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From the Floor: 'Equities are unstoppable' — #SaxoStrats

   • BoJ press conference sees Kuroda maintain course, inflation targeted
   • 110.25 remains the key area in terms of USDJPY downside risks: Hardy
   • Positive IMF global growth revisions see outperformance in Asian stocks
   • US government shutdown ended for now, gov't funded until February 8
   • Copper showing strength, appears set for further highs

By Michael McKenna

Asian stocks gained 1% overnight with the Nikkei 225 resting at levels not seen since 1991 on the back of a positive global growth revision from the International Monetary Fund, a dovish Bank of Japan outing, and the re-opening of the US government.

"Equities are unstoppable," says Saxo Bank head of equity strategy Peter Garnry, although he adds that he still forecasts an eventual turn lower in data readings with today's ZEW sentiment survey from Germany a potential bellwether.

"Looking at the S&P 500 index, we still see bulls in control," reports Saxo Bank technical analyst Kim Cramer Larsson, who points to a lack of RSI divergence and support at 2,735 as key factors.

"We will likely be close to 3,000 by the end of this month," he concludes.

The BoJ outing was felt more in the equities space than in its forex counterpart, but Saxo FX head John J. Hardy says USDJPY is still very much in limbo with 110.25-20 remaining the key level for signs of a downside move while strength will not be determinedly shown until well above 111.00; USDJPY currently trades at 110.96.


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Source: Saxo Bank 

In the commodities space, Saxo head of commodity strategy Ole Hansen reports that the sentiment surge is reflected in the open interest reading across 22 key commodities, pointing in particular to crude oil's early-week gains.

Crude bounced higher following the Oman "Opec-plus" meeting that saw cartel members and pertners agreeing to leave the production cuts deal as-is.

In gold, Hansen says that $1,345/oz is in focus as rising trendline resistance as the yellow metal trade weighs bond yields, geopolitics (most notably the Trump regime's hard line on the Iran nuclear deal), and crypto weakness.

One rally that Hansen is watching is the one in HG Copper where prices bounced after finding support at $3.17/lb. According to Kim Cramer Larsson, it would not be surprising to see bears make a run at the levels just below that line, but the chart overall seems to reflect a rising trend.

For more on commodities, EUR and NOK, Netflix, the earnings season, and US policy, watch today's Morning Call in full.

Nikkei 225
Japanese shares sit at 27-year highs on the back of a strong global growth 
outlook and continued BoJ dovishness. Photo: Shutterstock

Michael McKenna is head of editorial content at Saxo Bank


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