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End of an Era
Queen Elizabeth II, whose reign took Britain from the age of steam to the era of the smartphone, and who oversaw the largely peaceful breakup of an empire that once spanned the globe has died at the age of 96. Her death marks the start of a tumultuous 10 days for the UK that will see a nation — and the rest of the world — mourn its longest-reigning monarch. Within hours, Charles, the eldest of Elizabeth’s four children, will be formally proclaimed King Charles III in a ceremony dating back hundreds of years. Having lived most of her life in the public eye, the Queen leaves behind an unparalleled photographic record. Rest in peace Ma’am.
Asian stocks and US equity futures advanced Friday as investors assessed whether monetary tightening to tackle inflation in the US and Europe is getting closer to being priced in.
Equities rose in Japan and Australia in the wake of modest Wall Street gains that left the S&P 500 above 4,000 for the first time since late August. Shares in Hong Kong rebounded on short covering ahead of a long weekend in China.
Asian shares crept higher as the dollar eased, with markets turning calmer after a record interest rate hike from the European Central Bank and hawkish comments from the U.S. Federal Reserve Chair reinforced bets of aggressive tightening ahead.
MSCI’s broadest index of Asia-Pacific shares outside Japan eked out a gain of 0.3% early on Friday. But it was headed for a weekly drop of 1.2%, battered by a slew of outsized rate hikes from global central banks this week – and the expectations of more to come.
Japan’s Nikkei rose 0.3%, Chinese blue chips were up 0.2%, while Hong Kong’s Hang Seng Index advanced 0.4%.
Overnight, Wall Street’s main indexes posted modest gains after heavy selling earlier in the week. S&P 500 futures rose 0.3% and Nasdaq futures was up 0.5%, in a sign of improved risk appetite as markets stabilised.
Fed chair Jerome Powell on Thursday said the bank is “strongly committed” to controlling inflation but there remains hope it can be done without the “very high social costs” involved in prior inflation fights.
U.S. rate futures have priced in an 86% chance the Fed will hike by another 75 basis points at this month’s meeting, which would increase the Fed funds rate to 3.0% to 3.25%. That was up from a 77% probability a day earlier.
U.S. Treasury yields climbed slightly on Friday, with the yield on benchmark two-year notes edging 4 basis points higher to 3.5264%. The yield on 10-year bonds stood at 3.3284%, compared with its previous close of 3.2920%.
Across the Atlantic, the European Central Bank raised interest rates by a record 75 basis points and also signalled further hikes to fight inflation, even as the bloc’s economy is heading for a likely winter recession.
That sent euro zone government bond yields soaring and supported the euro. Germany’s two-year bond yield climbed more than 20 bps to 1.326%, its highest since 2011, while 10-year bond yields were up 14 bps to 1.71%.
The euro gained 0.5% to $1.0049 and managed to stand above parity with the U.S. dollar
Oil
Oil prices turned down in early trade on Friday and were headed for a 4% weekly drop on worries that central banks’ aggressive rate hikes and China’s COVID-19 curbs will hurt demand. U.S. crude dipped 0.1% to $89.07 a barrel while Brent crude rose to $89.07 per barrel.
Jumbo Hike
Federal Reserve Chair Jerome Powell said officials won’t flinch in the battle to curb inflation, hardening expectations that they’ll deliver a third straight jumbo rate hike later this month. US central bankers are raising interest rates rapidly to curb the hottest inflation in four decades. They next meet on Sept. 20-21 and Powell has kept the option open for another 75 basis-point move, following increases of that size in June and July. Meanwhile, the European Central Bank hiked interest rates by a historic 75 basis points, and President Christine Lagarde hinted it could do the same again in October.
FTSE100 live outlook prediction analysis for 9th September 2022
Well we got the dip and rise on both the FTSE100 and the S&P500 yesterday, with the bulls managing to shake off any negative overtones from more interest rate rises after the ECB raised by 0.75 points. The S&P has now recaptured the 4000 level and the bulls will be keen to hang onto that and push up towards the 4050 level really. That may well tie in with the FTSE100 pushing for a test of the 25ema on the daily at 7348 currently.
If we do see that and as it aligns with R2 and also the daily 200ema we may well see bit of a bearish reaction here. Also ahead of the weekend so profit taking for those longs from sub 7200 yesterday.
Initial support this morning is at the 30m coral and 200ema 30m at the 7250 level and just above the 7234 daily pivot. Feels like a buy the dip again today, at least till this afternoon.
Below the 7234 then the S1 and key fib are at the 7190 level, and a potential double bottom here, though I don’t think we will get that low today but as its Friday do keep your guard up.
Resistance above the initial R1 level (where we are as I write this) at 7294, is 7336 for R2 and 7333 for the 200ema on the daily chart. Also that 25ema as mentioned 7348. Should the bulls break through this area then a rise towards 7369 is on the cards, though that also feels a big ask!
The 2h chart is bullish once again and has decent support showing at the 7261 level with the Hull MA here, so should we get an initial dip this also lends weight to a bounce in this area.
S&P500
As mentioned the bulls will be keen to hold onto 4000, and a brief foray below to the daily pivot at 3987 may well see some buying kick in. The bulls will want to push this higher having defended yesterday and will want to keep the momentum going into the weekend. We may well see a late Friday pump as well. Below the pivot then 3963 is the S1, 200ema 30m, and key fib so would more than likely see a bounce. Above the R1 4032 level then there is the potential for a push towards 4056 R2.
Good luck today and stay nimble as its Friday!
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