Spreadex Market Update
FTSE Soaring as Current Weekly Gains Hit Almost 2%
The FTSE is taking off on Tuesday with the index up a further 0.65% so far, extending yesterday’s gains to take the current rally to around 2% on the week so far. The index is now up more than 8% off the March lows putting a retest of YTD highs firmly back on the table. As European traders return to their desks following the Easter weekend, markets are digesting Friday’s US labour data. With the headline NFP coming in above expectations and the unemployment rate seen falling lower, the focus has fallen back onto the prospect of further Fed tightening near-term. Traders will now be looking to Wednesday’s US CPI data which is sent to guide markets this week.
Key Factors for Today
- USD a little softer as equities take the lead
- European traders return to desk after Easter – FTSE rallying firmly
- AUD rallying as Australia/China WTO trade dispute resolved
- Fed’s Williams calls for more hikes
Market Movers
- FTSE breaks 7783 resistance
- Gold back above $2000 per oz
- Silver back above $25 per oz
- S&P turning higher, still below 4150 resistance for now
- AUDUSD above .6670
Econ Calendar
- Eurozone Sentix Investor Confidence (9.30am)
- Eurozone retail Sales (Mar) (10am)
- FOMC’s Goolsbee (6.30pm) Harker (11pm)
Earnings
- Albertsons Companies Inc
- JD Sports PLC
- Carmax Inc
Aussie Rallies As WTO Trade Dispute With China Ends
The Australian Dollar has been the strongest performer in the FX space across the European open on Tuesday. A tentatively better tone to risk markets is helping drive demand for the higher-beta AUD. The currently is also benefiting from thew news that Australia has suspending its WTO dispute with China over Barley. The two countries have reportedly reached an agreement whereby China will review the duties currently imposed. Signs of improving relations between the two trading partners should help keep AUD underpinned
near-term.
Overnight the latest data showed that Chinese inflation eased last month following a spike higher over the previous monthly. CPI rose just 0.7% in March, down from 1% the prior month. Traders are paying close attention to the health of the Chinese economy as the post-reopening recovery continues to develop. The latest comments from Fed’s Williams earlier today were seen falling on the hawkish side. Williams said that the world is still is still in a relatively low interest rate environment and called on the Fed to do more to bring prices down. Williams was also keen to stress that Fed tightening was not the cause of the recent banking sector turmoil and noted that the neutral interest rate remains relatively low. Traders now await further comments from Fed’s Goolsbee and Harker later.
The rally in the FTSE is the big move to focus on today. With the index having broken back above the 7697.7 technical level the next obstacle for bulls to clear will be the 7835 level. Should price trade back above this area the YTD highs will then be the main focus around 8023.6.
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