Week, spotlighting interest rate impacts. Source: Getty Forex Shares Japanese yen USD/JPY United States dollar Inflation Written by: Richard Snow | Analyst, DailyFX, Johannesburg Publication date: Tuesday 30 April 2024 05:10 USD/JPY registers massive decline, stoking intervention speculation The USD/JPY tagged the 160 mark, and immediately dropped towards the 155 level as speculation around possible FX intervention did the rounds on Monday morning. The early surge in the pair came off the back of Friday’s disappointing Bank of Japan (BoJ)’s meeting, where Governor Ueda mentioned that the weak yen has no significant impact on inflation. Japan is currently on holiday for Showa Day, one of the holidays observed during Golden Week. Further holidays will be observed this Friday and Monday next week. The bank holidays naturally present a lower liquidity environment which can help advance a sharp, large move in USD/JPY. USD/JPY 5-min chart Source: TradingView Bigger picture: why FX intervention is likely to be ineffective FX intervention could provide a short-lived boost for the yen because ultimately, yields and rates matter in the longer run. The USD/JPY rose in consistent fashion in the first quarter of 2024 as low volatility conditions favour the ‘carry trade’. The interest rate differential between the US and Japan is over 5%, meaning traders and investors were more than happy to collect the positive carry at a time when hotter US inflation buoyed the greenback. If what we have observed today is, in fact, an effort from Japanese officials to strengthen the yen, then it is likely the market views any sizeable decline in USD/JPY as an opportunity to go long at more attractive entry levels as the US-Japan rate differential is unlikely to narrow any time soon. The issue was made worse by comments from the BoJ Governor Ueda that the yen’s weakness does not have a significant effect on inflation. Therefore, it appears the Bank is not looking to hike simply to defend the local currency. Furthermore, Ueda mentioned he does not have a predetermined timeline for the next hike, which has been perceived as dovish. USD/JPY daily chart Source: TradingView The weekly chart helps portray the longer-term bull trend and reveals the confluence area of resistance around the 160 mark. The pair approached channel resistance and the important 160 mark before reversing sharply lower. 155 remains a key level, if prices can close below it on the daily candle today. USD/JPY weekly chart Source: TradingView Major risk events ahead: US treasury QRA, FOMC and NFP Perhaps the biggest risk to the recent lower move in USD/JPY is the FOMC meeting on Wednesday. However, there are several high importance US events and data that can impact USD/JPY. On Monday, the US Treasury will detail how it plans to fund the government, detailing a mix of shorter and longer-term issuances (mix of T-bills, notes and bonds). Then on Wednesday, markets will be on the lookout for a greater acknowledgement of re-accelerating inflation from the Fed but the committee could also downplay recent inflation surprises as disinflation is broadly observed. US ISM manufacturing PMI data is likely to attract more attention than usual after the S&P Global survey now sees the sector as having dipped into a contraction. Friday ends the week off with non-farm payrolls, where it is expected that the US economy would have added another 243k jobs for the month of April. Therefore, the prospect of growth concerns, combined with hot inflation and a strong labour market provides the Fed with a lot to think about as high interest rates risk weighing on economic growth but is also necessary to calm resurgent price pressures. Economic calendar Source: DailyFX This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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Brent crude oil, gold and silver prices slip Further de-escalation in the Middle East leads to flows out of save haven commodities such as precious metals. Source: Getty Images Written by: Axel Rudolph FSTA | Senior Financial Analyst, London Publication date: Tuesday 30 April 2024 13:20 Brent crude oil price slips The Brent crude oil price is seen coming off Friday’s 88.72 high amid ample supply with the February-to-April uptrend line at 86.16 representing a possible short-term downside target. If fallen through, last week’s low at 85.21 may also be revisited. Minor resistance above last week’s high at 88.72 sits at the 19 April peak at 90.10. Source: ProRealTime Gold price gradually slips The spot gold price is gradually slipping towards Thursday’s low at $2,306 below which lies last week’s trough at $2,292. While this level holds, further sideways trading remains on the cards. A rise above last week’s high at $2,352 is needed, for the $2,400 region to be back in play. Source: ProRealTime Silver price weighs on uptrend line The spot silver price’s descent from its $29.79 per troy ounce mid-April high, a level last traded in February 2021, has taken it to the February-to-April uptrend line at $22.67 which offers support. If slid through, the 5 April low at $26.29 would be next in line, ahead of the $25.77 December and late March highs. Immediate downside pressure will remain in play while no bullish reversal above Friday’s high at $27.73 is taking place. Source: ProRealTime
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