euro stoxx 50

Manufacturing PMIs in focus, as RBA keeps rates unchanged  
 
European markets finished the month of July on a rather subdued note, even allowing for another month of solid gains, although we did see another new record high for the DAX, while the CAC 40 posted a record monthly close. The euro Stoxx 50 also posted its highest monthly finish since October 2007.
Both the FTSE100 and FTSE250 also fared reasonably well, with the FTSE100 closing at a 2-month high, helped by a rebound in house builders on the back of easing interest rate rise expectations.
US markets also started the final day of July on the front foot before slipping back from their intraday highs, on the back of some end of month profit taking, drawing a line under a 5th successive month of gains.
While there is a growing degree of confidence that last week's rate hikes from the Federal Reserve and the European Central Bank might be the prelude to a lengthy pause, there is rising realisation that rates may well hav

Favorite Charts of Callum Thomas of 2021

Favorite Charts of Callum Thomas of 2021

Callum Thomas Callum Thomas 30.12.2021 11:32
    Last week I shared with you some of my Best Charts of 2021 (as well as my Worst Charts of 2021) -- so this week I wanted to follow up with my Favorite Charts of 2021!       The following charts made the list either because they were something completely new or just super interesting (to me at least!) ...or indeed ones that helped illuminate some of the key developments across macro and markets.       These charts were featured in my just-released 2021 End of Year Special Report -- do check it out when you get a chance (free download as a holiday treat!).       n.b. I have updated the charts with the latest data (in a few cases the original idea has actually come entirely full-circle). Also on formatting: the italic text is a quote from the report in which the chart originally appeared.       Hope you enjoy!           1. Inflation Surprise! This was my go-to chart in highlighting the risks presented by inflation (as I figured that with folk’s inflation expectations skewed downwards by a decade of deflationary winds that my upside inflation scenario would be a big surprise).       “Already we’ve seen inflation surprises go from downside surprises to upside surprises across developed economies, and I’d expect that trend to continue.” (15 Jan 2021)                 2. Global Monetary Policy Map: If the first chart in this report didn’t make it obvious enough, this next chart should: central banks are stepping away from stimulus, OK?       “With the lift-off in emerging markets (and the small/developing central banks), the global weighted average policy rate has clearly turned the corner. As such I would double down on the call I made earlier in the year for central banks globally to move to a more neutral stance – and actually, would probably be about time to shift the global policy outlook to hawkish.” (7 May 2021)                 3. Global Oil & Gas Capex: The next chart shows in the blue line the fall and fall of global Oil & Gas capex: a key reason I stuck with the bullish bias for commodities and crude oil in particular… and a key reason to stay that way. As I note, the path to carbon zero will be paved with a commodities bull market as a logical consequence of the shifts in supply and demand, and investment required to make that shift.       “the medium-term outlook for crude oil: I think it’s worth highlighting again the capex picture for crude – global capex (and rig counts) remain near record lows. Clearly the pandemic has taken a toll on the sector. But the road to carbon zero is going to be a long one and the world won’t kick its petroleum habit overnight, and before we know it the world will be vaccinated, open for business, and potentially overstimulated.” (5 Feb 2021)                 >>> These charts were featured in our 2021 End of Year Special Report.               4. EURO STOXX 50 Breakout: This next one makes the favourites list for a few reasons, first is just how text-book a breakout it is, second how significant it is – i.e. with regards to price breaking out from such an entrenched trading range, and how it also helped confirm my biases to expect a breakout in European equities!       “the first shows European equities basically stuck in a range and currently looks to be in the process of making another attempt at breaking out. Given the duration and durability of this trading range, I would say that when/if it does breakout, it will be very significant indeed.” (5 Feb 2021)                 5. Bond Yield Model: This chart was actually introduced later in the year but it basically was designed to present a single image – combining half a dozen different charts and indicators which were pointing to higher bond yields. As it stands, there is still quite the disconnect, and therefore upside risk to bond yields (even if they ‘meet in the middle’).       “Moving onto the macro/market indicators, we still see global consumer discretionaries vs staples + developed market manufacturing PMIs + inflation swaps all in agreement that 10-year treasuries should be (a lot) higher. Thus, risks are clearly skewed to the upside for bond yields.” (22 Jan 2021)                 6. Total Population Growth: The last one in this section is a key element [high and stable population growth vs low and falling growth elsewhere] of the strategic case for the often-forgotten Frontier Market Equities. Most allocators put FM equities in the too hard basket, but I have been advocating the surprisingly intriguing strategic case (in many ways superior to EM equities), but also the tactical case – basically nailed the exceptional run in Frontier Market equities over the past year.       “Frontier Market equities have some interesting strategic characteristics: lower historical volatility vs EM, higher expected returns, relatively lower correlations to DM/US equities, and higher expected population growth. Although it is a relatively unpopular corner of global equities, it has begun to attract some attention as price has picked up.” (5 Feb 2021)                     Thanks for reading!           This is an excerpt from my 2021 End of Year Special report - click through to download a free copy of the report.       Best regards       Callum Thomas   Head of Research and Founder of Topdown Charts           Follow us on:   Substack https://topdowncharts.substack.com/   LinkedIn https://www.linkedin.com/company/topdown-charts   Twitter http://www.twitter.com/topdowncharts
Ceasing (?) Russia Vs. Ukraine Conflict And Indices - Eurostoxx 50, FTSE 100 And DAX

