Catalan carnage clips Euro’s wings

Catalan carnage clips Euro’s wings

Henry Croft, Research Analyst at Accendo Markets commented to clients this morning:

“FTSE 100 Index called to open +15pts at 7385, extending Friday’s breakout rally, although the index has retreated from overnight highs above the 7400 mark, its highest level since a mid-September breakdown. Bulls will be looking for rising lows support since Thursday to keep the rally alive and a return to a 7400 handle. Bears will be looking for that support to breakdown for a return to Friday’s 7330 pre-breakout highs. Bullish 7400, Bearish 7375.

 

Calls for a positive start to the final quarter of the year come as the Euro retreats in the aftermath of a violent day in Catalonia, where the Spanish government forcefully and controversially forbade residents from taking part in what the authorities deemed an illegal independence referendum. This saw the Euro open on the back foot overnight, however this has benefited the US dollar and subsequently the FTSE’s predominantly foreign earning constituents.

 

The UK’s blue-chip index also enjoys a positive lead from the materials-heavy Australian S&P/ASX index overnight, trading higher on account of stronger than expected PMI readings across the region. Chinese, Hong Kong, Korean and Indian markets are all closed today as they observe public holidays.

 

UK Company headlines include Monarch Airlines going into administration, with IAG reported as one of the names looking into acquiring its assets, and Nex Group, the fintech company spun out of ICAP last year, warns on half-year profits.

 

US equity markets closed higher across the board to close out the third quarter, with Tech sector outperformance helping the Nasdaq to better its peers and notch its 50th record closing high of the year. The S&P 500 also closed at a record high, while the 30-stock Dow Jones index finished within 0.1% of its best ever close.

 

Crude Oil prices are marginally lower overnight as concerns of Kurdish-inspired threats to supply abate. Global benchmark Brent crude is hindered as falling highs resistance since Thursday coupled with its continued falling channel seeing it trade just above $56.5, while its US equivalent remains range bound between $51.25-$51.75.Gold has continued to edge lower overnight, trading a fresh 6-week low of $1272.5 as the US dollar rebounds from Friday’s lows.

 

In focus today will be a range of Manufacturing PMI prints from across the globe. Kicking things off in Europe,Spanish (8:15am; recovering from an 11-month low), Italian (8:45am; to an all-time high), French (8:50am) and German readings (8:55am; both of the latter confirmed at a 6-year high) are all expected further in September, before the headline Eurozone reading (9am) is also seen at its highest level since 2011. The UK print (9:30am) bucks the trend in Europe, seen retreating from a 4-month high, while this afternoon, the US reading (2:45pm) is also seen marginally further to a fresh 3-month high.

 

Other data today includes Eurozone Unemployment (10am), expected to fall to a fresh 8-year low, while this afternoon US ISM Manufacturing (3pm) is expected to retreat from a 6-year high as Construction Spending is seen returning to growth in August for the first time since April.
A quiet schedule for speakers today sees the Fed’s Kaplan (7pm) providing the lone scheduled address, however commentary throughout the day on the aftermath of yesterday’s controversial Catalonian referendumas well as the continuing Conservative Party conference could provide several market-influencing soundbites.”

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