The market mood steadies, PMIs in focus
DAX => The index rises to 14300
NIO => The stock trades up 35% in 2 weeks
USD/JPY => The pair holds above 121.00
DAX edges higher ahead of PMIs
The DAX tumbled 1.3% yesterday amid rising fears over the fallout from the Russian war.
Russian President Putin said that all Russian gas must be paid for in Rubles. Germany gets around 40% of its gas from Russia and 27% of its oil, making it vulnerable.
Oil prices rallied over 4% on the news to $120.00. Higher energy and fuel prices will exasperate already high inflation and could slow growth considerably.
Today, the DAX is edging cautiously higher. Russian developments will remain in focus, in addition to PMI data.
German composite PMI, a good gauge for business activity, is expected to slow slightly in March but remain comfortably above 50, the level that separates expansion from contraction.
| Ger. Composite PMI | Expected: 54 (1.6) | Previous: 55.6 |
Where next for DAX?
The DAX is consolidating after its recent run higher from 12450, the 2022 low.
Currently, the price trades in a holding pattern, capped by 14550 on the upside and 14050 on the lower side. The RSI is neutral.
Traders could look for a breakout trade.
Sellers would look for a move below 14050 to bring 13800 the February 24 low into play, ahead of 13275, the March 11 low, and 12450.
Meanwhile, buyers will look for a break above 14550 to expose the 50 sma at 14730 and then 14850, a level that offered support on several occasions across the past six months.
NIO Q4 earnings preview
NIO, the Chinese electric car maker, will report Q4 earnings after the closing bell.
Deliveries for 2021 doubled to 91,429, as orders and deliveries hit record highs. Revenue is expected to jump 46% to RMB 9,719 million, and adjusted loss will likely widen to RMB 1.00 from RMB 0.93 per ADS.
Supply chains will be a crucial focus, especially since NIO said it wouldn’t raise its prices. This pledge, if stuck to, could derail growth plans and overseas expansion. NIO ADR trades over 30% lower so far this year.
USD/JPY rises above 121 following BoJ minutes
USD/JPY is rising for a fifth straight session on Thursday.
The pair rose 0.3% in the previous session as Fed officials continued to express the need for the US central bank to adopt a more hawkish stance to tame 40-year high inflation. This was in sharp contrast to the minutes from the BoJ meeting, which showed that the Japanese central bank was ready to extend its easy monetary policy if necessary.
The central bank divergence sent USD/JPY to a fresh six-year high.
Today attention will shift towards a barrage of US data, including PMIs, durable goods, and initial jobless claims.
| US Services PMI | Expected: 59 (1.5) | Previous: 60.5 |
Support can be found at 120.00 (psychological level)) and 118.60 (2017 high).
Resistance for the pair can be seen at 121.70 (January 2016 high) and 122.00 (round number)
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