Not a particularly great start to a new week yesterday for markets in Europe, but having just come off the back of three days of strong gains at the end of last week, we were probably overdue a bit of a pullback.

The big question now is whether that means we are back to chopping and changing in the same broad range we’ve been in since the beginning of July, or whether we sustain the positive momentum of the last couple of weeks?

Yesterday’s disappointing China Q3 GDP numbers may well have been the perfect excuse for a bit of a pullback; however, the numbers can’t have been too much of a surprise to anyone who’s been paying attention to recent events in the world’s second largest economy these past weeks.

Thus far we’ve seen companies post some fairly decent beats on the earnings front, and while it’s been notable that most have cited concerns about rising costs, as well as supply chain disruptions, we haven’t seen many significant profit downgrades yet.

That could change over the course of the next few days, and while the risks from rising energy prices are now starting to make themselves felt, for airlines in particular who having only just been given the all clear to start flying again, are now facing spiralling fuel costs, probably feel like they are lurching from one crisis to another.

While European stocks fell back yesterday, US stocks were slightly more resilient with the S&P500 and Nasdaq both finishing in positive territory, helped by oil prices slipping back from their peaks, and on optimism that last week’s trend of earnings beats will continue later today, when Netflix announces its latest Q3 numbers, after the close of US markets tonight.

Apple’s share price also finished strongly last night after announcing a series of new upgrades for its laptops, as well as new upgraded AirPods with a higher price tag, at its latest online unveiling yesterday evening.

Two new MacBook Pros, one with a 14-inch screen and one with a 16-inch screen come with Apple’s own new M1 Pro processors, and a hefty price tag, due to start deliveries next week. Apple says the new chipsets are faster than the equivalent Intel chips.  

Today’s Asia session has seen stocks rebound and this looks set to translate into modest rebound for European markets this morning, after yesterday’s pullback.

EURUSD – Struggled to break above the 1.1625/30 again yesterday, with larger resistance at the October highs at 1.1640/50. A break above that, targets resistance at 1.1760. Below 1.1520 targets the 1.1450 area.

GBPUSD – Had an indifferent day yesterday, slipping back from the 1.3775 level. We could slip back to the 1.3670 level, without undermining the prospect of a move towards the 1.3900 area, however we need to break above trend line resistance from the June highs at 1.3820 first. Support also comes in at the 1.3570 area.

EURGBP – Rebounded from the 0.8420 area, a break of which potentially opens up further weakness towards 0.8280, and the 2020 lows. We now have resistance at the 0.8470 level, as well as the 0.8520 area.   

USDJPY – Found support at 113.20 last week, and having broken above the 114.00 area opens up a move towards the 2018 peaks at 114.75 the next target. We could slip back towards the 112.40 level, on a break below 113.00. 

FTSE100 is expected to open 4 points higher at 7,207.

DAX is expected to open 22 points higher at 15,496.

CAC40 is expected to open 10 points higher at 6,683.

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