European Open: China Manufacturing PMI crawls out of contraction

Asian Indices:

• Australia's ASX 200 index rose by 72 points (0.99%) and currently trades at 7,311.80
• Japan's Nikkei 225 index has risen by 205.14 points (0.74%) and currently trades at 28,492.22
• Hong Kong's Hang Seng index has fallen by -260.56 points (-1.09%) and currently trades at 23,591.68
• China's A50 Index has fallen by -126.27 points (-0.81%) and currently trades at 15,384.89

UK and Europe:

• UK's FTSE 100 futures are currently up 33.5 points (0.47%), the cash market is currently estimated to open at 7,143.45
• Euro STOXX 50 futures are currently up 19 points (0.46%), the cash market is currently estimated to open at 4,128.51
• Germany's DAX futures are currently up 72 points (0.47%), the cash market is currently estimated to open at 15,352.86

US Futures:

• DJI futures are currently down -9.42 points (-0.03%)
• S&P 500 futures are currently up 22.25 points (0.14%)
• Nasdaq 100 futures are currently up 8.25 points (0.18%)

China’s manufacturing PMI expanded for the first month in three at 50.1, above expectations of 49.6. The slowdown of raw materials was a welcomed surprise, although that may be down to power rationing during China’s energy crisis. And there are signs that bottlenecks are easing. Yet in all the while the Omicron variant lurks in the background like the Grinch, it takes the wind out of positive data. The Hang Seng fell to a 14-month low and the China A50 Is down -0.8%.

Elsewhere, Japan’s industrial output rose for the first time since June to show more signs of a reprieve in Asia and sent the Nikkei 225 up around 0.75%. The ASX 200 traded above 7300 in the back of higher energy and travel stocks, yet gave back early gains to close with a bearish pinbar on the day.

GBP/AUD ready to revert higher?

During Friday rout in the Asian session, GBP/AUD broke out of its bullish flag pattern. Not because new covid variants are a bullish case for the UK, but because during the risk-off theme risker currencies such as AUD get offloaded the quickest (which was the weakest currency of the day) alongside the fact that RBA are more dovish the BOE by a long yard.

After reaching our 1.8750 target prices have now retraced to a nice level of potential support at the October high. Given the potential bullish wedge on the four-hour chart, we’d take a burst of bullish momentum form current levels that its bullish trend had resumed.

Elsewhere for currencies, USD/CAD remains in a strong uptrend on the four-hour chart. It is meandering around the monthly pivot and we suspect it will have another crack at its highs if it can hold above the pivotal level of 1.2710. USD/JPY repeatedly tried (but failed) to test the monthly pivot point from below, so we suspect it may be trying to top out on the four-hour hart. The same can also be said for CAD/JPY which has the monthly pivot point and 89.60 resistance capping gains.

Commodities struggling to lift themselves from their lows

The head and shoulders top for gold on the hourly chart remains a potential setup that requires a break of Friday’s lows to he confirmed. The longer it fails to do so, the risk of an upside bounce increases. Silver is trying to rise above but, like other markets mentioned above, bulls are struggling to make a convincing case. Still, the November low / $23.0 is clearly a pivotal level this session as it looks appealing to bears whilst prices remain below it, or more for bulls if it can break above it.

WTI is above $70 but trading conditions are choppy and undesirable for momentum traders in its current state. Without a fresh catalyst we could find it remains to frustrate directional traders ahead of this week’s (delayed) OPEC meeting.

FTSE 350: Market Internals

FTSE 350: 4076.21 (0.94%) 29 November 2021

• 276 (78.63%) stocks advanced and 66 (18.80%) declined
• 7 stocks rose to a new 52-week high, 9 fell to new lows
• 49% of stocks closed above their 200-day average
• 59.83% of stocks closed above their 50-day average
• 6.84% of stocks closed above their 20-day average

Outperformers:

• + 6.10%-BT Group PLC(BT.L)
• + 5.53%-WH Smith PLC(SMWH.L)
• + 5.47%-Wizz Air Holdings PLC(WIZZ.L)

Underperformers:

• -5.63%-Hargreaves Lansdown PLC(HRGV.L)
• -4.64%-AO World PLC(AO.L)
• -4.33%-FirstGroup PLC(FGP.L)

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