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Last week’s move down in WTI futures marked an extension of the current corrective cycle. The 20-day EMA has been breached and attention is on support around the 50-day EMA, at $72.30 (pierced). A clear break of the 50-day average would suggest scope for a deeper retracement. On the upside, a reversal higher would refocus attention on $79.48, the Apr 12 ‘24 high and a key resistance. A bull cycle in Gold remains in play. Last week’s extension higher and this week’s appreciation, confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on $2867.5 next, a Fibonacci projection. The first key support to watch is $2698.4, the 50-day EMA. The 20-day EMA is at $2746.5.

• WTI Crude down $0.64 or -0.88% at $72.07
• Natural Gas down $0.05 or -1.41% at $3.207
• Gold spot up $27.31 or +0.96% at $2870.78
• Copper up $2.55 or +0.59% at $437.75
• Silver up $0.3 or +0.93% at $32.4715
• Platinum up $13.66 or +1.41% at $981.72

Eurostoxx 50 futures have recovered from Monday’s low. However, the sharp reversal lower earlier this week signals the end of the recent bull run - for now - and the start of a corrective cycle. Price has traded through the 20-day EMA, at 5170.66. A resumption of the bear leg would pave the way for a move towards the 50-day EMA, at 5065.54. On the upside, key resistance and the bull trigger has been defined at 5327.00, the Jan 31 high. Monday’s initial sell-off in the S&P E-Minis contract and breach of support at 5948.00, the Jan 27 low, strengthens a bearish threat and cancels - for now - a recent bullish theme. An extension down would open 5892.37, a Fibonacci retracement point. Initial resistance is at 6069.00, Tuesday’s intraday high. Gains are considered corrective, however, a stronger rally would expose key resistance at 6178.75, the Dec 6 high.

• Japan's NIKKEI closed higher by 33.11 pts or +0.09% at 38831.48 and the TOPIX ended 7.39 pts higher or +0.27% at 2745.41.
• Elsewhere, in China the SHANGHAI closed lower by 21.113 pts or -0.65% at 3229.488 and the HANG SENG ended 192.87 pts lower or -0.93% at 20597.09.
• Across Europe, Germany's DAX trades lower by 88.4 pts or -0.41% at 21417.27, FTSE 100 lower by 2.11 pts or -0.02% at 8568.67, CAC 40 down 31.12 pts or -0.39% at 7874.96 and Euro Stoxx 50 down 15.59 pts or -0.3% at 5248.84.
• Dow Jones mini down 144 pts or -0.32% at 44553, S&P 500 mini down 40.5 pts or -0.67% at 6022.5, NASDAQ mini down 225.75 pts or -1.04% at 21443.

The reduction in short-term French political risk premium continues to filter into the 10-Year SPGB/OAT/PGB fly after the French Socialist Party indicated that it would not support a censure motion against PM Bayrou (vote scheduled for later today).

• The structure is testing the November 21 closing level at -37.1bp, ~19bp off cycle/’25 closing lows.
• While the short-term risks have clearly lessened on that development, medium-term fiscal and political headwinds remain intact, with difficult discussions surrounding pensions and further fiscal tightening needing to be addressed on the coming months.
• As such, Commerzbank continue to suggest that “an ongoing OAT recovery should be used to add to structural shorts in the semi-core complex vs. Iberia.”

Fig. 1: 10-Year SPGB/OAT/PGB Fly (bp)

Source: MNI - Market News/Bloomberg