Ceasing (?) Russia Vs. Ukraine Conflict And Indices - Eurostoxx 50, FTSE 100 And DAX

Alex Kuptsikevich Alex Kuptsikevich 30.03.2022 10:23
The Russia-Ukraine peace talks have revived momentum in risk-sensitive assets. The market reaction to the outcome of the peace negotiations brought the indices back to where they had last been before the last days of February. The S&P500 reached its highest levels in two and a half months. European indices had bottomed as early as the 7th of March. Still, this recovery momentum stalled about a week ago, with the Euro50, FTSE100 and DAX all approaching levels where they were at the end of February, during the early days of the military conflict. The military conflict is far from over, and businesses have been badly affected by the sanctions and jump in commodities and energy. In addition, the turnaround in the indices took place well before the progress of the negotiations. Both these thesis lead us to look for other reasons behind the current share rally. In our opinion, the answer is to be found in monetary and fiscal policy. The uncertainty in Europe and the blow to the global economy looks like an important reason for the Fed to tone down its rhetoric last month and, as a result, raise the rate by 25 points rather than the 50 that we were prepared for in January. Monetary policy is still aimed at normalisation, but the authorities act more cautiously than required by the conditions of even higher inflationary pressures than estimated in January. Fiscal policy is considerably softer: Europe is discussing new stimulus and the next issue of EU joint bond; the USA is increasing defence spending and domestic programmes at new records. The remaining highly soft monetary policy and supportive fiscal policy create the conditions for further strengthening of the US and European stock markets. China is also contributing its support. The People’s Bank of China continues to inject liquidity into the financial system, supporting the pull into risky assets. Chinese indices have recovered much of March’s slump, adding 11% from the bottom in the China A50, 23% in the Hang Seng and 26% in the H-shar. It is also worth noting that stock markets are far from the overheated area, which leaves room for further upside moves in the coming days.
ECB Meeting Uncertainty: Rate Hike or Pause, Market Positions Reflect Tension

Manufacturing PMIs and RBA Rates in Focus: European and US Markets Show Resilience

