Daily Market Outlook, September 25, 2024 

Munnelly’s Macro Minute…

"China’s Stimulus Sugar Rush Subsides”

Beijing's substantial stimulus package continues circulating through Chinese markets; however, its influence on additional markets may be diminishing. Hong Kong's Hang Seng and mainland blue-chips opened in a buoyant mood; however, they are now well off their best levels, with the mainland index in negative territory. China's strong start to Wednesday initially supported the stock benchmarks in Australia and South Korea, whose economies closely link to China's fortunes. However, as with the major Chinese equities, these gains soon dissipated. Investors have begun to question whether any of the stimulus measures announced by the Chinese authorities on Tuesday would address the fundamental structural issues, despite the euphoria that had accompanied the announcement. The Nikkei225  in Japan closed lower, ending a four-session winning stretch. The market was seen as susceptible to profit-taking after the Nikkei rallied for a fourth consecutive session to a three-week closing high in the previous session, bolstered by the Bank of Japan's dovish stance.The overnight reaction on Wall Street was modest, with gains ranging from 0.2% to 0.5%. At the time of writing, U.S. futures were pointing approximately the same amount lower.

Data released on Tuesday suggests that concerns regarding a potential U.S. recession, following a significant decline in consumer confidence, may have mitigated the optimism regarding the global development narrative. Additionally, Europe is plagued by numerous economic concerns, and futures suggest that equities in the region will struggle to gain traction today. In essence, the narrative is consistent; the global easing cycle has arrived (with the exception of Japan). Traders are leaning significantly towards a second super-sized Fed cut at the next meeting in November, as the People's Bank of China followed Tuesday's volley of rate cuts with another reduction on Wednesday.

Stateside, Fed Governor Adriana Kugler will discuss the economic outlook later today, part of a busy week of Fedspeak that also includes Chair Jay Powell on Thursday. In Europe, today's agenda includes Elizabeth McCaul of the European Central Bank participating in a roundtable discussion and Megan Greene of the Bank of England addressing the issue of consumption. In European stock stories, U.S. investigators are looking into allegations of possible collusion to overcharge federal agencies for software developed in Germany, according to Bloomberg.

Overnight Newswire Updates of Note

  • Australia Inflation Eases, Core Remains High

  • China Cuts MLF Rate, Drains Liquidity

  • ADB Sees Asia Growth, China Deflation

  • Offshore Yuan Surges Beyond 7 Mark

  • Aussie Falls Below 0.6900 After CPI

  • Yen Gains Toward 143.50 On Risk Appetite

  • Gold Hits Record High As US Data Supports Cuts

  • Oil Holds Amid Mideast Conflict, China Stimulus

  • OPEC Raises Oil Demand On Growth

  • Shell Aims For Asia LNG Market Via North America

  • Commerzbank CEO To Oppose UniCredit Takeover

  • Swiss Poised For Year’s Third Rate Cut

  • ECB’s Knot Predicts 2025 Rate Cuts

  • Bitcoin Surges Past $64K On Easing Bets

  • China Crypto Brokers Lure $75B Amid Slump

          (Sourced from reliable financial news outlets)

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FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)

  • EUR/USD: 1.1125-30 (2.6BLN), 1.1140-50 (2.5BLN), 1.1170-75 (717M),

  • 1.1180-90 (1.1BLN), 1.1200-10 (3BLN), 1.1250 (927M)

  • USD/CHF: 0.8350 (525M), 0.8445 (820M), 0.8500 (252M)

  • GBP/USD: 1.3280-85 (777M), 1.3295-1.3300 (503M), 1.3350 (426M)

  • 1.3365-70 (486M), 1.3400 (276M).

  • EUR/SEK: 11.3080 (457M). NZD/USD: 0.6320 (1BLN)

  • AUD/USD: 0.6850-60 (1.1BLN), 0.6870-80 (1BLN)

  • EUR/AUD: 1.6300 (254M), 1.6550 (708M)

  • USD/JPY: 142.55 (400M), 143.00 (294M), 143.70 (635M), 144.95-145.00 (1.4BLN)

CFTC Data As Of 20/9/24

  • Equity fund managers raise S&P 500 CME net long position by 36,522 contracts to 1,021,562

  • Equity fund speculators increase S&P 500 CME net short position by 108,938 contracts to 362,306

  • Speculators increase CBOT US 10-year Treasury futures net short position by 71,921 contracts to 1,094,026

  • Euro net long position is 69,646 contracts

  • Japanese yen net long position is 56,840 contracts

  • Swiss franc posts net short position of -17108 contracts

  • British pound net long position is 62,979 contracts

  • Bitcoin net short position is -973 contracts

Technical & Trade Views

SP500 Bullish Above Bearish Below 5700

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Below 5650 opens 5630

  • Primary support 5475

  • Primary objective is 5750

EURUSD Bullish Above Bearish Below 1.1170

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Below 1.1160 opens 1.1130

  • Primary support 1.1130

  • Primary objective 1.1220

GBPUSD Bullish Above Bearish Below 1.3230

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Below 1.32 opens 1.3140

  • Primary support is 1.2730

  • Primary objective 1.3390 - TARGET HIT NEW PATTERN EMERGING

USDJPY Bullish Above Bearish Below 142.50

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Below 142 opens 140.50

  • Primary resistance 146

  • Primary objective is 146

XAUUSD Bullish Above Bearish Below 2645

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Below 2610 opens 2580

  • Primary support 2430

  • Primary objective is 2680

BTCUSD Bullish Above Bearish Below 60000

  • Daily VWAP bullish

  • Weekly VWAP bullish

  • Below 54000 opens 50000

  • Primary support is 500000

  • Primary objective is 700000