EQUITIES: Estoxx call, spread

Eurostoxx 50 futures have found resistance at 4513.00, Monday’s high, and the contract has traded sharply lower. For now, the pullback is considered corrective. However, the move lower has exposed support at the 50-day EMA. The average intersects at 4371.40 and a clear break, if seen, would threaten recent bullish developments and expose 4331.00, the Jul 26 low and a key support. Key resistance and the bull trigger is at 4513.00. The E-mini S&P contract continues to trade below 4634.50, the Jul 27 high. The pullback from this level highlights a possible short-term bearish signal. Price has found resistance at the top of a bull channel drawn from the Mar 13 low - the channel top is at 4654.42 today. An extension lower would expose the 20-day EMA - at 4547.38 and a break of it would strengthen bearish conditions. Clearance of the channel top is required to resume the uptrend.

• Japan's NIKKEI closed lower by 768.89 pts or -2.3% at 32707.69 and the TOPIX ended 35.6 pts lower or -1.52% at 2301.76.
• Elsewhere, in China the SHANGHAI closed lower by 29.259 pts or -0.89% at 3261.69 and the HANG SENG ended 493.74 pts lower or -2.47% at 19517.38.
• Across Europe, Germany's DAX trades lower by 275.1 pts or -1.69% at 15966.86, FTSE 100 lower by 141.51 pts or -1.85% at 7524.85, CAC 40 down 114.64 pts or -1.55% at 7292.83 and Euro Stoxx 50 down 75.24 pts or -1.71% at 4333.03.
• Dow Jones mini down 279 pts or -0.78% at 35480, S&P 500 mini down 46.25 pts or -1.01% at 4555, NASDAQ mini down 215 pts or -1.36% at 15601.5.

Tsys are resilient when it comes to the feedthrough from the cheapening move in Gilts, with any spill over cheapening fading, before TY moved to retest best levels, last sitting +0-10. Cash Tsys sit 5bp richer to 1.5bp cheaper as the curve twist steepens, leaving the 5s30s curve at the least inverted level seen since July 19, while the 2s10s curve threatens its mid-July high.

• Macro headline flow remains limited through early London hours, leaving discussions surrounding the one-notch rating downgrade of the U.S. by Fitch at the fore, along with weakness in equity markets.
• The FOMC-dated OIS strip has flattened today. Terminal rate pricing is little changed around 5.42%, while pricing of cuts through June ’24 has deepened, with 63bp of easing vs. terminal rate levels showing, as that contract softens by around 7bp.