FX Futures Edge: Asian Markets Lower, European Markets Higher
Richard Rhodes | Apr 24, 2013 04:07AM ET
STOCKS:
The fundamental backdrop is volatile: the Italian election is not yet resolved in terms of a sitting government; US “sequestration” is in place; and China continues to “dampen” their housing market. These issues, coupled with the “troika” bail-in decision regarding Cyrprus have increased the risk-premiums on stocks. Too, lest we not forget that the various Fed regional bank surveys have surprised to the downside in March, which has begun to pressure corporate margins/ earnings.
STRATEGY: The S&P 500 remains above the 160-wma long-term support level at 1300; and the standard 200-dma support level at 1452. Now, with prices having difficulty into major long-term overhead resistance, we’ve begun to see a quiet exit out of stocks beneath the surface. Hence, the risk-reward is towards lower prices, which is confirmed by a number of our short-term models.
ASIAN MARKETS CLOSED LOWER; EUROPEAN MARKETS ARE HIGHER as the overnight news of both these regions shows that manufacturing activity in China and Germany – the two main drivers of economic growth in their regions – showed manufacturing was faltering, and faltering at a faster rate than previously anticipated. In China, the HSBC “flash” PMI fell to 50.5 from 51.7…but still above the important 50-level of expansion/contraction. In Germany, both the manufacturing and services PMI are below the 50-level, with the services group falling through the 50-level. This is clearly not bullish of these economies; nor is it bullish of the world economy.
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