Michael Hewson Michael Hewson 01.08.2023 10:14
Manufacturing PMIs in focus, as RBA keeps rates unchanged     European markets finished the month of July on a rather subdued note, even allowing for another month of solid gains, although we did see another new record high for the DAX, while the CAC 40 posted a record monthly close. The euro Stoxx 50 also posted its highest monthly finish since October 2007. Both the FTSE100 and FTSE250 also fared reasonably well, with the FTSE100 closing at a 2-month high, helped by a rebound in house builders on the back of easing interest rate rise expectations. US markets also started the final day of July on the front foot before slipping back from their intraday highs, on the back of some end of month profit taking, drawing a line under a 5th successive month of gains. While there is a growing degree of confidence that last week's rate hikes from the Federal Reserve and the European Central Bank might be the prelude to a lengthy pause, there is rising realisation that rates may well have to stay at current levels for quite a while yet.     Nonetheless, despite this apprehension Asia markets have seen a positive session, despite weaker Chinese PMI numbers and this looks set to translate into a modestly positive start for markets in Europe this morning. This week we can expect the Bank of England to follow suit with another rate hike of its own, while this morning the RBA took the decision to keep rates unchanged at 4.1%. The decision was finely balanced with many expecting a rate hike, however the Australian central bank appears to have erred on the side of caution, given last week's weaker than expected Q2 CPI reading, and the weakness in recent PMI numbers.     The RBA went on to alter their inflation forecast to predict that prices would return to target in late 2025, while also revising up their GDP growth targets for this year and next year. The central bank did keep the door open to further hikes in the future. The Australian dollar slid back giving up some of the gains it made yesterday, while the ASX200 pushed back up towards its recent highs.     Today's economic agenda shifts the focus back to the weakness of the manufacturing sector, as well as the resilience of the US labour market, as we look to a flat open. In Germany especially, the performance of the manufacturing sector has been dire with July manufacturing PMI expected to be confirmed at 38.8, the lowest level since the manufacturing sector was shut down due to Covid. In France, manufacturing PMI is expected to slow to 44.5, while only modest improvements are expected in Spain and Italy of 48.3 and 44.3. The UK manufacturing numbers are expected to slow to 45, from 46.5.     Even the US economy hasn't managed to escape the manufacturing slump with the latest ISM manufacturing survey for July expected to show a modest improvement from 46 to 46.9, with prices paid expected to see a modest improvement to 44, from 41.8. It is clear that the manufacturing sector is experiencing a clear deflationary impulse which is likely to continue to act as a drag on prices in the coming months. The bigger question is whether this translates into a similar drag on the services sector, and here prices are proving to be slightly stickier.     One major concern to the slowing prices narrative has been the recent gains in oil prices, which yesterday saw their biggest monthly gain in over a year, over concerns that Saudi Arabia will go further and extend their production cuts into September. This rise in prices over the last 4 weeks is already feeding into higher prices at the fuel pumps, which if sustained could impact on consumer demand in the coming weeks.      We also get an insight into the US labour market with the latest JOLTS job openings numbers for June which are expected to show a fall from 9.82m vacancies to 9.6m, which would be a 2-year low. While such a move would be welcome it's also important to remember that vacancies are still over 2m higher than they were at their pre-pandemic peaks, back in mid-2018. This number needs to come down a lot further before we can infer that the falls in vacancies might lead to a moderation in wage growth.     EUR/USD – currently have support at the 1.0940 lows from last week with further support at the 50-day SMA as well as the 1.0850 area. Resistance currently at last week's high at 1.1150.     GBP/USD – support currently at the 1.2750 area as well as trend line support from the March lows at 1.2710, and the 50-day SMA at 1.2700. While above this key support the uptrend from the March lows remains intact. Resistance at the 1.3000 area.         EUR/GBP – currently range trading between resistance at the 0.8600 area, with the risk of a return to the recent lows at 0.8500/10. Above the 0.8600 area targets the July highs at 0.8700/10.     USD/JPY – broken above the 142.00 area, opening up the risk of a move back to the previous peaks at 145.00. We need to see a move back above 142.60 for this to unfold. Support comes in at yesterday's lows at 140.70.     FTSE100 is expected to open 3 points higher at 7,702     DAX is expected to open 13 points higher at 16,459     CAC40 is expected to open 5 points higher at 7,502     By Michael Hewson (Chief Market Analyst at CMC Markets UK)

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