GILT AUCTION RESULTS: Disappointing auction but little follow through

Broader risk-off trade seems to be driven by 3 major factors:

• Continued U.S. growth worry.
• Signs of tension within the German fiscal negotiations as the Greens grow a little louder when it comes to voicing some lingering areas of dissent. Most still expect the well-documented fiscal reform to be passed, however, the headlines remind market participants of the tight time constraints and continued potential for posturing/headwinds ahead of any deal.
• Social media reports suggesting that the Finance Minister of Israel has said that fighting in Gaza is set to resume in absence of progress in negotiations with Hamas, with the new chief of staff having “a more effective combat plan than his predecessor”.

A bearish trend condition in WTI futures remains intact and last week’s fresh short-term cycle lows reinforce current conditions. Recent weakness has resulted in a clear breach of support at $70.20, the Feb 6 low. This confirmed a resumption of the downtrend that started Jan 15 and has paved the way for an extension towards $63.61 next, the Oct 10 ‘24 low. Key short-term pivot resistance is seen at $70.54, the 50-day EMA. Gold is unchanged. The trend condition remains bullish and the recent pullback appears to have been a correction. A stronger rally would refocus attention on $2962.2, a Fibonacci projection. This would also open the $3000.0 handle. On the downside, a resumption of weakness would instead suggest scope for a deeper correction and expose support around the 50-day EMA, at $2823.8. The 50-day average marks a key support.

• WTI Crude up $0.02 or +0.03% at $67.09
• Natural Gas up $0.21 or +4.73% at $4.61
• Gold spot down $9.6 or -0.33% at $2899.23
• Copper down $4.45 or -0.94% at $466.5
• Silver down $0.18 or -0.56% at $32.3488
• Platinum down $1.47 or -0.15% at $967.77

The trend in the Eurostoxx 50 futures contract is unchanged, it remains bullish with price trading closer to its recent trend highs. Key short-term support has been defined at 5373.00, the Mar 4 low. A reversal lower and a break of this level would signal scope for a deeper retracement and expose the 50-day EMA at 5306.33. For bulls, a continuation higher would open the 5600.00 handle next. A bear threat in S&P E-Minis remains present following last week’s move lower that reinforced a short-term downtrend. The contract traded to a fresh short-term cycle low again, Friday, marking an extension of the current bear leg. This highlights a stronger reversal and a double top pattern on the daily scale. The focus is on 5658.00, the Sep 12 2024 low. Initial firm resistance to watch is 5993.68, the 50-day EMA.

• Japan's NIKKEI closed higher by 141.1 pts or +0.38% at 37028.27 and the TOPIX ended 7.83 pts lower or -0.29% at 2700.76.
• Elsewhere, in China the SHANGHAI closed lower by 6.383 pts or -0.19% at 3366.163 and the HANG SENG ended 447.81 pts lower or -1.85% at 23783.49.
• Across Europe, Germany's DAX trades lower by 20.57 pts or -0.09% at 22984.83, FTSE 100 lower by 17.86 pts or -0.21% at 8660.93, CAC 40 up 8.01 pts or +0.1% at 8128.81 and Euro Stoxx 50 down 12.06 pts or -0.22% at 5456.35.
• Dow Jones mini down 392 pts or -0.92% at 42450, S&P 500 mini down 63.5 pts or -1.1% at 5712.75, NASDAQ mini down 252.25 pts or -1.25% at 19979.